Sectors

Agriculture

The Philippines has recently transformed into a dynamic emerging economy that sustained a growth trajectory of 6.4% between 2016 and 2019. The agricultural sector employs one third of the population and accounts for 9% of the national GDP. Though the growth of this sector as a whole has not been optimal, they broke new ground with their “New Thinking” program. Which is set out to consolidate, modernize and industrialize the Philippine agriculture.

The challenges can be found in productivity, infrastructure and the lack of technical capabilities. These result in opportunities in the hog and pork industry, high value crops, innovation in farming technology, digitalization, storage and infrastructure. Dutch companies possess the skills and knowledge to fill these voids in the agricultural sector of the Philippines.

Automotive

The Automotive Industry in the Philippines has been a thriving industry in the country over the last five years. Across the Asia Pacific Region, the Philippines ranked 9th among the countries with the highest passenger cars sold. The Philippine automotive industry consists of three major markets: motor vehicles, motor vehicle parts, and component manufacturing.

One of the main challenges for the Automotive sector is competition with countries as Thailand, Indonesia and South Korea. Also, COVID-19 had a huge impact on the production of automotive products. On the other hand, as the Philippines have a largely growing middle class, demand for automotive products is growing.

Biotech

Biotechnology is a science that allows farmers to be more efficient and environmentally conscious by growing more crops resistant to pests and diseases on less land. This scientific advancement is essential in the nation, as almost half of Filipinos work in agriculture and the country is experiencing significant population growth.

Biotechnology in the Philippines is so important that a new biotechnology center is being built to support the Philippine Department of Agriculture. The project is being funded mainly by the U.S. Agricultural Trade Development and Assistance Act, Public Law 480. Agriculture makes up 20 percent of the Philippine’s GDP, yet Filipinos dependent on agriculture as their main source of income are some of the poorest in the nation.

Biotechnology in the Philippines increased the agriculture market by $642 million, and 14 climate change resistant rice strains have been created in recent years. The strains in-use now only take 5 to 7 years to breed as opposed to 10 to 12, and such results provide international hope for feeding ever-growing populations and combating a changing climate. For these reasons, it’s essential for foreign aid to continue and for biotechnology in the Philippines to remain active in agriculture.

Business Process Outsourcing

The Business Process Outsourcing (BPO) industry is considered one of the fastest growth industries in the world. It has grown at an average annual expansion rate of 20 percent.  The IT and Business Process Association of the Philippines (IBPAP) has stated that the IT-BPO and Global In-house Center (GIC) industry is the Philippines’ most important generator of jobs.  Its contribution to the Philippines GDP is approximately 17 percent in 2016, and it is now the Philippines’ second largest net foreign exchange earner after remittances from an estimated 10m overseas workers. The Philippines BPO industry has overtaken India as the leading call center country, and due to this, the subsector is projected to continue to maintain the largest contribution to the industry’s growth in future years.

BPO in the Philippines has the potential to help Dutch companies to focus on the core mission of their business while outsourcing their non-essential services such as email-support, bookkeeping, customer service, or accounting.

Education

The Philippines is one of the countries that has been investing more in its educational system, seeing it as an instrument for accelerating the country’s human capital development. This is reflected in the Philippine Development Plan 2017-2022 which states that the government intends to, “achieve quality accessible, relevant, and liberating basic education for all,” as well as, “improve the quality of higher and technical education and research for equity and global competitiveness.”

The Philippine education sector has therefore been given the highest allocation from the national budget, allowing the Department of Education (DepEd) to implement various educational reforms such as the K to 12 Program and the Universal Access to Quality Tertiary Education – all aimed at giving Filipino students equal access to quality education.

Energy

Due to the increasing population and the growing industry, the demand for electricity is increasing rapidly. The 2012-2030 Philippine Energy Plan (PEP) seeks to mainstream reliable and affordable energy services to fuel local productivity and countryside development. The PEP invites foreign expertise, investments, and innovation. In addition, the Philippines seeks to improve its environmental performance significantly by setting goals to generate energy consumption through clean sources.

Currently there is a lack of specific knowledge in the Philippines. The innovative Dutch business climate, combined with its expertise in the renewable energy market, promises business opportunities to lay ahead. Sectors with explicit potential are: generated distribution, solar power innovations, the service industry for wind generation, energy storage through water management, and electric public transport and smart charging solutions.

Healthcare & Life Sciences

The Philippines has a fast-growing middle class and aging population. The middle class has more money to spend and expects higher quality of care. Together with this development, the government is making efforts to improve the quality of healthcare throughout the country. There remain challenges regarding health access; many hospitals are outdated and overcrowded and are in need new medical equipment and more staff.

The speed and quality of implementation of health reforms as well as macro-economic progress will be crucial for further market opportunities to arise for Dutch companies active in The Philippines. Indicative fields that are expected to become or remain interesting in the medium to longer term future include: Construction and equipping of new health infrastructure in remote areas, capacity in emergency and disaster medicine services and population screening programs (e.g. cancer).

