MARCHASIA BUSINESS OUTLOOK8PHILIPPINES SECURES INVESTMENT PLEDGES FROM GERMAN & AMERICAN FIRMSJAPAN TO MODIFY TRANSFER REGULATIONS TO PERMIT EXPORTS OF MILITARY JETSThe Philippines has recently secured approximately $5 billion in investment pledges from German and American firms, representing significant potential gains for the country in sectors such as healthcare and energy. President Ferdinand Marcos Jr, during his three-day working visit to Germany, finalized investment pledges totaling $4 billion from German companies. This follows commitments of over $1 billion from American firms.Among the notable investments, private equity firm KKR & Co has pledged $400 million for telecoms tower operations and expansion in the Philippines. Ally Power, a startup, announced a $400 million deal with power utility Manila Electric Co to construct a hydrogen and electric refueling station. Additionally, Microsoft is collaborating with the Philippine central bank and ministries to leverage AI products to enhance productivity.In Germany, the Philippines inked eight investment agreements encompassing solar cell manufacturing, automotive modification, and military-grade armoured personnel carriers production. Other agreements include the potential development of a hospital training center, innovation hub, digital healthcare partnership, and farmland rehabilitation.Despite historic challenges in attracting foreign investment due to issues like red tape, weak infrastructure, and policy uncertainty, these recent investment pledges signify a positive step forward for the Philippines. In 2022, the country attracted $12 billion in foreign direct investments, trailing behind Vietnam's $15.7 billion and Indonesia's $21.1 billion, according to data from the Association of Southeast Asian Nations website. Japan has announced plans to adjust its military equipment transfer regulations to permit the export of the jet fighter it is co-developing with Britain and Italy. This decision, disclosed by Japan's Prime Minister Fumio Kishida, addresses a potential hurdle that could have impeded the project's progress.The collaborative effort, known as the Global Combat Air Programme (GCAP), involves key players such as Britain's BAE Systems PLC, Japan's Mitsubishi Heavy Industries, and Italy's Leonardo. The program aims to introduce an advanced fighter aircraft by the mid-2020s.Under Japan's strict military export rules, overseas sales of lethal equipment are prohibited. However, loosening these regulations will enable Tokyo's partners to market the aircraft internationally, which would help distribute development costs across a larger number of units and potentially reduce unit costs.The adjustment in export rules will allow sales to countries with defense equipment transfer agreements with Japan and that are not engaged in conflicts. Each export will require Cabinet approval, and the rule change will specifically apply to the GCAP fighter.Partnerships with additional countries, such as Saudi Arabia, are being considered to participate in GCAP as junior partners. Saudi Arabia's involvement could bring financial contributions and expand the market for the project, which is anticipated to involve significant expenditures.Various companies, including European missile maker MBDA, Japanese avionics manufacturer Mitsubishi Electric Corp, and engine makers Rolls-Royce PLC, IHI Corp, and Avio Aero, are also contributing to the GCAP initiative. NEWSROOM
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