Introduction of the Philippines economic environment--National-zone--V-Next

Introduction of the Philippines economic environment

The Philippines is a unitary sovereign and archipelagic country in Southeast Asia. It has an area of 343,448 square kilometers and, as of 2015, had a population of at least 100 million. As of January 2018, it was the eighth-most populated country in Asia and the 12th most populated countryin the world. The Philippines is the world's 34th largest economy by nominal GDP according to the 2017 estimate of the IMF's statistics, it is the 13th largest economy in Asia, and the 3rd largest economy in the ASEAN after Indonesia and Thailand. The Philippines is one of the emerging markets and is the sixth richest in Southeast Asia by GDP per capita values, after the regional countries of Singapore, Brunei, Malaysia, Thailand and Indonesia. It is primarily considered a newly industrialized country, which has an economy transitioning from one based on agriculture to one based more on services and manufacturing. As of 2017, GDP by Purchasing power parity was estimated to be at $986.980 billion. Primary exports include semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, and fruits. Major trading partners include Japan, China, the United States, Singapore, South Korea, the Netherlands, Hong Kong, Germany and Thailand. The Philippines has been named as one of the Tiger Cub Economies together with Indonesia, and Thailand. It is currently one of Asia's fastest growing economies.

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The Philippines consumption power fuelled by robust economic growth


In 2016, the Philippines recorded an impressive economic growth rate of 6.8% and this momentum is expected to continue. By the World Bank’s definition, the Philippines remains a lower middle income country at present, with a considerable income gap between it and richer ASEAN countries such as Thailand and Malaysia. However, if the current level of economic growth can be sustained, the Philippines is on track to become an upper-middle income country by 2022. The chief factors fuelling the country’s current consumption power are foreign receipts from overseas remittance and business processing outsourcing (BPO) services. In 2016, overseas Filipino workers remitted a total of US$27 billion back to the country. The remittance figure is much higher than the record US$7.9 billion in actual foreign direct investment (FDI) recorded by the Central Bank, Bangko Sentral ng Pilipinas (BSP) for the same year. However, the net FDI inflow in 2016 increased by some 40% from 2015 levels, as key reliable economic factors galvanised the country in spite of uncertainties caused by the change of president. The fast-growing BPO sector is another important source of foreign exchange for the Philippines, and has become the country’s largest source of private-sector employment. The industry is driving income growth, as BPO jobs are among the highest-paying jobs at all levels. It is estimated that Philippine BPO receipts amounted to US$25 billion in 2016[2]. Overseas receipts from remittances and BPO have driven local consumption and property investment in the Philippines, generating a sturdy cycle of growth. Final consumption expenditure of the Philippines almost tripled in the decade up to 2015 to a level of around US$247.9 billion, translating into an impressive CAGR of 11%. Anchored by strong economic growth, consumer confidence with the Philippines is now at a 10-year high and it topped world rankings in 2016. The Philippines also boasts a very youthful population with a median age of around 23 years old. This skews even younger than other populous ASEAN counterparts such as Indonesia and Vietnam. Such a demographic signals a strong vibrancy within the labour market which is capable of sustaining economic growth. Also, it fuels consumer spending. Young people usually operate on a low saving ratio and have a higher tendency to buy discretionary items.

News

The administrator of a government-controlled economic zone in the Philippines has revealed plans to issue 25 licenses to cryptocurrency exchanges. The Cagayan Economic Zone Authority (CEZA), a government-operated economic zone in the northern tip of the Philippines, will open its doors to as many as 25 cryptocurrency exchange operators in its tax-friendly jurisdiction, an announcement on its website revealed. The move to license effectively legalise crypto exchanges will follow a strict integrity check, coinciding with wider regulations for the cryptocurrency sector. Each cryptocurrency exchange will be required to invest at least $1 million within two years of operations in the zone as well a physical presence via an office in the zone, CEZA chief Raul Lambino added. Despite the limitation on the direct licenses, each cryptocurrency exchange will have 20-30 sub-licenses for trader and brokers, Lambino confirmed.. “We do not want the Philippines to be a haven for scammers even if these scams are happening abroad,” the CEZA chief was quoted as stating by a government-owned newswire. “That’s why through our probity and integrity check we can determine if their transactions are just designed to entice unsuspecting people to invest in Bitcoin or whatever crypto coin that is a fraud.” The authority is also mandating all ICO operators to have their coins to be ‘asset-backed’. As reported previously, the CEZA has already received a number of applications from cryptocurrency firms in the region to operate in the tax-haven zone strategically situated within an hour’s flight from Hong Kong, China and Taiwan. Earlier in April, the CEZA revealed it was in the process of issuing ten licenses to companies looking to operate exchanges, offer initial coin offerings (ICOs) and even mine cryptocurrency within the zone. “They are Japanese, Hong Kong, Malaysians, Koreans…,” Lambino said at the time. “They can go into cryptocurrency mining, initial coin offerings, or they can go into exchange [operations].” Elsewhere in the mainland, the Philippines’ central bank has also been reviewing over a dozen applications from operators looking to establish an exchange in the country. The Philippines is among the earliest countries in the world to publish regulations for cryptocurrency exchanges in February 2017. In a refreshingly candid televised news interview, the deputy director of the Philippines’ central bank lauded the ‘pioneering’ regulation and highlighted the benefit of using bitcoin as a “fast, near real-time and convenient” monetary instrument.

News

Philippines Ambassador to India Maria Teresita C Daza today said that her country could emerge as the fastest growing economy in Southeast Asia over the next two years. The sectors driving the economic growth in the Philippines are BPO, financial services, trade, construction, private consumption and manufacturing, she said. "Philippines is expected to be the fastest growing economy in Southeast Asia and second fastest in the world over the next two years," the ambassador said at an interactive session at the Merchants Chamber of India here. Referring to India, she said it is one of the fastest growing economies in the world now. Daza said the major factor driving her country's growth is its young and educated workforce which has an average age of around 24 years. The Philippines Foreign Direct Investment inflows had hit an all-time high of USD 10.05 billion in 2017, up by 21.4 per cent compared to 2016 levels, she said. The country's government has embarked on major reform programmes to significantly enhance the ease of doing business, such as TradeNet Platform, an online portal that will have 66 government agencies on board over the next two to three years, Daza added. Several Indian IT companies have set up BPO operations in the Philippines, including Wipro, Tata Consultancy Services, L&T Infotech, Genpact, Infosys, Intelenet, Aegis, HIMT (Hindujas) and Tech Mahindra, the Philippines officials said. The Philippines is beginning to emerge as a destination for many Indian students and there are more than 10,000 Indian students pursuing medical courses in various universities in that country, MCC president Ramesh Agarwal said.

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