U.S. Commercial Service PHILIPPINES

Business Opportunities in the Philippines

PATRICK T. WALL Senior Commercial Officer

U.S. Embassy ManilaApril 1, 2009, Honolulu

The Philippines in the heart of Asia

The Philippines –Geography and People

• 7,107 islands – size of New England

• 90 million people

• Over 10 million Overseas Filipino Workers (OFWs)

• Ethnic groups: Malay, Chinese

• Religion: Catholic (85%), Protestant and Muslim

The Philippines –Government & Politics

• Vibrant democracy with free, raucous press

• Bicameral legislature; 3 branches of government modeled after the U.S.

• Gloria Macapagal-Arroyo - President of Republic of the Philippines since 2001 (normally 5 yr-term)

• Next elections: 2010

The Philippines –Natural Resources &

Culture

• Rich in natural resources – 5th most mineralized country in the world

• Agricultural breadbasket

• Warm and friendly people - Rich heritage and thriving traditions

• Emerging medical tourism destination

Positive Opinion of U.S.

• Filipinos:– 95% favorable view of U.S.

• Filipinos see the U.S. as the most important player in the region

• Translates into great U.S. brand acceptance –competitive advantage for U.S. firms

U.S. - Philippine Ties

• Colonial Era – 1898 to 1946

• World War II– Shoulder to Shoulder

• Matured Friendship– English Language– Democratic Principles– 2.5 million Fil-Ams in the U.S.– 130,000 estimated American

citizen residents in the Philippines

Philippine Economy –Threats

• Reduced consumer spending• Higher government and trade deficit• Depreciating peso (exchange rate 3/30 –

US$1 to P48.47)

Opportunities in the Philippine Economy

• 2008 GDP growth of 4 % projected at 1- 4% in 2009• Increase in demand for Business Process Outsourcing (60K

to 400K seats 6 years ago)• Continuous influx of East Asian tourists• Expansion in energy and mining investments• Pump priming in infrastructure spending• Expansion in low-and medium-cost housing and office

buildings• Medical tourism and retirement villages• 10 million OFWs represent stable inflow

More OFWs, More Remittances

About 12 % of GDP comes from OFW remittances (2008)

Economic Indicators

2007 2008 2009 est.GDP (growth rate) 7.2 % 4.6 % 3. 8 – 4.3%GNP (growth rate) 8.0 6.1 4.9 – 5.2 %Imports - 4.5 % - 1. 1 % - 1. 5 %Exports (growth rate) 5.6 % 0.0 % - 3. 0 %Agriculture (growth rate) 4.9 % 3.2 % 3.0 %Industry (growth rate) 7.1 % 5.0 % 3.6 %Services 8.1 % 4.9 % 4.8% Inflation 2.7 % 9.7 % 4. 9%Population (million) 88.7 90.5 92est.OFW Remittances ( $ billion ) 14.4 16.4 15. 8 – 16. 4Exchange rate (Pesos) 46.1 44.5 48.0 – 51.0

For the U.S.

• The Philippines is the 35th

largest export market

• The Philippines is the 28th

largest exporter to the U.S. market

For the Philippines

• The United States is the single largest export market

• The United States is the top import source and largest seller to the Philippine market

Over US$17B two-way trade - relatively balanced trade flows

The United States is the top trading partner, accounting for nearly 16% of total Philippine trade with the world

U.S.-Philippine Trade: A Healthy Relationship

Leading Industrial Sectors for U.S. Exports to the

Philippines

1. Information Technology (BPOs)2. Telecommunications Equipment3. Electric Power Systems 4. Building Products5. Medical Equipment6. Water Resources Equipment &

Services

• US$3.41 billion worth of imports for IT-enabled services• Largest IT project - Election automation equipment for the

2010 national elections• 400,000 employees for the business process outsourcing

(BPO) industry, US$6.5 billion in revenue. • Best prospects:

• Election Automation Solutions• Security Solutions• Broadband Solutions & Wireless Application

Leading Sector # 1: Information Technology

• Mobile subscribers hitting 53 million in early 2008, over 50% of the population

• One billion text messages daily • Major telecom carriers: Smart, PLDT, Globe • Leading broadcast networks: ABS-CBN 2 & GMA 7 • U.S. broadcast equipment suppliers dominate the market • Best prospects:

• Wireless communication equipment• Broadband technology• Innovative applications

Leading Sector # 2: Telecommunication

• The Philippines is the second largest geothermal power producer in the world

• Abundant wind, solar, hydro power and biomass resources –highest potential in the region

• Best prospects: • Renewable energy equipment and products such as solar panels• Energy Efficiency Technologies• Lighting Equipment, Transmission and Distribution Hardware•Stand-by Mobile Power Generating Systems

Leading Sector # 3: Electric Power Systems

• Many U.S. made/U.S. brands available in the Philippinemarket, including everything from locks to roofs

• Real estate development projects: Residential Units, Shopping Malls, Office Buildings, Hotel projects , Techno/Industrial Park , Infrastructure projects

• Best prospects: • Building products with specialized characteristics or high-

end products for specific application; interior design and renovation products, specialized fittings, etc.

• Green building products • Products used in building roads, airports and other

infrastructure projects

Leading Sector # 4: Building products

• Philippine market is partial to American products. • U.S.-trained Filipino doctors prefer the high technology of American

medical equipment and instruments, despite their higher costs.• Medical tourism offers good opportunities for U.S. sellers of medical

equipment and instruments• Best prospects:

• electro-medical equipment• ultrasonic scanning machines• X-ray and radiation equipment• dialysis instruments and apparatus, and • medical and surgical instruments for cosmetic surgery

Leading Sector # 5: Medical Equipment

• Project opportunities that address increasing water demand and pressing water, sanitation, and wastewater-related problems.

• US$43 million Philippine government projects (Department of Health/Dept . of Public Works & Highways) for the development of potable water supply system

• Best prospects: • Drinking water treatment equipment/processes• Water resources and water supply systems• Products/equipment/accessories for sewerage, septage and combined sewerage-septage projects • Industrial wastewater treatment and recycling equipment

Leading Sector # 6: Water Resources Equipment

Success stories: U.S. Firms succeed in the Philippines

• Consumer products/Retailing: Office1 SuperstoreSold a master franchise fee of US$375,000 to a Philippine franchise holder, Store Specialists, Inc., a member of the Rustan Group of Companies which also owns Philippine franchise for Starbucks, The Gap, Zara, Debenhams.

• Security Systems/Information Technology: Brijot Imaging Systems, Inc. Sale of surveillance system used to detect, in real time, objects made of metals, plastics, ceramics and composites concealed underneath clothing. Brijot has already delivered $75,000 of products through appointment of a Philippine distributor

Philippine Business Culture

• Exporters should use a representative, agent or distributor

• Do your due diligence – Know Your Partner!

• Manage your risks

• Infrastructure• Intellectual Property Rights• Regulatory System

Challenges

Why the Philippines?

• American brands are well-known and trusted • U.S.-RP Commercial Relationship• Opportunities • Human Capital • Optimism• Filipinos:

– 95% favorable or very favorable• U.S. role in Asia; U.S. is #1 trading partner• Third-largest English-speaking country in the world

Who’s Who in the Philippines

Come to the Philippines!

• English-speaking, well-educated population• Shared cultural heritage in a vibrant democracy• Growing economy

Contact us !!

U.S. Commercial Service in Manila

Website: www.buyusa.gov/philippines

E-mail: Patrick.Wall@mail.doc.gov

CS Manila Staff-At your service