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Business Environment in Philippines
 
 
 

The Philippines is a Southeast Asian country with a developing economy so the business environment and the way of thinking is completely different than in a first world Western country.

The most important asset that the Philippines has to showcase to the rest of the world is its people and is the third largest English speaking country in the world. For the US market, the Filipino entrepreneur and knowledge worker speaks the same language, "American English", allowing efficient work communication. The educational system of the country was set up by the Americans when the Philippines was still a colony from 1898 up to 1945. From entering kindergarten to college, the medium of educational instruction is American English. This resulted to the Filipinos excellent grasp of the English language that has remained the medium of instruction from pre-school up to post-graduate university.

The country produces 380,000 college graduates a year where close to 100,000 are in the information and communications technology field. The educational institutions in the country as well strives to remain updated with the latest technologies in order to produce competent work force.

Within a short span of time, the Philippines has established itself as one of the top destinations globally for offshoring and outsourcing (O&O) operations. From less than $100 million in total revenues in 2001, the Philippines increased O&O revenues to $3.3 billion in 2006, effectively doubling every year. This high rate of growth has persisted even as the industry has grown beyond its initially low base. Between 2004 and 2006, the industry grew 49% per year. As a result of this growth, the Philippines is now the Southeast Asia market leader and, along with India and China, one of the top countries providing O&O services globally.

The Philippines' IT market is primarily being driven by extraordinary growth in outsourced ICT services. The Philippines’ strongest market niche is in IT-enabled services or call centres. More and more companies are making infrastructure investments to support the demand for call centre facilities. In fact, the Philippines call centre/outsourcing industry is projected to be among the largest sectors in the country for the next five years.

Cellular mobile telephone system (CMTS) is the preferred mode of service with mobile subscribers hitting 60 million in 2009. Landline subscribers grew to an estimated seven million due to the availability of wireless landline service. CMTS subscribers in the Philippines are divided into two basic segments; postpaid and prepaid subscribers, with an estimated ratio of 15:85 in favour of prepaid. 3G users in the Philippines, whether for mobile phones or USB modem devices, are projected to grow to eight to 10 million in 2010. This will be driven by social networking sites , location-based uses, gaming devices (delivering content through non-traditional devices), and healthcare, among others. The Philippines continues to be the world leader in the Short Messaging Service (SMS) market. Carriers process close to one billion text messages per day.

The Philippines is a world leader in renewable energy with a third of its total electric power needs met through renewable sources. The new Philippine renewable energy law, the Philippines Renewable Energy Act of 2008 (Republic Act 9531), is a supportive policy environment that offers fiscal and non-fiscal incentives to equipment manufacturers with the goal of achieving 60% renewable energy generation by 2017. The implementation of the Electric Power Industry Reform Act (EPIRA) has gained momentum, as noted by recent consecutive successes in privatisation of assets previously owned by the National Power Corporation (NPC).

Demand for power will continue to grow strongly, driven by the expected increase in economic and industrial activity and the country’s growing population. The industry estimates demand for electric power will grow 9% annually, at least until the end of the decade.

The outlook on the Philippines construction industry sector is positive. In 2010, the Philippines government is projected to continue its economic stimulus program as well as rebuild infrastructure damaged by the 2009 natural calamities. Stimulus spending in 2010, however, is expected to be less than its 2009 figures since fiscal stability is a concern of the Philippine government.

Private construction is expected to grow, particularly with residential projects that will address the 3.8 million housing backlog, commercial projects, and tourism/leisure facilities. Because of the expected growth in the construction sector, Philippine imports of building products are projected to increase by at least 5% through 2012. Many US- and European-made/brand building products, everything from locks to roofing, are readily available in the Philippines.

The Philippine market for water resource equipment/services is expected to grow by about 5% in the next two years. On-going and upcoming projects that address the increasing water demand and pressing water-related problems of the Philippine include limited access to potable water through water supply and distribution operations. Roughly 30 million people throughout the country do not have access to potable water through water supply and distribution operations); lack of accurate water usage monitoring; large amount of “unaccounted-for-water” due to leaks in distribution pipes, inefficient metering and poor administration. The US is a major source of water resource equipment and services of the Philippines.

The medical industry in the Philippines is almost totally dependent on imports. The medical equipment sector continues to present good opportunities for Western firms. The US was the leading source of imported equipment, with 30% market share. Germany and Singapore follow with 12% and 11% market share, respectively. Importers of medical equipment inform that import data on Singapore reflect transshipments from the US, Europe and other Asian countries, including Japan.