The Department of Trade and Industry (DTI) of the Philippines is liberalizing foreign investment laws to encourage foreign businessmen and enterprises to invest in the country’s robust economy and its highly educated people with a wide range of skill sets.
The Philippine economy is growing at a steady rate with a GDP growth of 6% to 7% that is forecasted to continuously rise until 2018. This is the fastest growth seen since the 1970s. And by 2050, the Philippines will be the 16th largest economy in the world, and the biggest in Asia according to the HSBC Global Investors study. Indeed, the Philippines is Asia’s next tiger.
Economic provisions and reforms are fueling the fast momentum that the Philippines is currently experiencing. The country is, in fact, an emerging market economy and is considered to be one of Goldman Sachs Next Eleven economies due to the rapid growth and industrialization it’s demonstrating.
There is no shortage of investment opportunities, and starting a business in the Philippines now may be the best business move you can make.
In an exclusive interview with DTI Secretary, Ramon Lopez, he cited the top industries that foreign direct investors would be wise to take part in. Such industries include agriculture, manufacturing, tourism, business process outsourcing, energy, and infrastructure development.
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1. Agriculture Products and Development
Agricultural development is steadily increasing because the Philippines is geographically and climactically ideal to meet agriculture trends and opportunities.
The country has enormous potential, especially in the export market of agricultural products such as coconut, bananas, mangoes, coffee, cacao, bamboo, and rice, among others.
“When we’re talking of agriculture and agriculture processing, we’re talking of products beyond the usual coconut, mango, and then we have, of course, coffee, cacao, rubber, and bamboo is [sic] also being promoted. A lot of these new higher value added agri products are being promoted.” – DTI Sec. Ramon Lopez
- Agriculture, as a whole, has grown by 1.1% in the last five years.
- Flexible investment depending on project size
- The Philippines has a large arable agricultural land area of 9.7 M.
- Rich in human and natural resources
- Major Philippine crops include rice, corn, coconut, sugarcane, banana, pineapple, mango, cassava, rubber, cacao, coffee, and bamboo.
2. Infrastructure Development and Construction
The infrastructure development and construction industry is another sector that’s being promoted by the Philippine government, according to DTI Sec. Lopez. In fact, they expect this industry to be a fast-moving sector in the 6-year Duterte administration.
“Infrastructure is given higher budget, from the usual three percent to now five percent going up to 7% of GDP as a budget for infrastructure development. This is what we call the golden age of infrastructure and golden age of construction.” – DTI Sec. Ramon Lopez
To encourage foreign direct investment, the local government is opening up the industry for foreigners to be granted construction permits and become registered as local contractors. The government is indeed making it easy for foreigners to complete their business registration in the Philippines.
In an interview for the 2nd EU-Philippines Business Dialogue, Public Works Secretary, Rogelio L. Singson, said that [foreigners] “can take advantage of the quadruple vehicle we’re issuing very soon so you can locate your operations here and take advantage of the thousands of Filipino engineers and operators.”
This is great news for foreigners looking to invest in the booming construction and real estate market in the country.
- Increased government budget from 5% to 7% on infrastructure development
- The real estate market is booming respective of the stronger purchasing power of Filipino workers.
Manufacturing has been contributing substantially to the country’s economic growth since 2013. In fact, it has been leading the country’s growth with an average rate of 6.9 percent in 2016, almost one percent higher than the previous year’s growth rate. This shows that the manufacturing industry is certainly in its resurgence stage.
- There’s a big number of qualified Filipino workers who can support the resurgence in manufacturing.
- A large and young population of over 100 million contributes to a growing domestic market for manufactured goods.
- Manufacturing industries include aerospace, automotive, chemicals, furniture, design-oriented products, and more.
4. Renewable Energy and Power Generation
According to Sec. Lopez, foreign direct investment on energy and power generation is also being highly promoted by the DTI. In fact, renewable energy is listed as a priority investment sector for DTI’s Board of Investment.
There’s a high demand for renewable energy to support the country’s new industrial policy that is geared towards the “greening” of industry roadmaps and maximize the use of natural resources.
Due to the resurgence of manufacturing, energy is becoming an increasing concern.
- Renewable energy sources include biomass, solar, wind, hydro, geothermal, and ocean energy.
- According to the Department of Energy’s 2014 to 2019 projections, an additional 5,100 megawatts is needed in all major grids of the Philippines.
- At least P3 trillion in new investments is needed to achieve energy security across all industries.
5. Business Process Outsourcing
In 2010, the Philippines has already outperformed India in the IT Business Process Management industry. To date, the country ranks as the leading provider of BPO service in the world.
“We are the favored country when it comes to IT-BPOs because as cited, we have the tech quality workforce. So, both on skills and cost, we have the advantage.” – Sec. Lopez.
According to Sec. Lopez, the IT business process management sector has grown so fast in the past 10 years. In fact, just in recent years, that sector has contributed more than the OFWs in terms of revenue.
“The IT-BPM has boasted about 25 [to] 26 billion dollars already in about a year, with about 1.2 million workforce behind the industry, as compared to about 22 to 23 billion dollars for the OFWs,” added Sec. Lopez.
“It’s not limited to Metro Manila as we interconnect the other key cities in the country, so you’ll see a fast growth of IT sector in the cities. – Sec. Ramon Lopez
- Competitive labor force
- Computer skilled workers with high English proficiency
- The Philippine government provides more incentives for foreigners to invest in BPO businesses and companies in the country such as income tax holidays, tariff reductions in capital equipment, and streamlined business registration and coordination procedures.
- Stable telecommunications infrastructure
The Philippines boasts of 7,641 islands, and we are home to some of the world’s most beautiful and pristine beaches. The growth in the amount of both international and domestic tourists throughout the country presents the need to increase products, facilities, and services related to travel and tours. Indeed, the local tourism industry is booming and is expected to continue to exceed expectations.
Early this year, inbound visitors to the Philippines reached a total of 631,639. This is the highest-ever recorded volume of tourists received by the country for a single month.
- There’s a growing demand for more facilities and services related to accommodations and accessible transportation.
- The Philippines surpassed the 600,000 goal for the total number of tourists arriving in the country.
- All allied industries to tourism include resort developments, souvenirs, car rentals, restaurants, transportation, and other related businesses.
Bottom Line: Invest in Top Philippine Industries Now!
DTI Secretary Lopez further stressed that there are so many things happening in the Philippine regions right now. Just look at the 7.1 growth of the country. It’s not just Metro Manila that’s greatly contributing to the steady rise of the GDP, but it also includes the provinces that are growing fast.
“Many of these things will go into a virtuous cycle. More infrastructure, better facilities attracting more investments creating more jobs, creating again a bigger consumer base, and of course, attracting more investment[s].” – Sec. Ramon Lopez
This only shows that the Philippine economy in general is booming, and the investment market remains robust with opportunities. The time to invest is now.