Considered to be the rising tiger of Asia after posting robust economic growth for the past five years backed by strong macroeconomic fundamentals, the Philippines aims to attract foreign investors on various sectors and industries. Investment opportunities are further boosted with government incentives on priority areas as identified in the IPP 2014-2016.
With increased business activities due to robust economic growth and expanding population, the Philippine energy demands continue to be one of the priorities of the government. As of 2014, sources of power generation were primarily coal (33, 054 Gwh), natural gas (18, 690), geothermal (10, 308), hydropower (9, 137), and oil-based (5, 708) while wind, solar, and biomass accounted to merely 364 Gwh. However, due to climate change issues, emphasis on the development of renewable energy sources have been given considerable attention especially with the enactment of Republic Act 9523 otherwise referred to as the Renewable Energy Act of 2008.
Fiscal and non-fiscal incentives are introduced in order to increase geothermal capacity by 75%, hydropower capacity by 160%, additional 277 MW biomass power capacity, and develop the first ocean energy facility as provided for in the National Renewable Energy Roadmap.
Construction and Infrastructure
This industry is expected to sustain its strong growth in the Philippine market largely attributed to private construction –residential and non-residential undertakings- and the rolling out of the administration’s flagship infrastructure projects under the Private-Public Partnership scheme or PPP as monitored by the PPP Center and the National Economic Development Authority (NEDA) chaired by no less than the President himself. By year-end, public and private sector construction activities is seen to reach Php. 1.7 trillion or estimated at 10.9% growth. Last year, the industry contributed 5.8 % at constant price to the Philippine economy and was responsible for 6.6% total employment as of October 2014.
The government through the Housing and Land Use Regulatory Board (HLURB) is targeting construction of one million housing units by end of 2016 with over 300 condominium projects in Metro Manila targeted as mid-market segment. BangkoSentralngPilipinas (BSP) has maintained stable monetary policy with overnight borrowing rates at approximately 4% in 2015 and estimated to be around 4. 25% in 2016.
As for PPP projects, there are eleven (11) major big-ticket infrastructure projects that have been awarded as of November 2015, which include the Php. 64.9 billion LRT Line 1 Cavite Extension and Operations and Management; Php. 55.51 billion Cavite-Laguna (CALA) Expressway; and the Php. 17.52 billion Mactan-Cebu International Airport Passenger Terminal Building, among others. There are also at least forty (40) other PPP projects under different stages of procurement and bidding that are in the pipeline of public infrastructure projects.
Despite the expected moderation of public construction after 2015 due to the upcoming 2016 elections and the change of national leadership, the infrastructure industry will continue to grow especially in the energy and utilities segments, which are forecasted to expand at an annual average of 7.6% between 2015 until 2019.
A key industry in the Philippine economy that comprised more than half of the country’s industrial sector and accounted at most 25% of its GDP is the manufacturing industries. The sector grew by 10.5% in 2013 and 8.1% in 2014. It seeks to achieve global competitiveness with forward and backward linkages with a total value added of 30% and 15% of total employment in 2025 under the so called “Manufacturing Resurgence Program” to which the government has allocated USD 1.5 million for its implementation. At the sub-sectoral level, all segments- consumer goods, intermediate and capital goods- had posted positive value added growth rates since 1990s.
Through the Department of Trade and Industry (DTI), the government in consultation with the various industry associations formulated a roadmap that will revive the manufacturing sector in the Philippines. From 2018-2021, it will shift to high value added activities, focus its investments in the core sectors, link and integrate manufacturing with agriculture and service industries, as well as create a manufacturing innovation ecosystem. In the long-run (2022-2025), the Philippines will continue to maintain globally competitive and innovative manufacturing industry with emphasis on electronics, automotive, food, machinery, garments, and establishing regional and global production networks.
In recent years, more foreign companies are availing the incentives provided in PEZA zones in the hope that the Philippines be the manufacturing hub in Southeast Asia in view of the ASEAN Economic Community. While labor costs are increasing rapidly in China, the Philippines remains a competitive market with minimum salary requirements and a strong government support from DOLE, PEZA, and DTI, among others.