THE Philippines is placing its faith on the Regional Comprehensive Economic Partnership (RCEP) and “friendshoring” to buoy the country’s Business Process Outsourcing (BPO) industry, according to the Philippine Economic Zone Authority (PEZA).
PEZA Director General Tereso O. Panga said the IT & Business Process Association of the Philippines (IBPAP) can target English-speaking countries like Australia and New Zealand as the new markets for their industry.
This is possible given the country’s recent accession to the RCEP, the world’s largest regional trade agreement. The country’s accession to RCEP was ratified by the Philippine Senate this year.
“On the impact of the lowering of the Philippines GSLI [Global Services Location Index] ranking, we note that most of the companies that have transferred to Mexico and Columbia are basically targeting the Spanish- speaking market in the United States which is not really our core target. It is a shift,” Panga said. “This (RCEP) will complement our traditional market strengths in the US and EU for services exports.”
A report by Kearney Inc. revealed that the Philippines is losing to its Asian neighbors in terms of attracting more companies to tap Filipino talent in local business process outsourcing (BPO) companies to provide global services (Full story here: PHL still Asia’s BPO engine, but down in offshoring rank ).
Panga said the PEZA is looking at allyshoring or friendshoring as a stopgap measure while the new digital hubs are still in the pipeline. This is possible since the current administration has renewed its ties with the United States.
The PEZA Chief said the agency is banking on the improved perception of the Philippines as an investment destination of companies from the Western Hemisphere and attract them to re-engage with the Philippines.
“I believe we still remain as a prime destination for the traditional IT-BPM services where we are ranked in the top 10 among choice destination locations. This is in part due to the high English language proficiency of our workforce as well as the high quality of our IT Engineers,” he added.
Further, Panga said allyshoring has been working for the Philippines even in the manufacturing industry, specially when it concerns the American export producers which remain our 2nd biggest foreign investors next to Japanese in PEZA.
He said this is supported by the increase in trade and investments between the US and the Philippines. Panga noted that the semiconductor-electronics products produced in the ecozones continue to be the country’s biggest source of export revenues.
In 2022, Panga said total electronics exports amounted to $49.1 billion, and where the US was reported to be the top destination for Philippine exports.
The IT companies registered with PEZA directly employ around 1 million Filipinos. Moreover, the total IT-BPO industry’s exports in 2022 valued at $32.5 billion is slightly lower than the total OFW remittances last year amounting to $36.1 billion.