Hailed as the next Asian miracle, the Philippines is deemed an attractive investment destination by a Singaporean state agency particularly in the areas of infrastructure, energy and consumer products.
In its review of the Philippines, International Enterprise Singapore, which promotes the overseas growth of Singaporean companies, said there were private sector infrastructure opportunities in the residential, commercial and industrial sectors, as well as demand for utilities services, in the Philippines.
It noted that the Philippine government remained committed to pursue investments that would plug the infrastructure gap in the country.
“It (Philiplpine government) plans to ramp up public infrastructure spending from 2.8 percent to 5 percent of gross domestic product (GDP) by 2016, through PPP (private public partnership) projects,” the report stated.
“While still lower than China and India, the Philippines could see the largest increase in demand for infrastructure as a percentage of GDP among the Asean countries. The government projects to spend $110 billion by 2020. This is due to an increase in urbanization and per capita income, which drives demand for infrastructure,” it further said.
The Philippines, it added, had embarked on an ambitious PPP program to tie up with the private sector for more than $17 billion worth of projects, majority of which were in Manila. It was expected that at least 15 major infrastructure projects worth more than $5.2 billion would be awarded before the end of the term of the current administration in June 2016.
IE Singapore also noted that there was significant potential for investments in the renewable energy sector, particularly wind and solar power, as well as for water projects as Metro Manila was reportedly suffering from a water deficit of about 400,000 cubic meters a day.
Singaporean firms could also look into opportunities in food, clothing and footwear retail sectors given the Philippines’ large and growing consumer market, it added.
The Philippines’ consumption expenditure accounted for about 74 percent of GDP, reportedly one of the highest in Asean. It was estimated that total consumer expenditure in the Philippines will grow by 5.4 percent yearly from 2013 to 2030, from $186 billion in 2012.
According to IE Singapore, household spending is projected to increase yearly by 10.5 percent to $322.6 billion in 2018, from $210.5 billion in 2014, while the country’s total household retail spending, estimated to be at $210.5 billion this year, is seen growing to $322.6 billion in 2018.
The agency disclosed that the clothing and footwear sectors are seen posting strong growth over the next few years, as the youthful population (between the age of 20 and 39), representing the main driver of these segments of the retail sector, grows in size.
“A growing and young population with increasing disposable income is expected to lead the growth of household spending in all retail sub-sectors in the Philippines. Hence there is great potential in the Philippine consumer goods market, particularly for non-essential items and aspirational products. Lifestyle sub-sectors that are expected to benefit include food and drinks as well as clothing and footwear retail,” the report stated.