This archipelago of more than 7000 islands has developed into one of Asia's most successful providers of business process outsourcing (BPO) and electronics exports.
Henry Schumacher, president of the European Chamber of Commerce of the Philippines, told OBG that the sectors bringing in the most overseas investment are mining, power, transportation, and BPO operations like call centres and other IT-related ventures.
Around the world, BPO activities are one of the fastest growing sectors. In 2006, the Philippines registered $2.1bn in BPO revenues, just behind world leaders India and China. A recent Ernst and Young report stated that demand for these services in the Philippines is focused on high-end services such as medical transcription, legal services, web design and other computer services. According to the Contact Center Association of the Philippines, call centre employment is expected to rise from 179,000 people in 2006 to 506,500 by 2010 with revenues expected to rise to $7.3bn.
Yet BPO is not the only area forecast to enjoy remarkable growth. The industry group, Semiconductor and Electronics Industries, reports that electronics account for 70% of the country's total exports. The Philippines supplies about 10% of the world's semiconductor manufacturing services, including mobile phone chips and micro- processors.
Minerals too offer the prospect of soaring income. The country's copper, gold and chromite deposits are among the largest in the world. Other minerals include nickel, silver, coal, gypsum and sulfur. The government estimates the value of its untapped mineral deposits is $1trn.
The public sector is another growth area "The country hasn't invested [sufficiently] in infrastructure for a number of years and needs to catch up," said Schumacher. "This is a good situation for companies active in energy, transport, and other areas of government involvement."
The government is fast-tracking 21 road and bridge projects by 2010, including renovation, expansion and new construction. The government's goal is to improve infrastructure to promote tourism, logistics, and faster and cheaper transport of agricultural products. Also part of the agenda are plans to reduce congestion in the capital city of Manila, develop economic zones, provide clean water to all communities and build new schools.
As well as increasing potential income, the country is taking steps to reduce costs. The government has focused on reducing its reliance on foreign fuel products. As part of this effort, it is encouraging the use of alternative fuels, particularly compressed natural gas (CNG). The department of energy is also looking to increase energy exploration and development by opening areas to prospective investors. This includes nine oil and gas areas with a total area of 71,357.30 sq km, 14 coal areas with combined estimated reserves of 421m tonnes and three areas for geothermal energy exploration and development with estimated power generation of about 100MW.
The population is approaching 90m people who provide a strong market for Western-style consumer goods. As Schumacher notes, "Eight million Filipinos live outside and send $15bn home every month, fuelling the consumer market."
In its latest East Asia and Pacific Update report, issued earlier this month, the World Bank said the Philippines had achieved "unprecedented success in fiscal policy in a difficult political environment," posting growth of more than 5% annually in the past three years.
This is the first time the country has enjoyed such growth rates since the 1970s, the bank added, also citing its success in controlling inflation. The Philippine government has projected the economy to grow between 6.1% and 6.7% this year.
Schumacher suggested investors would do well to operate under the terms of the bilateral investment protection agreements the Philippines has with several countries, and/or enlisting the participation of international financial institutions. "Getting the World Bank, the International Finance Corporation [the World Bank's private-sector arm], the Asian Development Bank, for example, as co-partners provides security," he said, "as does working closely with foreign chambers of commerce."
"Individuals or companies should seek contracts that stipulate arbitration in disputes," Schumacher added.