Friday, October 20, 2017

Investment Opportunities


Philippines as a Business Destination

One of the fastest growing economies in the region, the Philippines continues to be an attractive destination for businesses in Southeast Asia. In the past years, the country has achieved stellar economic gains. Its economy advanced 5.8 percent on the strength of substantial domestic demand in 2015 and is projected to grow 6 percent with increased investments and consumption in 2016.

The Philippines’ economic success is attributed to its substantial domestic consumer base of 100 million and remittances from eight million Filipinos working abroad. Powered by a young, skilled, and English-speaking workforce, the country has become the world’s largest center for business process outsourcing and boasts of a strong industrial sector based on the manufacturing of electronics and other technology components for overseas corporations. It is also rich in natural resources with significant reserves of chromite, nickel, copper, coal, and oil.  Furthermore, the country offers a competitive cost of doing business and, according to the World Bank Ease of Doing Business, has been the best performing economy, rising more than 30 ranks in the last five years since 2010.

With strong growth momentum, improved government finance and governance, it has also gained investment-grade ratings from Fitch, Moody’s and S&P and made the country an increasingly attractive investment destination in Asia.  The Philippine government continues to improve the business climate by simplifying procedures in registering a business and following through on other measures to encourage more foreign investments.

Rising Global Competitiveness Ranking

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Priority Exports for Promotion in Singapore

Singapore as a major trading hub in ASEAN is a vital market for Philippine exports of goods and services.

Fresh and Processed Food

The Philippines is a major exporter of raw ingredients, fresh and processed seafood and fresh produce to the US, Japan, China, Korea, UAE and Singapore.  In 2016, Singapore ranks ninth in Asia as a food export market for the Philippines, with fresh crab, lobster and prawn as major export items.  Other Philippine food products are also available in FairPrice, Giant and Chinatown.

Halal

A number of Philippine companies are halal-certified.  Philippine halal suppliers offer products under these food segments:  Cereal, Carrageenan and other food additives, Beverage, Bakery, Grain, Chemical, Confectionary, Beauty and Cosmetic, Egg, edible fungus, Flour and Starch, Food Supplement, Gelatin, Ice Cream and Dairy, Ink and Packaging Material, Noodle and Pasta, Nut, Oil and Coconut By-Product, Poultry, Meat and Meat Shop, Processed Fruit, Meat, Vegetable and Seafood, Fresh and Frozen food, Sauce and Condiment, Candy, Sugar Product and Sweetener, Soya, Syrup, Toll Packer and Toll Manufacturer, Snack, Processing Aid, Biscuit, Pickled Seaweed and Drinking Water Treatment.

For non-food, the country produces pharmaceutical and healthcare and personal care products.   It is also slowly beefing up facilities as well needed by Muslim travelers such as hotels, mosques, prayer and foot washing spaces.

Engineering and Architecture Services

The Philippine engineering design sector offers a large number of services for foreign companies outsourcing to the Philippines, including civil engineering, architecture, and structural-design assistance.   Its growth can be attributed to a similar trend of development in closely related industries such as the construction and real estate industries.  Several foreign companies are utilizing Philippine talent and resources for core research and product development purposes, planning, and procurement procedures, even for critical construction projects.  Every year, over 62,000 IT-enabled and English-proficient Engineering graduates integrate into the Philippine workforce.  Known for their creativity, they are also well-versed in a number of advanced engineering programs, including CAD, CAM and AutoCAD.

Maintenance, Repair and Overhaul (MRO) Service

The Philippines can support Singapore as it strengthens its aerospace industry.  Key Philippine aerospace and aviation players in the fields of parts manufacturing, MRO and aviation training have chartered significant growth, with projected export revenues of up to USD 1.5 billion in the next 10 years.  The country now has 75 MRO companies specializing in airframe heavy maintenance, engine and APU maintenance, component/systems maintenance, repair services, and aircraft interiors MRO. Major MRO firms that have operations in the Philippines include Lufthansa Technik, SIA Engineering (Philippines), Airbus Helicopters, Honeywell CEASA (Subic Bay) Company, Asian Aerospace Corporation, and Aerotechnok Services. The MRO sector provides services to the domestic and international commercial aviation industries, and general aviation industry.

Apart from the competitive cost and abundance of human resources, the country’s advantage is its speed of service delivery and turnaround.

Franchising

Several Philippine companies with unique and world-class products and services have found success overseas such as San Miguel Corporation, Jollibee, Universal Robina Corporation, Liwayway Marketing Corporation, United Laboratories, Manila Water, Metro Pacific Group and International Container Terminal Services.

Children clothing label Periwinkle recently expanded to Indonesia and Max’s Group will be bringing its Yellow Cab Pizza in Singapore.

According to Samie Lim, chair emeritus of the Philippine Franchising Association, the Philippines has a wealth of knowledge and expertise to lean back on.  He shares that the Philippines has the second-largest pool of professionally-certified franchising executives in the world, next to the US and this, combined with the Filipino entrepreneurs’ search for growth, can be relied on to fulfill that desire to test its mettle against foreign counterparts.

Priority Sectors for Singapore investments in the Philippines

As the Philippines pursues sustainable economic growth, it is reaching out to Singapore for stronger partnerships on these key Philippine industry sectors.

Halal

To meet the rising demand as the Filipino Muslim population increases, the Philippines is open to collaborate with Singapore in bringing in more halal-certified food and non-food products and services to the country.

