Low costs in PH seen luring more investors | Inquirer Business

Low costs in PH seen luring more investors

By: - Reporter / @bendeveraINQ
/ 01:00 AM February 04, 2016

Amid low labor and production costs, the Philippines is seen attracting more foreign investments in industries that employ skilled workers, such as banking and finance, business process outsourcing (BPO) as well as manufacturing, according to the Department of Finance’s chief economist.

In an economic bulletin, Finance Undersecretary Gil S. Beltran noted that the latest Bangko Sentral ng Pilipinas data showed that the sectors that attracted the most foreign direct investment (FDI) as of end-October last year were manufacturing as well as financial and insurance activities.


FDI in manufacturing rose 115 percent year-on-year to $624 million during the first 10 months of 2015 to comprise 12.5 percent of the total.

However, in the case of financial and insurance activities, which accounted for 10.7 percent of total FDI at end-October, investments slid by 28.4 percent year-on-year to $531.8 million.


Beltran attributed the “robust” FDI in the manufacturing and financial sectors to two reform initiatives recently introduced by the government—the Department of Trade and Industry-led Manufacturing Resurgence Program as well as Republic Act No. 10641 signed by President Aquino in 2014, which allowed the full entry of foreign banks.

According to Beltran, FDI in manufacturing and financial services “will undergo further expansion in quarters ahead.”

The BPO industry, which Beltran cited as having low capital     ization requirements, meanwhile, “will continue to attract FDI because of cost advantages.”

The BPO sector likely breached its $21-billion revenue goal last year, while revenues were expected to hit $25 billion this year, industry officials had said. The sector is poised to employ 1.3 million by year’s end.

Also, Beltran said sectors that have “small FDI presence” such as arts and recreation services, construction as well as education have “significant growth opportunities” as they were “expected to enjoy more infusion due to the country’s skills endowment.”

Separately, the Insurance Commission (IC) plans to lure more insurance firms into infrastructure investments, especially in public-private partnership (PPP) projects, by setting up a policy and regulatory framework for such ventures, Insurance Commissioner Emmanuel F. Dooc said.

“We have the investment provision in the Amended Insurance Code and we have been meeting with the [Finance] Secretary [Cesar V. Purisima] and other authorities to allow the industry to invest in PPP, for instance, because we are running out of investment opportunities that provide better returns,” Dooc told reporters recently.


Dooc said they plan to put in place regulations that would encourage industry players to place investments in infrastructure.

He said the IC would reactivate its reinvestment council headed by Deputy Commissioner Vida T. Chiong to assist insurance companies looking at non-traditional investments that would generate better and higher yields.

Last month, AIA Group Ltd. president and chief executive Mark Tucker said its local subsidiary Philippine American Life and General Insurance Co. (Philam Life) was looking at investing in infrastructure, given “right opportunities.”

For its part, Canadian insurance giant Sun Life Financial Inc. last year gave its Philippine unit the go-ahead to invest in a power plant project in Mindanao, its first local investment in infrastructure.

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TAGS: bpo, Business, invest, Investment, investor, manufacturing, Outsourcing
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