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The Philippines: The New Tiger of Asia
Dr. Bernardo M. Villegas
Ph.D. (Harvard)
University Professor, University of Asia and the Pacific
Manila, Philippines
The Philippine Economy: Reaching the Tipping Point
•Growth Rates of 7-10% possible in the next 10 years
• Result of over 25 years of slow and painful reforms
•Will be the 16th largest economy in 2050
(The Wider World in 2050 Report, HSBC)
Top Economies by 2050 (From HSBC’s The Wider World in 2050)
Rank in 2050
Country Change in rank from previous HSBC
study
Rank in 2050 Country Change in rank from previous HSBC study
1 China +2 16 Philippines +27
2 U.S. -1 17 Indonesia +4
3 India +5 18 Australia -2
4 Japan -2 19 Argentina
5 Germany -1 20 Egypt +15
6 UK -1 21 Malaysia +17
7 Brazil +2 22 Saudi Arabia +1
8 Mexico +5 23 Thailand +6
9 France -3 24 Netherlands -9
10 Canada Same 25 Poland -1
11 Italy -4 26 Peru +20
12 Turkey +6 27 Iran +7
13 South Korea -2 28 Colombia +12
14 Spain -2 29 Switzerland -9
15 Russia +2 30 Pakistan +14
The Global Competitiveness Index 2014-2015 rankings
Source: http://www.weforum.org/reports/global-competitiveness-report-2014-2015
GCI 2014-2015 GCI 2013-2014
Country/Economy Rank (out of 144) Score Rank (out of 148) Switzerland 1 5.70 1
Singapore 2 5.65 2
United States 3 5.54 5
Germany 5 5.49 4
Japan 6 5.47 9
Hong Kong SAR 7 5.46 7
Taiwan, China 14 5.25 12
Malaysia 20 5.16 24
Korea, Rep. 26 4.96 25
China 28 4.89 29
Thailand 31 4.66 37
Indonesia 34 4.57 38
Philippines 52 4.40 59
South Africa 56 4.35 53
Brazil 57 4.34 56
Vietnam 68 4.23 70
India 71 4.21 60
Lao PDR 93 3.91 81
Cambodia 95 3.89 88
Myanmar 134 3.24 139
5.9
5.9
5.5
5.1
4.7
4.1
3.6
3.1
2.7
2.4
2
1.7
1.1
0.8
0.6
0.4
0.2
0.1
0.1
0.3
0.4
0.7
1
1.5
1.9
2.3
2.7
3.1
3.6
4.2
4.8
5.3
5.8
6.2
6.2
8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8
Philippines 102 million
Source: United Nations, Department of Economic and Social Affairs, Population Division (2011). World Population Prospects: The 2010 Revision.
Percent of total population
25-29
50-54
40-44
30-34
15-19
4-9
55-59
45-49
35-39
20-24
10-14
0-5
60-64 65-69
Working age population:
50.5% (51M)
Male
Female
Young dependents: 46%
(47M)
Aged dependents: 3.5%
Main Source of Competitive Advantage: Young and Growing Population
Philippine IT-BPM industry size
2006–2012; US$ billion x% YoY Growth
1Philippines IT-BPM market as percentage of global offshore services market, in revenue terms *Cited from the Presentation of Mr. Bong Borja, EGS President and Country Head Sources: BPAP, ACPI, CCAP, GDAP, HIMOAP, PSIA
# FTEs
(~‘000) 236 383 424 527
Global
share1 5% 6% 6% 7% 8%
3.44.5
6.17.1
8.9
11.0
13.2
2006 2007 2008 2009 2010 2011 2012
34% 17%
25%
24%
Copyright ©2012: BPAP. All rights reserved.
FTEs Revenue
(US$M)
Rev % inc.
