THE IT and Business Process Association of the Philippines (IBPAP) said the Philippines is expected to remain a top US destination for outsourcing services, regardless of the outcome of the Nov. 5 presidential election.
On the sidelines of a briefing on a report of the Center for Strategic and International Studies (CSIS), IBPAP Chief Operating Officer Celeste Ilagan said US investors are continuously expanding in the Philippines regardless of which party is in charge.
“There are no immediate concerns we have heard about from them,” Ms. Ilagan told reporters on Monday.
“We are confident in the growth of the IT-BPM industry as well as some aggressive growth targets in terms of employment and service export revenue,” she added.
The information technology and business process management industry is expected to book $38 billion to $40 billion in revenue and to increase staffing to between 1.82 million and 1.84 million this year.
In the CSIS US Investment in the Philippines report, IT-BPM was identified as among the industries offering opportunities for US investors.
“US businesses have increasingly outsourced services to the Philippines in the last few decades, and US investment has played a crucial role in the development of the sector,” according to the report.
CSIS Southeast Asia Program Associate Fellow Japhet Quitzon said IT-BPM is a big employer in the Philippines.
“Outsourcing of IT-BPM services in the Philippines is growing because of the young, tech-literate, English-proficient population,” he said.
In the report, CSIS said that 395 US firms have invested $22.4 billion in the Philippines between 2003 and 2021, of which $7.8 billion or 35% went to IT-BPM.
The report also identified the industry as one of the key growth drivers for the Philippine Economic Zone Authority, bringing in nearly $260 million of investments in the first quarter.
The other key private-sector investment destinations in the Philippines are renewable energy, semiconductor manufacturing, agriculture, defense and aerospace manufacturing, critical minerals and electric vehicles, and logistics and shipping.
However, the report identified the Philippine constitution as among the institutional barriers to US-Philippine trade and investment.
“The current Philippine constitution, ratified in 1987, includes several economic provisions that have negatively impacted the Philippines’ net inflow of foreign direct investment, notably restrictions on foreign ownership in certain sectors,” according to the report.
“In the United Nations Conference on Trade and Development’s World Investment Report 2023, the Philippines ranked sixth among its Southeast Asian peers in foreign direct investment (FDI) inflows,” it added.
The government is hoping to become the second-leading destination for FDI in Southeast Asia.
To further improve bilateral relations, CSIS recommended the creation of a database on US investments and their impact on the Philippines.
“The US should work with the private sector and other stakeholders to develop a comprehensive database outlining US investment in the Philippines, clearly and transparently listing the specific impacts of such investments, including employment figures,” according to the report.
“It would be to the benefit of the US and the Philippines to create a joint resource with which to harmonize their datasets and investment figures,” it said.
Meanwhile, the report also recommended more consistent person-to-person exchanges throughout administrations.
“Both recent US government-led trade missions were the first of their kind. The United States, regardless of administration, should ensure the continuation of such exchanges,” it added.
The report also cited the need for US firms to diversify their investment destinations beyond Luzon.
“Business interest in areas such as Cebu and Davao is growing, but Manila remains oversaturated with investment,” it said.
The report identified Iloilo, Cebu, and Davao as potential alternative investment destinations. — Justine Irish D. Tabile