Investors are invited to participate in the Zamboanga City Special Ecozone 100-hectare property project to be designed exclusively for halal processing and manufacturing.

Information Technology and Business Process Management Services

With its highly-skilled, culturally adaptable and language-proficient professionals, the Philippines is positioned to be an important offshore IT service provider for regional and global operations of Singapore and Singapore-based companies.

The Philippine IT-BPM sector has grown at an annual rate of 30 percent over a decade, faster than the growth of the global offshore services market.  As it has grown, the industry has diversified significantly in breadth, scale, and maturity of services from contact center to back office, IT, healthcare, engineering, finance and accounting, business analytics, big data, animation and game development.  Over 40 of the 2014 Fortune 1000 and other large global organizations, including those from India have a Global In-House Center in the country.  These have built sizeable scale in the Philippines and have been driving the growth of non-voice and complex services.

Infrastructure, Construction and Public-Private Partnership (PPP) Projects

As Singapore continues to strengthen its capabilities and expertise in various industries such as world class transport and logistics services, energy, urban planning and environmental services, it also constantly seeks more opportunities in the regional market particularly in the growing Philippine economy.  Some Singaporean companies have been participating in bidding for several Philippine PPP projects, such as GMR Megawide Cebu Airport Corporation for the Mactan Cebu International Airport Project.

The Philippine construction industry is expected to continue to grow over the forecast period (2016-2020). Industry growth will be supported by the country’s development plan, Vision 2021, as well as population growth, urbanization, and favorable government PPP policies.

Clark Green City

For Singaporean investors looking for expansion opportunities outside the already congested Metro Manila, Clark Green City (CGC) in Central Luzon is a new investment destination, located at 80 km north of Manila.  Clark is adjacent to an international airport (Clark International Airport) and seaport (Subic Bay Seaport), which are linked by Subic-Clark-Tarlac Expressway. These make for convenient import and export transactions.

The CGC is being developed by the Bases Conversion and Development Authority (BCDA) as the country’s first green and intelligent global metropolis.  It enjoys natural protection from typhoons, with the Sierra Madre to the West and the Zambales mountain range to the east.

Being in a special economic zone, CGC has tax benefits which will be favorable to 100 percent foreign-owned companies. To attract more investors, BCDA will grant fiscal and non-fiscal incentives for locators.

Regional Headquarters and Regional Operating Headquarters (RHQs and ROHQs)

As a regional business hub, Singapore has attracted over 5,000 multinational companies. However, operations in Singapore are constrained by rising rental and labor costs and in recent years, tightening of flow of foreign workers.

The Philippines is poised to be a viable option for setting up RQHs and ROHQs, with its excellent track record as a back-office location for multinationals and abundance of skilled and English-speaking workers.

Shipbuilding

The arrival of foreign shipbuilders in the Philippines propelled the export growth of the Philippine-made ships and vessels. With available skilled labor and areas for shipyards, the Philippines is able to support the Singaporean shipbuilding and marine and offshore industry. An example is Keppel which has shipyards in the country.

Tourism Facilities: It’s More Fun in the Philippines

The increasing tourist arrivals in the Philippines and the corresponding requirements for tourism facilities and services offer an opportunity for Singaporean companies seeking growth prospects in ASEAN and particularly in the country.

CapitaLand operating the Ascot, Somerset and Citadine brands, has several projects in the country.  Other investors include Banyan Tree, Hong Leong Investment Holdings and Fairmont Raffles Hotel Group.

Visitor arrivals for the month of March 2016 reached 510,270, posting an 11.86 percent increase versus the 456,163 arrivals in March 2015.  For the first quarter of 2016, the Philippines has already recorded 1,602,253 arrivals which reflects the strong performance of the tourism industry. For three consecutive months, the country’s tourism grew by double digit at 13.17% in January, 20.42% in February, and 11.86% in March.

Startup

Since 2014, the DTI has been working closely with the Department of Science and Technology-Information and Communications Technology Office (DOST-ICTO) for the development of the startups and innovation ecosystem in the Philippines.  During the APEC 2015 hosting, DTI launched SlingshotMNL which paved the way in gathering and development of startup community among APEC economies.  It was then followed by series of dialogues and mentoring dubbed as Slingshot Philippines in April 2016.

DTI continues to support the establishment of startup and innovation ecosystem in the country as directed and supported by the 2015-2017 Philippine Export Development Plan.   In June 2016, it launched an Innovation Hub, co-working space situated at the DTI International Building in Makati City.  The hub under the Negosyo Center Plus operating model offers the budding startups and innovators opportunities for market access and capital, and mentorship.

While the Philippines can certainly learn from Singapore’s expertise and experience in this space, Singapore is also seen as a potential source of venture capital and partners. The availability of a thoroughly capable workforce in the Philippines will help Singapore companies achieve scale and speed.  Philippine universities produce thousands of graduates specializing in engineering and technology annually, with majority of them skilled in app design and programming languages.

Board of Investments 2014-2016 Investment Priorities Plan (IPP)

In line with the thrust of the current administration, the latest Investment Priority Plan (IPP) aims to achieve the goal of inclusive growth while keeping in mind the opportunities and challenges of an integrated regional community. The IPP, together with the country’s new industrial policy and development plan, takes on a more focused investment strategy that encourages the use of fiscal incentives and undergoing reforms to improve the business environment, increase productivity and efficiency, and enhance consumer welfare.  To learn more: http://www.boi.gov.ph/index.php/boi-investment-priorities-plan

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