fr ’11
Voice BPO 497,000 8,697 18%
Non-voice
BPO/KPO
154,380 2,470 20%
ITO 57,078 1,160 17%
Health Info Mgt &
Care
45,000 460 66%
Engineering
Services
10,836 206 20%
Animation 9,000 132 3%
Game
Development
3,500 50 251%
TOTAL FTEs 776,794 13,174 19%
19%
284 640
9.5%
777
Philippines 2012 Performance*
31% 45%
9.9%
2016 Projections
US$ 25 Billion IT-BPM Revenue
1.3 Million Direct Employment
Overseas Filipino Workers, 2011
Sources: Commission on Filipinos Overseas
Americas and Trust Territories
4,326,059 41%
Middle East 2,987,923
29%
East and South Asia 1,449,373
14%
Europe 808,779
8%
Oceania 451,042
4%
Africa 63,508
1% Sea-based workers
369,104 3%
Total = 10,455,788
Positive Trends
• Stable democracy
• Improving governance
• Strong macroeconomic fundamentals
• Labor peace
• Educated, young, and English-speaking labor force
• Strategic geographic location: launching pad for AEC
• Renaissance of manufacturing
• High rate of savings due to OFW remittances
• Low rate of dependence on petroleum
• One of the emerging markets
BRICA + South Africa
Population (in Millions)
GDP Value (in current prices,
US$B)
Foreign Exchange Reserves (US$B)
Real GDP Growth Inflation
2013 2013 2013 2013 2014F 2013 2014F
Brazil 198.3 2,242.9 358.8 2.5 0.3 6.2 6.3
Russia 143.0 2,118.0 509.7 1.3 0.2 6.8 7.4
India 1,243.3 1,870.7 298.1 4.7 5.5 6.0 5.7
China 1,360.8 9,181.4a 3,880.4 7.7 7.5 2.6 2.4
ASEAN 625.1 2,398.5 755.1b 5.0 4.6 4.2 4.1
South Africa 53.0a 350.8a 49.7 1.9 1.4 5.8 6.3
Emerging Markets: Nest of EAGLES (Emerging and Growth Leading Economies)
a-estimates; b-2011; F-forecasts Sources: IMF World Economic Outlook, Oct. 2014; World Bank Key Development Data & Statistics; ADB Asian Development Outlook Oct 2014;
Selected Basic ASEAN Indicators as of Aug. 14, 2014, asean.org.
The Next 11: Emerging Engines of Growth
Source: IMF, World Economic Outlook, Database April 2014
Country Population 2013 GDP 2013
(in millions) (current US$ B)
Bangladesh 156.3 141.28
Egypt 84.2 271.43
Indonesia 248.0 870.27
Iran 77.1 366.26
Mexico 118.4 1,258.54
Nigeria 169.3 286.47
Pakistan 182.6 238.74
Philippines 97.5 272.02
South Korea 50.2 1,221.80
Turkey 76.5 827.21
Vietnam 89.7 170.57
Exports as Percentage of GDP
Source: Key Indicators 2014 (ADB)
SOUTHEAST ASIA 2006 2007 2008 2009 2010 2011 2012 2013
Brunei Darussalam 71.7 67.9 78.3 72.8 81.4 79.7 81.4 76.2 Cambodia 68.6 65.3 65.5 59.9 54.1 54.1 54.6 -
Indonesia 31.0 29.4 29.8 24.2 24.6 26.3 24.3 23.7 Lao PDR - - - - - - - -
Malaysia 112.2 106.2 99.5 91.4 93.3 91.6 87.5 82.9 Myanmar 0.2 0.1 0.1 0.1 0.1 15.4 14.6 -
Philippines 46.6 43.3 36.9 32.2 34.8 32.0 30.8 27.9
Singapore 233.3 217.2 232.9 196.0 199.3 207.2 200.7 190.5
Thailand 69.0 69.2 71.8 64.5 66.6 71.4 - -
Vietnam 67.8 71.1 71.5 63.0 72.0 79.4 80.0 83.9
REGION 2010 CAGR 2014e
PHILIPPINES 92,337,852 2.11% 100,387,941
METRO MANILA 11,855,975 1.99% 12,889,589
CORDILLERA 1,616,867 1.90% 1,757,827
ILOCOS 4,748,372 1.37% 5,162,339
CAGAYAN VALLEY 3,229,163 1.54% 3,510,684
CENTRAL LUZON 10,137,737 2.38% 11,021,553
CALABARZON (SOUTHERN TAGALOG) 12,609,803 3.42% 13,709,136
MIMAROPA (SOUTHERN TAGALOG) 2,744,671 1.99% 2,983,954
BICOL 5,420,411 1.63% 5,892,967
WESTERN VISAYAS 7,102,438 1.50% 7,721,634
CENTRAL VISAYAS 6,800,180 1.97% 7,393,025
EASTERN VISAYAS 4,101,322 1.43% 4,458,879
ZAMBOANGA PENINSULA 3,407,353 2.08% 3,704,409
NORTHERN MINDANAO 4,297,323 2.29% 4,671,967
DAVAO REGION 4,468,563 2.19% 4,858,136
SOCCSKSARGEN 4,109,571 2.74% 4,467,847
CARAGA 2,429,224 1.66% 2,641,006
MUSLIM MINDANAO 3,256,140 1.68% 3,540,013
Population: Some regions outpace the average national population growth due to immigration
Source: National Statistics Coordination Board
PER CAPITA GROSS REGIONAL DOMESTIC PRODUCT (at current prices)
