by: Sarah Joson
Regulatory reforms and infrastructure development are expected to fuel the strong position of the Philippine economy, as well as its investment climate. Moreover, government economic planners are confident that the trade and industry of the Philippines will continue to grow in the next two years.
During the speech of National Economic and Development Authority’s (NEDA) Director General and Socioeconomic Planning Secretary Arsenio Balisacan at the recent economic briefing and general membership meeting of the Managers Association of the Philippines in Manila, he projected a 6-7 percent growth rate for the local economy for this year, and anticipates that 2014 will grow by 6.5 to 7.5 percent.
He added that the government remains cautious, as there are several risks overseas such as the economic crisis in the US and uncertainty in the Eurozone. Another factor that they are keeping an eye on is the rising price of oil caused by higher global demand.
He reiterated that a successful growth plan should involve the entire nation, and that social status and location should not matter.
Meanwhile, the Philippines posted a GDP (gross domestic product) growth of 6.6 percent, which is higher than Thailand’s 6.4 percent, Indonesia’s 6.2 percent, 5.0 percent of Vietnam, and Singapore’s 1.2 percent. Furthermore, the country’s key economic contributors for this year are agriculture, industrial, and services sectors.
According to Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo, higher volumes of remittances, BPO revenues, and tourist receipts were seen last January. These helped both the corporate and government sectors to not only settle foreign loans during the first quarter, but also pay existing expenditures.
Furthermore, BSP’s foreign investments increased 8.8 percent year-on-year, posting a firm $72.13 billion at the end of January. These investments are the country’s assets overseas, which are placed in foreign banks and foreign securities - nearly $68 billion are invested in foreign securities.
JPMorgan Chase and The Northern Trust Co. (TNTC) are assigned by BSP to act as custodian banks for its $10 billion worth of foreign investments or externally managed portfolio (EMP), which was upturned from $4 billion in 2010.
It is JPMorgan and TNTC’s duty as custodians to protect and update BSP's foreign currency-denominated securities. Both also act as security lending agents.
Revenues from the country’s securities lending have reached $85.27 billion last January and are added to the local Forex reserves. The balance of payments, amounting to $2 billion, likewise contributes to these reserves. However, it is projected that gross international reserves (GIR) will reach $86 billion and balance of payments (BOP) will amount to $3 billion surplus.
by: Sarah Joson
The February issue of The Market Call, a renowned publication, predicted that the Philippine economy will post robust growth this year, based on recent gross domestic product (GDP) results.
Some of the factors identified as key contributors for economic growth are the government outlays for infrastructure, disbursements on the upcoming election, and marginal increase in electricity sales last December.
Meanwhile, the publication stated that during Q4 last year, GDP grew 6.8 percent. Moreover, it noted that better weather and harvests will be able to counter the fluctuating prices of crude oil, making inflation settle at three percent.
Even with the positive forecasts, The Market Call advised that the valuation of the peso still poses a threat to the country’s economic growth, adding that it mainly affects investors involved in the business process outsourcing (BPO) industry and overseas Filipino workers (OFW) for remittances.
It is also projected that the strong performance of the peso could result to an exchange rate below P40:$1. Meanwhile, the recent credit upgrade from Standard and Poor’s (BB+ "stable" to BB+ "positive") puts the Philippine peso at a favourable position.
by: Sarah Joson
Megaworld Corporation recently launched Mactan Newton, a 16-hectare multipurpose development in Mactan Island, Cebu. The site is set to have the company’s second business process outsourcing (BPO) building and is said to be similar to Eastwood City, one of Megaworld’s premier developments in Quezon City, known for a "live-work-play" atmosphere.
According to Jerico Go, Vice-president at Megaworld, the One World Center, Cebu, is expected to accommodate 2,000 employees. The five-storey building is already leased out and some of the tenants include EnfraUSA and Results Manila.
Two World Center was launched the same day, and will be established to supply the growing demand for office spaces in the area. At 7,500 square meters, it will have a larger office space than One World Center which only has 6,000 square meters.
Three more 15-storey residential buildings are expected to be launched in three years. The first few floors of these buildings will be occupied by retail stores and will be used for more BPO operations.
Apparently, firms in Sweden are fascinated with the bullish business process outsourcing (BPO) sector of the Philippines.
During the recent trade briefing for Swedish delegation in Makati, Carl Malmqvist, manager of the Malaysia office at Business Sweden (the Swedish Trade and Invest Council), said more investors from Sweden will flock to the country in the coming years, and majority will be targeting the BPO sector.
Malmqvist added that among the countries in the ASEAN region, the Philippines slightly stands out as it is service-oriented, unlike its counterparts which are industry-oriented.
Manila recently took the 3rd spot and surpassed Delhi, India, as the most preferred BPO destination. Furthermore, the study done by Everest Group and Outsource2Philippines predicts that by 2016, the industry will employ 862,000 Filipinos and revenues from call center operations will reach $14.7 billion.
Meanwhile, Malmqvist recounted that four years ago, only large companies like Ericsson knew about the Philippines. But recently, SMEs are starting to pay more attention, which he predicts is where growth will come from.
by: Sarah Joson
The program called "Smarter Philippines" which was recently launched by the Department of Science and Technology (DOST) is anticipated to boost the growth of the country’s society and economy by maximizing the benefits of science and technology. This is in line with the Aquino government's inclusive growth across various segments.
The "Smarter Philippines" program is set to cover and develop five divisions by applying technology and innovation. These are: Addressing Pressing National Concerns, Countryside Development, Inclusive Growth, Improved Delivery of Government Services, and Applying Merging Technologies to Local Products.
The program is also subdivided into: Smarter Governance, Smarter People, Smarter High-Tech Industry, Smarter Computing, Smarter Small and Medium Enterprises, Smarter Agriculture, Smarter Environmental Healthcare, Energy, and Transport, Smarter Public Safety, and Smarter Cities.
DOST is also improving and developing ICT-dependent programs such as Project NOAH (Nationwide Operational Assessment of Hazards) for nationwide calamities and emergencies, iGovPhils which is a revolutionary integration of the administration’s ICT systems, and Smarter Cities, which is an initiative to create awareness that rural areas are also feasible business process outsourcing (BPO) hubs.
During the recent launch of NASSCOM India Leadership Forum 2013 in Mumbai, India, Union Commerce and Industry Minister Anand Sharma said by 2020, the country's IT industry will create more than 10 million jobs annually. It was found that the key driver is the 25 percent increase of the country’s total IT exports. Moreover, it is projected to be valued at Rs 200 billion and produce 10 million jobs. At present, the industry produces three million jobs directly and nine million indirectly.
However, he noted that the more industries, governments, and businesses become overprotective, the more problems they will come across. Instead of improving and acting as remedy, protectionism will worsen economic challenges.
The Commerce Minister is also hoping that that IT sector will perform better than 2012 as the economy is adversely affected and is put in a lot of pressure.
He is also waiting for the new US Commerce Secretary to assume office so he can proceed with forging new partnerships. He strongly believes that now is the time to be aggressive by engaging, investing, and manufacturing to help boost their respective economies.
Regarding the anti-outsourcing bill in the US, he is hoping that whatever’s being drawn up will not have a negative effect on the IT sector.