Over the past decade, we’ve witnessed a significant departure of foreign investors from the Philippines, ranging from major manufacturing companies to prominent banking institutions. One of the earliest and most impactful exits was that of Intel, the American electronics giant that played a crucial role in establishing the Philippines’ electronics industry. Intel’s departure marked the beginning of a trend that saw other major players like Ford, Citibank, and Hanjin following suit.
Intel’s exit in 2009 was a significant blow. The company, which was the first US semiconductor firm to set up a facility in the Philippines, contributed immensely to the country’s export revenues. Their departure was attributed to a combination of global economic factors and internal company decisions. Intel had been facing a downturn in profits, with a 90% drop in the fourth quarter, coupled with a 23% slowdown in sales. These factors, alongside the company’s broader restructuring plans, led to the closure of their assembly test facility in the Philippines. Some speculated that high energy costs and infrastructure issues in the Philippines played a role, while others pointed to Intel’s desire to capitalize on lower wages in Vietnam, where they opened a new facility in 2006.
Despite Intel’s exit, the Philippine electronics industry has continued to thrive. Texas Instruments Philippines, another pioneer in the semiconductor space, stepped up and has since become one of the most significant foreign investors in the country. Their recent $1 billion expansion is a testament to their confidence in the Philippines as a viable investment destination.
The story of Citibank, the largest foreign bank in the Philippines, follows a similar pattern. In 2021, Citibank announced the sale of its local consumer and retail banking business, marking the end of its longstanding presence in the country. Citibank’s exit was part of a broader strategy, as they pulled out of consumer banking in 13 other countries as well. While some might attribute this to challenges in the Philippine market, the reality is that Citibank, much like Intel, has struggled to grow since the global financial crisis. However, their departure opened the door for UnionBank, a fast-growing local player, to acquire Citibank’s business, highlighting the opportunities available for local companies to step in and thrive where global giants have retreated.
Ford Motors’ decision to close its assembly plant in the Philippines in 2012 was another significant loss. The plant, which produced 35,000 vehicles annually, was shut down as part of Ford’s regional restructuring. The decision to shift production to Thailand raised questions about the competitiveness of the Philippine market. However, just two years later, Mitsubishi Motors acquired the very same plant, indicating that the local market still held potential, but perhaps not for every player.
Hanjin Philippines’ story is slightly different but follows the same theme. Once the largest foreign investor in the country, Hanjin declared bankruptcy in 2019 due to overwhelming debt. The collapse of Hanjin Philippines was part of a broader decline, as the Hanjin name had already been tarnished by the earlier collapse of Hanjin Shipping in 2016. However, the shipyard did not remain idle for long. Cerberus Capital Management, a private equity firm, took over and revitalized the facility. Today, HD Hyundai Heavy Industries, the world’s largest shipbuilding firm, is among the new tenants, demonstrating that even in the face of setbacks, the Philippines remains a place where new opportunities can emerge.
These examples illustrate that while foreign companies may leave the Philippines, it does not necessarily indicate a failing local economy. Often, these exits are due to broader global trends, internal company issues, or strategic shifts rather than local factors alone. Moreover, each exit has created space for local and other international players to step in and grow, proving that the Philippines still holds promise as an investment destination.