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ADB Says PH Shouldn’t Depend on BPOs

by: Sarah Joson

Friday, November 25, 2011 | Outsourcing News |

Philippines Should Expand Beyond BPO

The Asian Development Bank (ADB) said depending too much on the services sector, specifically business process outsourcing (BPO), in the Philippines will not drive growth, contrary to what the government was saying in its inclusive growth plan.

It is apparent that the country is still troubled with the high unemployment rates, even if the BPO sector began to grow incessantly from 2001, said ADB senior country economist Norio Usui. He added that there are two important prerequisites to simplify the country’s growth. These are services and manufacturing.

In Usui’s recent presentation at the Federation of Philippine Industries (FPI)-organized First Philippine Manufacturers and Producers Summit, he said that the Philippine economy will not grow without manufacturing. This, together with modern services, will drive economic growth.

He later on added that even if the BPO sector has grown into a $10-billion industry, contributed 4.8 percent average economic growth, and employed half a million people from 2000 to 2009, there is low activity in the manufacturing sector. Also, investments are believed to have weakened because the country focused too much on services. Moreover, Usui said that while the BPO industry greatly helps the economy, it only provides job opportunities to those who have proper education.

According to Josef T. Yap, President of the Philippine Institute for Development Studies (PIDS), the contribution of the country’s manufacturing sector to the GDP dwindled to 21.4 percent in 2009 from 22.2 percent in 2000 and 25.7 percent in 1980.

Manufacturing sectors in other countries in Southeast Asia reinforced economic growth. In fact, Indonesia’s manufacturing GDP increased 26.4 percent in 2009 from 13.5 percent in 1980. Thailand’s sector grew from 21.5 percent to 34.1 percent. Malaysia also posted an increase - from 21.6 percent to 25.1 percent.  


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