Doing Business In The Philippines - Ptic Brussels

Land Area:

300,000 sq.km.

Population:

96 Million (July 2008)

Government:

Democracy – Presidential

Economic Overview: The Philippine economy grew at its fastest pace in three decades with real GDP growth exceeding 7% in 2007. Higher government spending contributed to the growth, but a resilient service sector and large remittances from the millions of Filipinos who work abroad have played an increasingly important role. Economic growth has averaged 5% since President MACAPAGALARROYO took office in 2001.

THE ECONOMY

 

Economy has remained stable over time, 7.5% GDP for 2nd Quarter (highest in 20 years)

 

Philippine Peso is one of Asia’s best performing currencies

 

Ranked RP 2nd among 32 economies in level of business confidence

Y2008 Forecast 5.5% - 6.4%

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GDP growth remains fundamentally sound   1st semester growth of 4.6% is better than others in Asia-Pacific   Forecast year-end average growth of above 5% is very respectable

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OFW remittances continue to be strong   2008 year-to-date total registered 17.2% higher for the same period Jan-Aug at US$10.9 billion

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Inflation reached 9.4% year to EO October 2008 (NSO Report of 05 Nov 2008)   Peak of 12.2% in August has bottomed out to realistic levels

Source: NSO

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Sub-prime exposure estimated at less than 1% of total assets

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Gross International Reserves (GIR) is solid  

US$36.69 Billion covers 5.8 months of imports or 4 times short-term external debt

 

a small US$50 Million decline from previous month’s level

  Strategically

located in Asia

  Within 4 hours

flying time to any Capital in Asia

  Available quality human resource

  35.2 Million Labor Force

  94.6% Literacy rate

  70% fluency in English

  405,000 University/ College

graduates per year

  English speaking – The Philippines is the world’s third largest english speaking nation.

  Reliable Infrastructure Support

  Excellent Telecommunications Infrastructure

  Airports and Seaports

  Economic Zones & IT Parks

  Hospitable lifestyle

  A survey conducted in March 2005 by ECA

International (Employment Conditions Abroad Ltd.) of 32 countries said:

  “The Philippines has the lowest living costs for

expatriates … The Philippines is the cheapest country to live in followed by Argentina, Thailand and Malaysia”.

Attractive Investment Incentives

  Philippine Economic Zone Authority (PEZA)

  Board of Investments (BOI)

I. Preferred Areas • 

Agriculture/ Agri-business and Fishery

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Infrastructure

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Tourism

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Research and Development

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Engineered Products

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Strategic Activities

II.  Export Activities • 

Manufacture of Export Products/Services

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Activities in Support to Exporters

•  Physical infrastructure – development and/or operation of toll roads, highways, railways, roads and bridges

•  Power generation – activities as specified in the Power Development Plan, e.g., those utilizing indigenous and renewable energy sources, other energy sources adopting environmentally-friendly except oil-fired projects, and those under the NPC privatization plan

•  Mass housing – low-cost and socialized housing projects •  Bulk water supply – any kind of water supply except deep wells and limited to supply to “waterless” areas as listed by NAPC

•  Mass rail transport – for passengers and cargoes including LRT in line with the transport development plans and programs of the DOTC

•  Pipeline projects for oil and gas – transport of petroleum products and natural gas, petrochemicals, and similar products

•  Projects under Build-Operate-Transfer (BOT) Law

•  Logistics –  Passenger and cargo shipping –  Overseas shipping –  Passenger and cargo air transport –  Regional international airports and terminals –  Sea Ports and terminals –  Warehousing –  Post-harvest facilities –  IT-enabled logistics services –  IT services rendered to government agencies and LGUs

Indicative Capacity Additions

Luzon 550 MW Combined Cycle Natural Gas Plant (2011) 300-500 MX Natural Gas Expansion (2011) 600 MW Coal-fired Thermal Power Plant (2010) 200 MW Hydro Expansion Project

Visayas 200 MW Toledo Coal Expansion in Cebu(2010) 100 MW Coal-Fired Plant in Panay (2009)

Mindanao 46 MW SibulanHydropower by Hedcor/AEV (2009) 21.8 MW MinergyDiesel Plant Expansion (2010) 50 MW Mindanao 3 Geothermal (2010) 200 MW by MG Mining & Energy Corp. (2012)

Geothermal Energy - The Philippines is 2nd only to the US in terms of Geothermal Energy potential reserves. With only 1,931 MW installed out of 2,047 MW proven geothermal reserves and 4,790 MW potential reserves, there are obviously plenty of opportunities for expansion and private sector involvement. Wind Energy - Comprised of 7,107 Islands, the Philippines has maximum potential for wind energy generation. 16 wind power sites were offered to private investors during the 1st wind contracting round with a potential capacity of 345 MW. Hydropower - Indicative Hydropower potentials are currently at 2,400 MW. Compressed Natural Gas - Minimum investment of about $4.0B between 2006 –2014 Biodiesel and Bio-Ethanol - The government targets to implement a 1% CME blend with diesel fuel for vehicles in 2007, to reach 2% in 2009; and 5% ethanol blend with gasoline fuel for vehicles within 2007-2009, to reach 10% in 2011.

