Investing in the Philippines – A Primer for Bangladesh

The Philippines is increasingly becoming a prime investment destination in Southeast Asia. Its demonstrated resilience and growth amidst external shocks and the exceptional high growth it has achieved relative to its neighbors in the region have made it to be one of the fastest-growing economies in the Asia Pacific.

In the fourth quarter of 2023, the Philippine economy expanded by 5.6% and the 2023 GDP exceeded pre-pandemic levels. Buoyed by an improved global growth perspective, sound macroeconomic fundamentals, and robust fiscal performance, its growth prospects for 2024 remains intact. The country’s economic growth is supported by sustained consumer spending, improved labor market conditions, and key structural reforms that create a favorable business environment to attract investments.

A woman crafting traditional handicrafts, highlighting the rich cultural heritage and artisanal skills in the Philippines

The country enjoys preferential market access through various Free Trade Agreements (FTAs) and the Generalized System of Preferences (GSP). Its ratification of the Regional Comprehensive Economic Partnership (RCEP) and the Philippines-Japan Economic Partnership Agreement (PJEPA) underscores its commitment to fostering economic growth and international cooperation. These not only enhance market access but also provide a competitive edge for businesses operating in the Philippines.

In addition, the Philippines’ strategic location provides direct access to the over 600 million-strong Southeast Asian consumer market, making it an ideal hub for companies looking to enter other supply chains and participate in inter-country economic activities. Its proximity to major markets such as the US and its ASEAN neighbors offers ample trade and investment opportunities.

The Philippines’ trade relations with Bangladesh have been growing steadily. In 2022, bilateral merchandise trade reached USD 142.86, with the Philippines exporting USD 38.74 million worth of goods to Bangladesh and importing USD 104.22 million worth of goods from Bangladesh. Top Philippine exports to Bangladesh include ferrous waste and scrap, food preparations for infants, and fluting paper while medicaments, tobacco, and textile products comprise top Philippine imports from Bangladesh.

Windmills in the Philippines: A Symbol of Sustainable Energy Investment Opportunities for Investors

Investments from Bangladesh to the Philippines reached PHP36 million (USD 0.66 million) in 2022, directed mainly in the wholesale and retail trade sectors, is also a marked improvement from previous years. This underscores the potential for further trade collaboration and business opportunities between the two countries.

Textiles and garments manufacturing, pharmaceuticals, electronic equipment, machinery, and food products are some of the sectors that present lucrative opportunities for Bangladeshi investors looking to diversify their investment portfolios and tap into the growing Philippine market.

What do all these mean for Bangladesh? Investing in the Philippines offers Bangladeshi businessmen numerous advantages – a strong and resilient economy, a favorable business environment, and strategic government reforms, among others.

The PH as a Strategic Management Hub and Smart Bangladesh 2041

The success of Digital Bangladesh and in light of the new vision of Smart Bangladesh 2041 articulated by Prime Minister Sheikh Hasina, Bangladesh’s efforts in this area can be expanded by and through the Philippines’ robust and steadily growing Information Technology (IT) infrastructure. There is an array of globally certified data centers, cable landing stations, and subsea cable systems that ensures reliable and efficient connectivity, making it an attractive destination for IT and Business Process Management (IT-BPM) services.

The semiconductor and electronics manufacturing services (EMS) sector is one of the Philippines’ core industry strengths. The country is host to over 1,000 EMS companies that serve both domestic and international clients.

His Excellency Bongbong Marcos, 17th President of the Philippines, a great leader

The Philippines remains a top-tier destination for IT-BPM and one of the leaders in the global IT-BPM industry. The goal is to be recognized for the competitive integrated circuit (IC) design companies that have the capacity to provide chip design services to the worldwide IC ecosystem. To realize this, plans are underway to establish a Science and Technology Center, which will house an IC design training laboratory, a Research and Development laboratory, as well as a lab-scale wafer fab.

