Philippines eyes stronger ties with KSA
Wednesday, June 12, 2013
The Puerto Princesa underground river, above, is one of the new seven wonders of nature. The other six are Amazon Rainforest (Brazil), Halong Bay (Vietnam), Iguazu Falls (Argentina and Brazil), Jeju Island (South Korea), Komodo National Park (Indonesia), and Table Mountain (South Africa).
THE Philippines, one of the few economies with positive economic growth achieved in 2012, is a newly industrialized emerging market economy, with exports as its key driver of growth. Its P1.5-trillion GDP, the fourth largest in Southeast Asia, is accounted for by the service sector (50 percent), industry (33 percent) and agriculture (17 percent). Key economic activities in the Philippines include business process outsourcing (BPO), food processing, textiles and garments, and assembly operations in the manufacturing of electronics and other high-tech components.
Trade
In their meeting in Saudi Arabia in 2012, Saudi Foreign Minister Prince Saud Al-Faisal and Philippine Foreign Affairs Secretary Albert F. Del Rosario discussed ways on how to further improve Philippine-Saudi bilateral trade cooperation, among vital economic areas.
Bilateral merchandise trade between the Philippines and the Kingdom of Saudi Arabia has been expanding in recent years. According to latest available Saudi government statistics, two-way trade rose to $3.6 billion in 2011 as compared to $2.7 billion in the previous year. In 2011, Saudi imports from the Philippines amounted to around $208 million while Saudi exports to the Philippines were valued at $3.4 billion.
In 2012, Saudi Arabia ranked 10th as the Philippines’ trading partner, 31st as export market (up four notches in 2011, when it was 35th as export market) and 8th as import supplier. During the same period, Saudi Arabia both ranked first as the Philippines’ trading partner and import supplier, and ranked second as export market in the Middle East region.
While the Philippines relies largely on Saudi Arabia’s oil and petroleum products, the Philippines is working to reduce the balance of trade by introducing more product exports to the Kingdom that include medium- to high-end garments; fresh and processed food including agriculture crops such as bananas, pineapple, mango and other staples; furniture of all types and home décor; leather goods and fashion accessories; costume jewelry; health and wellness products; construction materials and industrial goods.
The Philippines is encouraging Saudi businessmen to look at what the Philippines could offer by inviting them to attend and/or participate in major trade fairs and exhibitions in the Philippines, such as the International Food Exhibition (IFEX), Philippine International Furniture Show, and Manila FAME in October 2013.
Tourism
The Philippines is open to Saudi investors in tourism, infrastructure, hotels and resorts.
The “It’s More Fun in the Philippines” campaign by the Department of Tourism had positive effect in increasing tourism in the Philippines. With over 4.2 million tourists in 2012, representing a 7.2 % increase compared to 2011 tourist arrivals of 3.917 million, the Philippines invites more foreign investors in the tourism sector.
In December 2012, the Kingdom Hotel Investments (KHI), a wholly owned subsidiary of Kingdom Holding Company, through a joint investment with Ayala Land Inc. (ALI), formally opened the 280-room Fairmont Hotel, a 32-suite Raffles Hotel and 237-room Raffles-branded private residences, in the bustling Makati business district in the Philippine capital.
The Shanghai Morning Post identified the Philippines as the “Most Romantic Destination” in the world, a distinction inspired by the magnificent sunsets over its numerous white sand beaches, or the pristine, secluded coves dotting its many islands.
Philippine President Benigno S. Aquino III, in speaking to business executives in Davos, cited that the new hotels sprouting around the Philippines in the past two years are positive proof of Philippines’ tourism boom.
In Boracay, one of the Philippines’ most popular beach destinations, an additional 1,599 rooms have been built.
In April 2012, President Aquino officially inaugurated the Puerto Princesa Underground River in Palawan as one of the world’s New Seven Wonders of Nature (N7WN).
An invitation to Public-Private Partnership projects
The Philippine government has put infrastructure as a top priority, realizing that it is a key ingredient for further growth and development. Since 2010, the Philippine Department of Public Works and Highways has already completed 28 percent, or 2,006 kms, of the 7,256 kms of national arterial and secondary roads that need paving.
Philippine Ambassador to Saudi Arabia Ezzedin H. Tago has outlined the Philippines’ public-private partnership (PPP) program under which a number of projects have been planned to be developed in cooperation with foreign and local investors. He urged Saudi investors to participate in these projects.
In January 2013, four major infrastructure projects under the PPP program have already been approved. The projects covers roads and railways, communications, and a gas pipeline.
In the past, the Saudi government contributed to infrastructure development in the Philippines, providing $20 million as soft loans for the development of various road projects in the Mindanao region. This was part of Saudi Arabia’s commitment of $100 million to Philippine development projects.
Creative Industries/Knowledge-Based Services
Besides diversifying its markets and increasing its concentration on the production of goods and services with clear competitive advantage, the Philippines is looking to further value-add growth sectors such as IT-BPO and penetrate high growth markets in Asia to achieve the projected growth of the country.
Under its 2012 Investment Priorities Plan, investment in preferred activities such as the creative industries will be given incentives. The creative industries cover business process outsourcing (BPO) activities, and IT and IT-enabled services that involve original content.
The Philippine BPO industry is reputed globally to have talented, highly-proficient in English, and service-oriented human resources. It is also cost-competitive, strategically located (gateway to Asia) and boasts of excellent telecom infrastructure, reliable infrastructure support and strong government-private sector partnership.
According to the Information Technology and Business Process Association of the Philippine, the revenues of the information technology business process management sector alone grew 19 percent in 2012 to $13.2 billion while employment rose 21 percent, bringing in additional jobs of 137,066 and ending last year with a total workforce of 776,794 individuals. The industry is targeting revenues worth $25 billion and 1.3 million jobs by 2016.
Members of the Contact Center Association of the Philippines (CCAP) posted $8.7 billion in revenues, an increase from 2011 by 18 percent. The next biggest segment of IT-BPM is corporate services, which includes knowledge process outsourcing and back-office services, which grew 20 percent with total earnings at $2.5 billion.
The Philippine Software Industry Association (PSIA) meanwhile reported a 17 percent growth in revenues, earning $1.16 billion in 2012. The healthcare information management revenues also increased rapidly to $460 million or 66 percent growth.
Fastest growing in terms of revenues was the Game Developers Association of the Philippines (GDAP), which leapt more than three times from $14 million in 2011 to $50 million in 2012.
Clearly, the Philippine BPO industry is a promising investment opportunity. — SG
Saudi Gazette - Philippines eyes stronger ties with KSA