Business and Economic Update
Issue 02

Concluding Notes

The Philippines was not attracting enough FDI inflows until 2012 compared to its five other neighbors in the ASEAN. But there was noticeable surge in FDI in the country in 2013 and 2014. The series of credit and investment upgrades it got, declining public debt/GDP ratio, fast GDP growth and huge, young population are among the factors that helped made the Philippines an attractive place for investments especially for the business process outsourcing (BPO) and IT sectors.

More than those recent short-term gains, the Philippines need to address a number of medium- to long-term bottlenecks to more FDIs. Among them are (a) the need to change the Constitution and remove investment protectionism in it, (b) have more stable and cheap electricity and leave the “second most expensive electricity in Asia” image, (c) improvement in other physical infrastructures, and (d) improvement in governance, have rule of law.

The Philippines has two distinct advantages that so many other countries abroad do not have. One, having thousands of islands and islets that allow for huge potentials in tourism and fisheries. And two huge, generally young population with an average age of only 23-24 years old. Many ageing societies in Asia like Japan, Taiwan, Hong Kong and S. Korea have average age that are 15 to 25 years older than that in the Philippines.

Freer movement of capital and labor in the ASEAN and the rest of the world will allow the Philippines to optimize these two advantages, especially in the BPO, tourism and personal remittances sectors. Unlike before, the bulk of young Filipinos working abroad are composed of skilled professionals and managers.

We invite our readers and business partners abroad to put the Philippines in their business radar today, if they have not done so yet.

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