Source: National Statistics Coordination Board
Purchasing power: It is because income growths in these recipient regions are faster than the rest
Region / Year 2011 2012 2013
Philippines 102,383 109,494 117,603
NCR METRO MANILA 284,863 309,671 342,170
CAR CORDILLERA 126,477 125,974 133,413
I ILOCOS 61,834 66,722 72,677
II CAGAYAN VALLEY 50,425 56,295 61,800
III CENTRAL LUZON 84,855 90,229 93,745
IVA CALABARZON 125,062 131,602 135,579
IVB MIMAROPA 61,646 63,318 64,137
V BICOL 35,968 38,569 42,206
VI WESTERN VISAYAS 53,488 57,598 61,325
VII CENTRAL VISAYAS 84,769 94,129 101,862
VIII EASTERN VISAYAS 57,549 53,803 58,451
IX ZAMBOANGA PENINSULA 56,473 61,146 63,643
X NORTHERN MINDANAO 85,891 90,793 95,655
XI DAVAO REGION 88,607 90,645 97,037
XII SOCCSKSARGEN 64,321 68,968 75,061
XIII CARAGA 43,688 48,741 51,146
ARMM MUSLIM MINDANAO 26,476 27,690 29,608
Purchasing power: It is because income growths in these recipient regions are faster than the rest
Source: National Statistics Coordination Board
Region / Year 2011-12 2012-13
Philippines 8.8 9.3
NCR METRO MANILA 10.5 12.2 CAR CORDILLERA 1.2 7.5
I ILOCOS 9.1 10.1 II CAGAYAN VALLEY 13.0 11.1 III CENTRAL LUZON 8.5 6.0
IVA CALABARZON 8.3 6.0 IVB MIMAROPA 4.5 3.0
V BICOL 8.7 10.9 VI WESTERN VISAYAS 9.0 7.8 VII CENTRAL VISAYAS 12.8 9.9 VIII EASTERN VISAYAS (5.4) 9.9 IX ZAMBOANGA PENINSULA 10.2 5.9 X NORTHERN MINDANAO 7.7 7.3 XI DAVAO REGION 4.1 8.9 XII SOCCSKSARGEN 9.7 11.3 XIII CARAGA 13.1 6.3
ARMM MUSLIM MINDANAO 6.0 8.3
GROSS REGIONAL DOMESTIC PRODUCT (growth rates at current prices)
Macroeconomic Forecasts
2011 2012 2013 2014f 2015f
Inflation Rate (ave % change) 4.5 3.2 3.0 4.3 3.3
Peso-Dollar Rate (end) 43.93 41.50 44.41 44.80 45-47
Gross Int'l Reserves ($B) 75.4 84.5 83.2 80.0 86.0
GDP Growth Rate 3.9 6.8 7.2 6.3 7.3
Industry Sector 4.1 6.8 9.5 8.0 10.0
Services Sector 5.3 7.6 7.1 6.0 7.2
GDP growth to accelerate due to added reconstruction work and robust private sector
f – Forecasts Sources: NSCB; BSP; Dr. Victor A. Abola, Philippine Economy: Going to Slow Down or Rebound?
2014 Year-end Business Economics Briefing, Nov. 12, 2014, University of Asia and the Pacific, Pasig City
Financial Market Forecasts
2011 2012 2013 2014f 2015f
Inflation Rate (%) 4.7 3.4 3.0 4.3 3.3
Peso-Dollar Rate (P/US$)* 43.9 41.5* 44.4* 44.8* 44-47*
91 day T- bill rate (% p.a.)* 2.0* 1.5* 0.3* 1.3* 2.0*
10-year T-bond rate * (% p.a.)
5.1* 4.7* 3.3* 3.9* 4.4*
PSEi (Level / % change) 4,372 +4.1
5,500 +26.2
6,325 +16.0
7,100 +12.2
8,200 +15.5
*Year-end forecast
Investment environment to remain friendly with low interest rates
f – Forecasts Sources: NSCB; BSP; Dr. Victor A. Abola, Philippine Economy: Going to Slow Down or Rebound?
2014 Year-end Business Economics Briefing, Nov. 12, 2014, University of Asia and the Pacific, Pasig City
Weaknesses and Challenges
• Corruption
• Red tape and Bureaucracy
• High rate of poverty
• Vulnerable to natural calamities such as floods and earthquakes
• Inefficient infrastructures
• Low rates of investments to GDP
• Low Foreign Direct Investments
• Tribal conflicts in Mindanao
Sunrise Industries
Agribusiness
Mining
Triple Ts: Transport, Telecom, and Tourism
Infrastructures
Automobiles
Consumer durables
IT-enabled and IT services
Logistics and retailing
Health care and medical tourism
Education
Construction and real estate
Four Fs: Food, Fashion, Furniture, Fun
Agribusiness
Business Process Outsourcing
Creative Industries
Infrastructures (Airports, Power, Roads and Rail, Seaports, Telecoms, Water)
Manufacturing and Logistics
Mining
Tourism, Medical Travel and Retirement
Source: Arangkada Philippines 2010: A Business Perspective, Joint Foreign Chambers
Seven Key Industries