The Philippines: Economic Update 2011

Philippines posts record GDP growth

The Philippine economy grew at its fastest pace in 2010  expanding 7.3% — this well surpassed the government’s target of 5.0% to 6.0% and jumped up from growth of just 0.9% in 2009, reported newspapers in the Philippines. The Philippines seeks to attract more foreign investment and enable the long underperforming economy to catch up with its fast-developing Asian neighbors, said analysts.

The Philippine Star on January 10, 2011, reported that investment is expected to hit P610.4 billion by 2014 (2010 posted a P505 billion investment) according to the Board of Investments (BOI)'s managing head Cristino L. Panlilio and the Philippine Economic Zone Authority (PEZA).  The BOI said that they were hoping that investments from the public private partnership (PPP) will boost the figure.

Philippines overtakes India as top call center capital of the World

A report from IBM released in October 2010 said the Philippines had this year passed India as the global leader in business process outsourcing in terms of the number of people each country employed in the sector.   "For business support functions ... the Philippines has taken over the lead in the global ranking from India, after having challenged the top position for several years," the report said. The IBM report did not present exact figures on how many people each country employed in the outsourcing industry but the head of the government’s information technology commission, Ivan Uy, said the Philippines had definitely bypassed India in call centre revenues with $5.5 billion last year compared with India’s $5.3 billion.

The president of the Contact Centre Association of the Philippines, Benedict Hernandez, also said the Philippines had more than half a million people working in call centers and related services compared with 330,000 in India.  Hernandez said the Philippines, a former US colony, had an advantage due to its workforce being made up of English speakers who had accents and a culture that is closer to those of many Western callers. Large centers can be seen in Metro Manila, Cebu City, Davao and Angeles.  According to The Economic Times, EXL has a centre in Pasay with more than 800 employees. IBM and Accenture are estimated to have more than 20,000. Convergys this year announced plans to hire about 3,000 people around Manila, while Sitel plans to hire 4,000. Aegis also acquired Philippine outsourcing company PeopleSupport for US$250 million in 2008. Uy said even Indian companies were setting up call centers in the Philippines to take advantage of the Filipinos’ cultural links to the West.  For example, Tata Consultancy Services, one of the largest Indian companies in the industry, announced in early 2011 that it had launched a business process outsourcing operation in Manila, its first in Southeast Asia. 

Business process outsourcing call centers  handle phone calls from customers abroad, including in the fields of logistics, finance, accounting and software research and programming, computer-aided design, animation and graphic design, human resource management, marketing analysis, legal processes and research, medical and legal transcription, case writing and preparation of legal briefs. The country’s surplus of nurses and other medical professionals can also be harnessed for the outsourcing of health care services such as hospital billing, management of medical health records and ‘aftercare’ of patients, said the paper.

Some Challenges to face in 2011

Global Competitiveness Report 2010-2011 by the World Economic Forum (WEF) showed that the Philippines placed 85th out of 139 economies for its global Competitiveness, slightly better than 87th place out of 133 in the year before report. Even though the country competitiveness slightly improved from last year, the country continues to lag behind most Southeast Asian neighbors.

(for more information, please see our article on Philippines' ranking globally)

Apart from the rankings, respondents to the WEF survey were also asked to select the five most problematic factors for doing business in their country, on a list of 15 factors. The top most problematic factors for doing business in the Philippines according to the report are: corruption, inefficient government bureaucracy, inadequate supply of infrastructure, policy instability and tax regulations.

The Aquino administration plans to double the Philippines’ infrastructure investments in the next six years by tapping the private sector, as well, according to the National Economic and Development Authority (NEDA). Based on the agency’s input to the State of the Nation Address of President Benigno Aquino 3rd, the new government will raise investments to a range of 25 percent to 28 percent of gross domestic product for the period 2011 to 2016, from the current 14 percent. To achieve this, NEDA said the government will increase spending on public infrastructure through greater private sector participation.

NEDA said the government aims to modernize the transportation sector and the logistics system for efficient movement of goods and people. The government plans to develop tourism infrastructure to provide access to major tourism destinations and spread economic development to other regions aside from Metro Manila.

To improve the Philippines’ competitiveness, the Aquino administration also aims to reduce the cost of electricity, thereby reducing manufacturing costs in the country.

NEDA said the government will enact a competition law and create a competition body to foster a culture of competition and enhance economic efficiency for job creation.

Other priorities for the next six years are promoting anti-corruption through legislative action, administrative measures and wider collaboration with the public; improving health services and social protection services and increasing exports through diversification and trade agreements.


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