What are the top Philippine industries for foreign investors?
- Real estate industry
- Retail and e-commerce industry
- Business process outsourcing (BPO) industry
- Manufacturing industry
If you’re a foreign investor, you might be wondering if it is a good time to invest in the Philippines. Fortunately, the Philippine economy is expected to maintain strong recovery rates this 2022 because of loosened pandemic restrictions, the opening of borders, fewer COVID-19 cases, and growing local consumption.
Despite the increasing inflation rate due to geopolitical tensions and pushing oil prices, the Philippine economy’s growth rose up to 8.3% in just the first quarter of 2022 — one of the highest rates in the Southeast Asian region. To bring your confidence back, we discuss an overview of the investing state in the Philippines as well as the top Philippine industries for foreign investors.
Why Invest In The Philippines?
The Philippines, also known as The Pearl of the Orient, has been deemed one of the top countries for foreign investment. It is ahead of many nations because of its positive economic outlook in the coming years. The country is primed by key assets such as diligent and English-proficient Filipino workers. Investors are assured of a continuous supply of quality workforce — whether for sectors needing highly-technical professionals or for labor-intensive industries.
Other key factors driving the Philippines’ economic success include abundant natural resources, technological proficiency and infrastructure, strategic business location, favorable tax environment, remittances, strong consumption, innovation, and dynamism.
According to the Bangko Sentral ng Pilipinas, The Philippines recorded its highest foreign direct investment inflows just back in 2021 amounting to USD10.52 billion, a staggering 54.2% increase from the previous year. That being said, with the effects of the pandemic, it is pertinent that you choose the right industry to invest in. Some industries in the Philippines are faring better than others.
Opportunities abound for foreign investors targeting Philippines industries like real estate, retail and e-commerce, manufacturing, business process outsourcing, renewable energy, and retail. Continue reading to learn more.
Real Estate Industry
Real estate remains a thriving industry in the Philippines and it remains one of the best foreign investment choices today. There is an attractive potential for high returns for investors as there is a sustainable market among students, young professionals, families, expats, and retirees. But what earned the real estate industry on this top list is the amount of annual foreign direct investment the country receives. This is a very blatant indicator of just how investors see the potential in Philippine real estate.
The government’s Build, Build, Build project will continue to push projects such as expressways, bridges, railways, flood control projects, dams, and others to accelerate infrastructure building, decongest traffic, enhance countryside development, and disperse economic activities. Today, locations are more accessible than ever in the Philippines for transacting businesses.
Needless to say, the real estate industry encompasses a wide range of property types — whether residential, commercial, or industrial. In fact, as the demand for specialized zones conducive to industrial development increases, investments in industrial parks are increasing as well.
All these positive outlooks play a pivotal role in posing lucrative opportunities for foreign investors in the Philippine real estate industry.
Retail and E-commerce Industry
According to reports, the Philippine retail market is expected to grow by USD 70.67 billion at an 11.68% CAGR between the years 2021 and 2026. The market is segmented by personal and household care, apparel and footwear, and electronic products, with food and beverage accounting for maximum growth in the market.
More than that, the Philippine retail industry is propelled to succeed further due to e-commerce trends. The E-commerce sector is expected to contribute about PHP 1.2 trillion or 11.4% of GDP by the end of 2022. During the onset of the pandemic, consumers heavily relied on online shopping and transactions. And even as the regions are starting to recover from the pandemic, e-commerce growth is still growing. For foreign investors, any retail product from the light industry is a smart investment choice.
Business Process Outsourcing (BPO) Industry
The BPO industry has been proven crucial to the Philippine economy recovery and growth. Even in the face of the COVID-19 pandemic, the industry was recognized as “essential” by the former president along with food and health care providers. This allowed the BPO industry to remain resilient and continue operations. The sector was able to hire 1.44 million employees and deliver USD29.49 billion in revenue, beating targets significantly during the year 2021 alone. The previous target of the BPO industry was to hire 1.43 million workers and deliver USD 29.1 billion in revenue by the end of 2022.
The BPO industry continues to be a top foreign investment choice with its continuous growth. This optimistic outlook can be attributed to the adopted work-from-home arrangements during the new normal and internet connectivity improvements that up the Philippines’ technological capabilities.
The manufacturing industry of the Philippines receives the biggest foreign direct investment among all sectors. This sector alone contributes 25% of the country’s entire gross domestic product. While the pandemic did hit this sector due to logistic disruptions, the Department of Trade and Industry (DTI) is projecting a 10% growth this 2022.
Despite facing a decline back in 2020 due to the pandemic, the manufacturing industry is poised to return to its pre-pandemic growth track.
The manufacturing sectors that were able to grow during this year include food, wood and bamboo, furniture, paper, metals, fabricated metal, chemical, and pharmaceutical products.
The top Philippine industries for foreign investors offer attractive high returns. The country is already recovering from the pandemic and these are industries you can invest in as they are thriving better than others! Want to invest in the Philippines? Let Science Park of the Philippines (SPPI) help you make a smart investment decision today! Click here to inquire.