03 October 2014 – A broad cross section of small and medium enterprises (SMEs) and large German companies are showing a very strong interest in the Philippines. This was the message conveyed by German business leaders in their meetings with President Benigno S. Aquino III during his official visit to Berlin from September 19 to 20.
President Aquino held engagements with six companies during his short stay in the German capital. Philippine Ambassador to Germany Maria Cleofe R. Natividad observed that “we are now witnessing increased interest from German SMEs, known as the Mittelstand, to establish their presence in the Philippines. The Mittelstand has taken notice of the Philippines’ strong economic fundamentals and growth prospects. In particular, investors have recognized the resurgence in our country’s manufacturing sector, which grew by more than 10% in 2013.” The Mittelstand tend to be family-owned export oriented enterprises that focus on high value industrial products. The Mittelstand is also acknowledged as the backbone of Germany’s export oriented economy.
Dr. Nikolas Stihl, Chairman of Stihl AG, informed President Aquino that Zama Corporation, its Hong Kong based subsidiary, will enter the Philippines with its first investment in a manufacturing plant for carburetors and other engine parts for motorized forestry tools such as chainsaws and hedge trimmers. The Stihl AG/Zama plant is expected to start commercial production by 2016 and the total investment of US$ 54.2 million (PhP 2.4 billion) is expected to generate up to 1,300 manufacturing jobs by 2018. Stihl is a global leader in the manufacturing of power tools for forestry and agriculture. Stihl and Zama employ more than 16,000 people worldwide and had revenues of EUR 2.71 billion (US$ 3.74 billion) in 2013.
Likewise, Mr. Manfred Grundke, Managing Partner of Knauf Gips KG, emphasized that his company is very interested in the Philippine market and is particularly keen on growth prospects in the domestic construction industry, particularly the growing demand for affordable housing. Knauf Gips is an important player in the construction industry as it manufactures building material and construction systems based on gypsum for residential, commercial and industrial buildings. The company employs 26,000 people worldwide and recorded total sales of EUR 6.27 billion (US$ 8.3 billion) in 2013.
Praise from the German business community also extended to its major players. SAP Chief Operating Officer (COO) and Chief Financial Officer (CFO), Mr. Luka Mucic, praised the level of professionalism and skills of its Filipino workforce. SAP, the world’s third largest software company and the global leader in business-enterprise software, is very bullish on the Philippines’ business and knowledge processing sectors. In the future, SAP plans to expand strongly in the Philippines, both for shared services as well as software development and analytics. SAP has also recently acquired Concur Technologies, which provides cloud computing software for the travel and hotel industries. Concur Technologies currently operates its first Global Operations Center from Manila and employs more than 700 professionals in the Philippines supporting the global travel industry.
President Aquino also witnessed the signing of a partnership agreement between Ayala and Siemens for its Qualimed initiative. Ayala Land, together with its partners the Mercado Group, are pursuing a supply and maintenance contract with Siemens for advanced multimodality imaging equipment such as MRI and PET scanners as well as digital imaging equipment for Ayala’s newly launched Qualimed chain of hospitals and satellite clinics. The partnership will enhance access and healthcare services in expanding metropolitan areas. Valued at EUR 16.6 million (PhP 1 billion), the contract covers 10 sites in the Philippines, and is set to be completed in 2017. The 10 QualiMedsatellite clinics and hospitals will be set up in Ayala malls and mixed use developments, which is likely to create 1,650 new jobs. The first QualiMed clinics were recently launched at Trinoma and Fairview Terraces in Quezon City.
The Ayala-Siemens partnership extends into the energy sector. Ayala and Siemens are working on the development of two wind farm projects in Ilocos Norte, with a combined value of EUR 112 million (PhP 6.35 billion) and energy capacity of 99 Megawatts.
In addition, a new and unique Filipino-German partnership was recently announced. The Philippine Long Distance Company (PLDT) has recently invested US$ 446 million (PhP 20 billion) into Berlin-based Rocket Internet. PLDT has considerable expertise in the field of mobile payment solutions and this new partnership will offer emerging economies enhanced mobile and online payment services.
Bilateral trade between the Philippines and Germany has grown significantly, with total trade of US$ 3.43 billion in 2012 rising to US$ 4.51 billion in 2013. Likewise, German investments have grown to US$ 71.77 million in 2013 from US$ 45.7 million in 2012. Germany is now the Philippines’ 10th largest investor. END