The Philippines is cited as the emerging overseas investment destination of choice for Korean small and medium enterprises (SMEs), according to an article published in a Korean publication.

The Philippine Trade and Investment Center (PTIC) in Seoul, South Korea had provided the Department of Trade and Industry with the copy of the said article published in the Korea Economic Daily (KED).

“KED is published in Korean language. It is one of Korea’s most widely read and respected economic dailies. Owned by a syndication of conglomerates that include Samsung, Hyundai, SK, and LG, it has a readership of at least 1 million,” said Nicanor Bautista, PTIC Seoul Commercial Counselor.

The article entitled “For Korean SMES, the Philippines is the emerging overseas investment destination of choice,” cited global recession as the major reason for the growing number of Korean companies eyeing the Philippines.

It also mentioned other reasons such as the Philippine average wage at about $300 per month, which is only half the wage in China, and the common use of English language in the country.

The article also cited data from the Korea Export Import Bank, which said that 69 Korean companies have established a new corporation in 2009, 74 companies in 2010, and 82 companies in 2011.

In the first quarter of this year, the number of new companies in the Philippines increased to 22 from last year’s 19. Among these new companies are Nurian International (garments), Iam (electronics), and Koren (electronics).

Together with a local conglomerate, more than 20 Korean SMEs with plant operations in China had an exploratory mission in the Philippines last month, according to the article.

As mentioned by a delegation member, the Philippines is an attractive investment location because of its lower labor cost compared to China, and better infrastructures like roads and power compared to Vietnam.

“According to Mr. Chang of KCCIP [Korea Chamber of Commerce and Industry in the Philippines, there are increasing investment inquiries from Korean SMEs in the last few months. Most of these SMEs have plants in China. He believes that because of language, infrastructure, religion and cost competitiveness, China is fast losing its attractiveness to foreign investments,” the article said.

The article added that this trend is expected to continue as wages in China are expected to rapidly increase in the medium to long term.

According to Exim Bank data also cited in the article, the average minimum wage of China in 2011 has increased by 22 percent and is expected to further increase by more than 13 percent by 2015. This analysis is based on the Korean companies’ experience in China.

The number of Korean SMEs in China has also decreased from last year’s 634 to 533 in the third quarter of this year.

“Mr. Oh, a researcher from Korea’s SME institute said that the labor intensive companies are no longer considering investing in China. They are looking to Asean [Association of Southeast Asian Nations] countries such as the Philippines as possible alternative locations for their expansion. China is now considered as a market and no longer as production base,” the article said.