- Highly Qualified and English-Speaking Workforce - The Philippines is the third largest English-speaking country in the world. It has a large affordable, skilled and English-speaking labour force and a literacy rate of around 95%. Filipino workers are often qualified professionals who have a strong customer service orientation.
- Price Level – The cost of wages, housing and foodstuffs are quite low. Foreign companies that outsource programming and business processes to the Philippines estimate substantial business cost savings.
- Business-Friendly Policy Environment – Many sectors allow 100% foreign ownership. The Philippine government also supports Public-Private-Partnerships (PPP), which allow private investors to build and operate infrastructure. Government corporations are being privatised and the banking, insurance, shipping, telecommunications and power industries have been deregulated. Incentive packages include competitive corporate income tax, and substantially reduced tax rates within Special Economic Zones. Multinational corporations looking for regional headquarters are entitled to incentives such as tax exemptions and duty-free importation of specific equipment and materials.
- Liberalised Policies Towards Globalisation – The Philippines participates in the General Agreement on Tariffs and Trade (GATT) of the World Trade Organisation (WTO) and the ASEAN Free Trade Agreement (AFTA). The Philippines has pursued several structural reforms and liberalised policies, which are aimed at opening up for investments in various key sectors.
- Strategic Location – The Philippine government highlights, in its investment promotions, the country’s strategic location as a natural gateway to the East Asian economies. The country’s numerous international and domestic airports and seaports, with its two great trade routes via the Pacific Ocean and the South China Sea are also emphasised when the country is promoted as a foreign direct investment location. The Asian Development Bank (ADB) headquarters is located in Manila.
SPECIAL ECONOMIC ZONES
Special economic zones, also known as Ecozones, are areas set aside by the government for development into balanced agricultural, industrial, commercial, and tourist/recreational regions. They are regulated by the Philippine Economic Zone Authority (PEZA), which also grants incentives to qualified enterprises that chose to locate to these zones.
Each Ecozone is developed as an independent community with minimum government interference. It administers its own economic, financial, industrial and tourism development without help from the national government. It also provides adequate facilities to establish linkages with surrounding communities and pertinent sectors of the economy.
- Industrial Estates (lEs) are areas designated and developed for industries, with basic infrastructure such as roads, water and sewage systems, pre-built factory buildings, and residential housing.
- Export Processing Zones (EPZs) are special IEs that cater to export-oriented companies. EPZ incentives include tax and duty-free importation of capital equipment, raw materials, and spare parts.
- Free Trade Zones are areas in nearby ports of entry, such as seaports and airports. Imported goods may be unloaded, repacked, sorted, and altered without being subjected to import duties. However, if these goods are moved into a non-free trade zone, they will be subjected to customs duties.
- Tourism Ecozone refers to a tourism development zone/tourism estate that is suitable for development into an integrated resort complex. It has facilities that cater to the needs of tourists such as accommodation, entertainment, convention centres and other related commercial establishments.
- IT Parks/IT Buildings are special economic zones for IT projects and services. IT parks or IT buildings are areas that have been developed to meet the infrastructure and facility requirements of IT enterprises.
- Energy - The Philippine government is currently pursuing intensive efforts on investment promotion in the energy sector in order to secure long-term investments that can drive economic stability, growth and sustainability in the country. Deregulation, contract rounds for the petroleum, geothermal and coal sub-sectors, and Philippine policy for energy independence, among others, lead to a number of prospects for private sector participation in the energy sector.
Photo: SN PowerRenewable Energy - The country is one of the world’s largest producers of geothermal energy, and still holds large amounts of untapped resource potential. The hydropower industry also contributes a significant amount to the country’s energy mix, especially in Mindanao where it accounts for about 58% of the region’s total power. SN Power, a Norwegian company owned by the Norwegian government agency Norfund and the company Statskraft, is heavily involved in the Philippine hydropower industry. Notable projects include Magat dam and Binga hydropower plant, both located in Luzon. Other potential growth areas in the energy sector include wind, solar, biomass and bio-fuels.
- Maritime Industry - For an archipelago like the Philippines, water transport serves a vital role in the movement of people and goods. The Philippine government is focused on the development of the inter-island shipping and roll-on-roll-off (RO-RO) networks in order to improve the mobility of people and products. The Philippines supplies roughly 25% of the total crew requirements of the world’s maritime fleet with around 350 000 Filipino seafarers in all. More than 25 000 Filipino seafarers are employed aboard Norwegian merchant ships, reflecting the longstanding maritime ties between the Philippines and Norway. Aside from employment, there is also a significant Norwegian involvement in ensuring the quality of maritime education and training of seafarers. During the past decade, several maritime schools and training centres with Philippine and Norwegian principals have been established.
- Shipbuilding Industry - With the liberalisation of the shipbuilding industry there has been an influx of foreign shipbuilders in the Philippines. Shipyards are now building more ships of larger tonnage capacities, such as bulk carriers, container ships and big passenger ferries that now compete with Europe in terms of annual production. In 2010, the industry grew to become the fourth largest ship building nation in the world. The major shipyards are located in Cebu and Subic, both with construction and repair capabilities.
- Fisheries and Aquaculture - The Philippines is an important fish producer and is one of the largest producers of seaweed and other aquatic plants. Other important exports include tuna, shrimps, and prawns. Chilled and frozen fish and fishmeal are major imports. Aquaculture is considered a potential growth area.
- Business Process Outsourcing (BPO) - The Philippine BPO industry has been the fastest-growing segment of the Philippine economy. The fast paced growth is in part due to low business costs and a large pool of university educated, English-speaking, highly adaptable workers. In the past outsourcing was seen as a way of cutting down cost. The BPO industry’s main strategic advantage now lies in its ability to deliver higher value services to companies by providing both business and process expertise, which demand advanced analytical and specialised knowledge from its workers.
- Tourism - The tourism sector has experience rapid growth in recent years. Cebu, Boracay and Palawan are among the country’s top tourist destinations. The archipelago offers pristine beaches, diving, recreational activities and natural wonders. Local airlines offer competitive fares and have increased the frequency of flights to key tourist destinations.
- Electronics Industry – Accounting for a large portion of Philippine exports the electronic export industry includes many well known semiconductor, computer and computer component manufacturers. The industry started in the mid-seventies as industrialised nations relocated their production facilities in order to control the cost of production. Diversified component suppliers make the industry highly competitive due to a wide range of available component and assembly services.
- Mining – The Philippines has a well established mining industry with involvement from both local and international mining companies. The country has substantial mineral wealth, with large deposits of copper, gold, and chromate. Other important minerals include nickel, silver, coal, gypsum, and sulphur. The Philippines also has significant deposits of limestone, marble, silica, and phosphate.