Industry

Before the COVID-19 pandemic, the Philippines has seen significant growth within the FMCG sector. The highest share in the Filipino FMCG sector in the third quarter of 2020 was food, followed by beverages and personal care. Food accounted for 58 percent of the total FMCG value, whereas beverages and personal care accounted for 17 percent each.

The Philippines’ large population, strategic location, and rising middle class has led to many advantages from a manufacturing point of view, which also has a positive result on the retail industry. Furthermore, lower inflation and increased purchasing power created more consumer confidence. Online retail activity is seeing a substantial growth, due to the support of government policy and market leaders. This combined with new logistics and transport opportunities, creates a valuable network for the retail market.

Manufacturing contains over 50 percent of the Philippines’s industrial sector and accounts for almost a quarter of their GDP. Due to a high unemployment rate, the manufacturing industry creates opportunities since it is a labor-intensive industry. The Philippine government has created a roadmap for structural transformation, which will for example lead to a more sustainable growth, upgraded technology, better competitive exchange rate, and more aggressive marketing and promotion programs. Besides this, the Philippines has a broad variation in manufacturing industries such as: aerospace, auto parts, E-vehicles, Electronics, Furniture, Natural Health Products, and many more.

Information Technology

IT, with a focus on business process outsourcing (BPO), is seen as a prime are that is projected to continue growing in the Philippines. The Philippines’ growing middle class and the young population are also important drivers of IT demand because their spending levels on technology products are on an upward trajectory, benefitting premium brands, even during COVID-19 crisis.

Challenges for this sector are slow and expensive internet, and high vulnerability to cyber-attacks. Also, smart cities, consumer electronics and increasing e-commerce are subsectors that offer many opportunities.

Maritime

The extensive area of its bays and coastal and oceanic waters gives the Philippines maritime sector and its allied industries a vital and critical role to play in the inclusive economic growth and sustainable development of the Philippines. The Philippines is strategically located along the international sea lanes of commercial ships that cater to the world’s seaborne trade. Seafaring, shipbuilding and fishing are the sector’s key strengths.

Several new opportunities have occurred for Dutch companies. For example, cruise tourism is emerging as the new up-and-coming business in the Philippines and is projected to attract more visitor arrivals in the future. Another new growth area in the maritime sector is the development of coastal and inland waterways. These lessen urban traffic congestion and pollution in highly metropolitan and urbanized areas and offer an alternative cost- and energy-efficient mode of transport. Finally, there are also excellent prospects for the further development of shipping and fishing enterprises.

Tourism

The Philippines’ tourism industry is a significant source of the country’s GDP throughout the years. In terms of tourism sector GDP share in Asia, the Philippines’ share was one of the highest-ranking. In the past year, though, the COVID-19 pandemic had disrupted the tourism market’s supply chain resulting in an economic downturn for the Philippines. This year, the Philippines’ tourism industry has created major strategies and plan for domestic traveling in the new normal to keep tourism alive and going with the closure of international borders.

As the COVID-19 pandemic continues to affect the industry, the Philippines’ domestic tourism market is likely to help the industry recover. Local tourism stakeholders adapting to the crisis, understanding travelers’ preferences, and providing a robust online travel service would propel its road to recovery. As online sales channels have been one of the preferences for sales distribution channel in the travel and tourism market in the past, its share is estimated to increase to over 60 percent by 2025, thus, giving a better choice for stakeholders to navigate their efforts.

Transport & Logistics

Transport & Logistics is a driver of the Philippines’ and firms’ competitiveness which is fundamental to job creation and economic growth. Efficient logistics connects firms to domestic and international markets; it affects the competence of the manufacturing global value chains, and competitiveness of a country’s economy within these value chains.

The logistics industry in the Philippines is a key GDP contributor, but lags behind the country’s neighbours when it comes to digitalisation. This is where opportunities lie for Dutch companies with expertise in this area.

The infrastructure sector is a key investment area in the Philippines that has the potential to facilitate the development of other sectors. For this reason, the government aims to accelerate the provision of safe, efficient, reliable, cost-effective, and sustainable infrastructure, providing the private sector a level playing field, reasonable returns and appropriate sharing of risks.

Water

The Philippines’ position on the Pacific Ring of Fire and within the western North Pacific basin makes it prone to natural disasters. The country also faces significant challenges in terms of water and sanitation access. The country is rapidly urbanizing, and its growing cities struggle to provide new residents with adequate water and sanitation services.

The Dutch water sector has successfully been involved in the Philippines for many years now and the Philippines are eager to learn from Dutch knowledge. Government agencies have already indicated an interest in Dutch expertise and technologies in the areas of wastewater treatment, improvement of water use, and flood management. Other opportunities for the Dutch water sector lie in integrated coastal zone management, water supply, and in the field of sustainable urban development. Dutch technologies are considered as superior quality and are therefore preferable options for water and environmental technology purchases.