Business Environment in the Philippines
If you’re planning to start a business in the Pearl of the Orient, here’s a helpful overview of the current business environment in the Philippines:
After decades of economic and political woes, the Philippines has now emerged as one of the most dynamic economies in the Asia-Pacific region. One of the key sectors that helped boost the country’s economy is the Business Process Outsourcing (BPO) sector that has brought in large revenues and investments from abroad. Other major industries that have also aided in the country’s development are Mineral and Energy Extraction, Agriculture and Forestry, Manufacturing, and Technology.
The Philippines escaped its predicament as the “Sick Man of Asia” thanks to its highly skilled population. Being the global leader in the BPO sector, the Philippines capitalizes on its population’s high English proficiency and literacy rate to maintain this position and in turn, further drive growth. It also has a large and highly active digital population that possesses huge potential to help reinvent underdeveloped industries and establish new ones.
Considered a relatively small industry, tourism is also a valuable asset in the country’s economy. Through smart and effective ways of promoting the Philippines, the number of tourists visiting the country has steadily increased, opening more livelihood and employment opportunities for Filipinos.
Having a dynamic market also comes with many challenges. Like much of the developing world, corruption remains to be an obstacle to achieving economic freedom and prosperity. Although taxes are kept low to support the country’s economic environment, it is not as low compared to other countries in Southeast Asia. It is also important to consider the Philippines is prone to natural calamities that constantly poses a grave threat to all sectors of society.
Philippine Economy Amid the COVID-19 Pandemic
Just like most countries around the world, the Philippines suffered huge economic blows because of the pandemic. The Philippine government was forced to scale down its goals to significantly reduce poverty and unemployment by 2022. The World Bank estimates that nearly three million Filipinos slid into poverty in 2020 while the unemployment rate averaged 10.2% as a result of mass lay-offs during the lockdown.
The country’s GDP also contracted by an estimated 8.3% in 2020 but is expected to bounce back in 2021 according to the International Monetary Fund (IMF). The inflation rate, however, is expected to remain at 3% throughout 2021 and 2022.
Despite these setbacks, the government is still persistent in achieving its medium-term goal of bringing more Filipinos closer to having a more comfortable life by the end of 2022. The government laid out five major programs to boost resilience amidst the pandemic: health system improvement, food security, learning continuity, digital transformation, and regional development. In the updated Philippine Development Plan, reforms were also made to ease human capital constraints, increase foreign direct investments (FDI), and expand market linkages for MSMEs.
Having one of the most dynamic emerging economies in the region, the Philippines is ready and eager to welcome new businesses to join in its pursuit towards economic freedom and success. Armed with a highly-skilled and hardworking population, the Philippines is ready to claim its position in the global economy.