Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

Why Invest in the Philippines?

Posted by butalidnl on 11 July 2010

Why would foreigners invest in the Philippines? That’s a good question, especially since there are lots of other countries which are trying to attract foreign investors.

Here are some reasons.

Large Population, Big Market
The Philippines has a large population. It is the 12th largest country in the world, with a population of about 96 million people. This is a lot of people, and they can mostly be reached by advertisements in the media. So, this means that, whatever your product, it will probably pay to try selling it to Filipinos. And in turn, this would probably mean that they will need to open at least a sales office in the country. And, for many kinds of products, it will also pay to manufacture these goods in the country itself.

Large Pool of World Class Labor that Speaks English
This is going to probably be why foreign companies would like to set up shop in the Philippines. If they do, they only need to import a few foreign experts, and then avail of the local labor pool. And the labor pool is quite deep, with lots of universities churning out graduates every year, and lots of Filipinos experienced in almost anything (of course, some of these may be abroad).  And  all these have been educated in English. This is not simply English as a subject in school, but English as the medium of instruction in school. We can see this in the fact that we are one of the main countries for call centers; our accent is relatively easy to neutralize.

This means that the Philippines will make a great center for their customer service (as shown by the growing call center industry in the country), and also for things like accounting back-office, or as regional office. The fact that you can source practically all your personnel locally makes it quite attractive. And salaries are still relatively cheap.

Good Infrastructure
The Philippines has relatively good infrastructure. We have a good system of airports  and ports. Our roads are quite good. We have urban mass transit (i.e. LRT, MRT). Electricity supply is regular, with some outages especially during the summer.

The IT infrastructure is also good. High-speed internet is available in our major cities. It is affordable for a lot of middle class families. Mobile telephone availability is practically universal.

Politically Stable
Believe it or not, the Philippines is politically stable. It only looks unstable, specially for those living in the Philippines – with all the rumors and other things you read in newspapers. For one, the homegrown communist movement is more of a nuisance rather than a threat. [See CPP-NPA Helps Maintain Status Quo in the Philippines ] As for the Moro rebels, the government is constantly having a ceasefire with the MILF, while they negotiate a peace agreement.

Military rebels? Kidding? What kind of threat to stability do they pose, when they mostly resort to occupying hotels when doing a “coup de etat”. What kind of coup is that? Besides, the present Aquino government has good relations with a number of military rebel leaders; I don’t expect them to go against the government now.

No major threat to the interests of foreign investors are on the horizon. It is safer to invest in the Philippines, than to do so in places like Thailand or Indonesia. Of course, this doesn’t cover all the country – take the case in point of Western Mindanao, with its Abu Sayyaf – but it is generally peaceful, and stable in the rest of the Philippines. So, for foreign investors: just keep out of the Abu Sayyaf areas, and it’s alright.

2 Responses to “Why Invest in the Philippines?”

  1. sana tax free na ang investment money deposited in the bankS like COUNTIES Of dubai, monaco, switzerland and luxembourg, hakot rich people kasi yan to stay in phils, if tax free sila.in a way, true, it is good to invest in phils kasi ang labor mababa, kaya nga mga call centers mostly from there.

    • butalidnl said

      As far as I know, foreigners who deposit money in the Philippines are not subject to tax in the Philippines. May “bank secrecy law” kasi ang Pilipinas. In other words, the government is not allowed to see who are the depositors at the banks. Many foreigners are doing that, or buying stocks and bonds in the Philippines (that is called “portfolio investments”). That’s one reason why the peso is steadily gaining strength (of course, the other reason is OF remittances).

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