•  Tourist accommodation failities – hotels, apartels/serviced residences, condotels, tourist inns, and pension houses as classified and endorsed by DOT

•  Resorts –special interest activities such as but not limited to eco-tourism, agritourism, theme parks, conventions and exhibition/trade

•  Retirement villages •  Medical tourism – 

Hospital/medical services

–  – 

Ambulatory surgical services Dental services

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Other human health and wellness services including rehabilitation and recuperation services, e.g., health spa and rehabilitation and recuperation services

– 

Healthcare and wellness products

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Commercial and In-house R&D activities

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Establishment of Centers of Excellence, innovation and skills development training institutions

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Knowledge and skills development through the provision of training facilities and programs

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Research and development and other productivity enhancement activities

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Technology scanning, selection and adoption

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Incubation program

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Common service facilities

Training and learning institutions

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Basic iron and steel products -  Long steel products -  Flat hot-/cold-rolled products integrated with basic iron and and steel production

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Manufacture/assembly of motor vehicles -  Assembly of motor vehicles -  Manufacture of parts and components

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Manufacture of machinery and equipment

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Shipbuilding

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Basic Iron and steel products, refined iron ore and primary steel products in the form of slabs

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Long steel products (billets, and reinforcing steel bars)

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Production of flat hot/cold-rolled products integrated with basic iron & steel production

•  Manufacture/ Assembly -  -  - 

Passenger Cars Commercial Vehicles Motorcycles

•  Manufacture of parts & components

 

Manufacture of machinery and equipment including their parts and components

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Shipbuilding -  Shipbuilding (design, construction, outfitting & launching any type of ship) -  Ship repair – conversion, overhaul, alteration, modification or repair of hull, machinery, equipment, outfits and components of any type of ship -  Shipyard operations (excluding shipbreaking)

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Shipping -  Domestic shipping -  Overseas shipping

IT and IT-Enabled Services •  IT and IT-enabled Services -  Contact Centers -  Business / Knowledge Processing (BPO / KPO) -  Software Development -  Data Transcription (Medical / Legal Corporate) -  Animation -  Engineering Design

•  IT Support Activities (except internet & cyber cafes)

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Manufacture and test of electronic products

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Manufacture of parts and components of electronic products

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Manufacture of production supplies for the exclusive use of the electronics industry

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Research and development

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IC design/ other design engineering services

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Establishment and operation of Centers of Excellence

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Original Design Manufacturing (ODM)

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Sub-assembly / fabrication of parts / components of the final export products located in EPZ or to exporters operating in BMW

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Manufacture of supplies directly / reasonably needed in the production of non-traditional export products to exporters located in EPZ or to exporters operating in BMW

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Services comprising a portion of the manufacturing process

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Product testing and inspection

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Repair and maintenance

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Logistic services rendered to exporters

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Located in the “Ring of Fire” 5th most mineralized country in the world -  2nd in Gold -  4th in Copper -  5th in Nickel -  6th in Chromite

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Established reserves of 13 known metallic and 29 nonmetallic minerals (Mines & Geosciences Bureau)

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RP has 9 million hectares of mineralized land -  Only 420,000 hectares – with mining permits -  8.6 million hectares – still awaiting investors! Activities under RA 7942 -  Exploration and development of mineral resources -  Quarrying, and -  Processing of metallic and non-metallic minerals

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Contact Center

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Business Processing

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Software Development

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Engineering Design Services

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Medical/Legal Transcription

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Computer Graphics/Animation

Philippine O&O industry earned USD 4.9 billion in revenues (as of end 2007)

Sector Contact Centre

Source: BPAP

2007 Revenues ($000,000) 3,600

% change vs. 2006 53

Back Office (nonvoice bpo) Transcription (non-voice bpo) Animation

398

32

197

24

105

8

Software

423

56

Engineering Svcs

152

124

4,875

50

TOTAL Philippine O&O (export)

Source: Joint BPAP/BOI/PEZA/CICT Task Force; 2008 – BPAP analysis

Export Revenues ($000,000) Year

Growth Rate (%)

2005

2,420

64

2006

3,257

35

2007

4,875

50

2008 (forecast)

6,760

39

12,999

39 p.a.

2010 (target)

Source: Joint BPAP/BOI/PEZA/CICT Task Force; 2008 – BPAP analysis