The Board of Investments (BOI) is urging Chinese toy manufacturers to transfer their production facilities here, as the agency seeks to take advantage of the growing demand for video games during the Covid-19 pandemic.
In a meeting in February, the BOI presented to members of the Toys Manufacturers’ Association of Hong Kong (TMHK) the opportunities in relocating their factories here. TMHK firms are scanning the Southeast Asian terrain due to the surge in production costs in China, making it imperative for them to consider expanding abroad.
Trade Undersecretary and BOI Managing Head Ceferino S. Rodolfo said the agency wants to make the Philippines an investment destination for multinationals, including toymakers, eyeing to expand outside of their home country.
Further, Rodolfo said the pandemic forced buyers to shift from traditional toys, including action figures, dolls and play sets, to video games, such as those developed by Japan’s Nintendo and the United States’ Blizzard Entertainment. Toy manufacturers may begin to bring their products on multiple platforms, and the BOI wants to capitalize on this change in play preference.
“Experts have noted that the impact of the Covid-19 pandemic on toys and games have globally reinforced the trends already shaping the industry sales [prior to] Covid-19 mainly through digital transformation,” Rodolfo said in a statement on Wednesday.
“A Covid-19-generated shift towards home entertainment and online education has led to further surge in video games, including e-sports, and digital education tools. While some traditional toy categories have seen a spike in 2020, the long term trend is reflected in the strong repositioning of toy industry players as entertainment providers on multiple platforms.”
Also, Rodolfo pitched to HMTK members the availability of raw materials here, such as plastics, rubber, cotton and textile that enabled toy producers like Academy Plastic Model Toy, Bandai Namco Philippines and Dunlop International (Philippines) to operate here.
Based on BOI records, the Philippines hosts 125 firms engaged in the manufacture of toys and games, and they represent a total of P450 million worth of investments. Mattel Philippines made the largest capital registration in toy making at P39 million, while Carissa Balsam Sdn. Bhd. was the latest player to enter the game with its P2.65 million investment in 2018. In 2019 Philippine exports of toys, games and requisites amounted to $176.1 million, although the BOI admitted this is made up of traditional items and video consoles, and has yet to include applications and in game transactions.
According to the BOI, TMHK members are considering the Philippines as an investment location due to the reforms in its fiscal structure as introduced by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. Now awaiting President Duterte’s signature, the CREATE Act brings down the corporate income tax to 25 percent, from the highest rate in Southeast Asia of 30 percent. For firms earning below P5 million yearly, the rate was reduced to 20 percent.
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