The sector also contributes around 9% to the Philippine economy and provides ample opportunities for investment and growth that can complement Bangladesh’s journey to realizing its vision of a Smart Bangladesh 2041. The Philippines’ vision to be a regional hub for smart and sustainable manufacturing and services runs parallel to Bangladesh’s efforts to bridge the digital divide and scaling sustainable and inclusive digital solutions that all of its citizens can benefit from. Realizing these respective ambitions provides opportunities for collaboration and enhanced trade between the two countries for the benefit of both.

Renewable Energy Potential

The Philippines is endowed with rich natural resources, specifically in green metals such as copper, nickel and cobalt, which are essential for cleaner energy applications like electric vehicles (EVs) and renewable energy technologies. The country has substantial mineral reserves, ranking second globally for nickel and among the top ten for copper. This wealth of resources provides numerous opportunities for exploration, development, and value-added activities in the green metals sector.

The country’s abundance of green metals is particularly advantageous for the growing EV industry. Nickel, a key component in EV batteries, enhances energy density and vehicle range. The Philippines’ richness in nickel and other minerals needed for EV production positions the country as a strategic location for EV manufacturing and assembly.

President Ferdinand R. Marcos Jr. and DTI Secretary Alfredo Pascual working together to advance the Philippines’ economic growth and development

Further, the Philippines recognizes the important role of the government to provide calibrated incentives to priority industries and foster an enabling business environment to allow job-generating businesses and industries to grow. Policies have been put in place to encourage both private domestic and foreign investments to drive growth in the industry and reduce dependence on expensive energy imports. Some of the key initiatives include:

  • The National Renewable Energy Program, which outlines the framework and strategy for the Philippines to realize a renewable energy future. Under the program, policies such as Fixed Price Purchase, Net Metering, Renewable Portfolio Standard, Green Energy Options Program, and Renewable Energy Markets, among others, increase the economic stability of renewable energy projects and attract long-term investments.
  • The Energy Virtual One-Stop Shop System and the amendment of the Renewable Energy Act of 2008, which removes the restrictions on foreign ownership of inexhaustible energy projects were enacted to further facilitate investments in renewable energy.

Similar to the Philippines, Bangladesh is not only well-positioned to transition to clean energy, but it is imperative that it does. By harnessing its renewable energy potential, leveraging innovative financing mechanisms, and fostering multi-stakeholder partnerships, the country can fast track its transition to clean energy and even emerge as a leader in South Asia in sustainable development. As it works to transition a larger share of its energy mix to comprise of renewable energy, the Philippines presents substantial investment opportunities in the renewable sector that are worth considering.

Economic indicators show upward trends in the Philippines, signaling robust growth

Philippines as Bangladesh’s partner in growth and development

In sum, the Philippines offers numerous business and investment advantages – including, but not limited to, a strong and resilient economy, a favorable business environment, and strategic government reforms. Its strategic location provides access to the Southeast Asian market and serves as a gateway to major markets like the US and Europe.

With its rich natural resources and significant renewable energy potential, the Philippines creates an environment conducive to business growth and sustainability. The robust trade relations between the Philippines and Bangladesh further highlight the potential for successful ventures, making the Philippines an ideal partner for growth and development.

The Philippines’ commitment to enhancing market access through comprehensive trade agreements and its support for high-value investments in sectors like manufacturing and IT-BPM make it an attractive destination for foreign investments. The country’s infrastructure, coupled with government incentives and a proactive approach to fostering a business-friendly environment, offers ample opportunities for Bangladeshi businessmen to establish and expand their ventures.

By investing in the Philippines, Bangladeshi entrepreneurs can achieve significant returns and contribute to the strengthening of economic ties between the two nations, leveraging the Philippines’ strategic advantages and supportive policies for sustainable and profitable growth.

Written by-

Maria Tanya B. Gaurano
Vice Consul
Embassy of Republic of Philippines in Bangladesh
In collaboration with the Department of Trade and Industry

 

 

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