The Philippines is heading for higher trend growth, with the growth of Business Process Outsourcing (BPO) as one of the drivers, according to CLSA Asia-Pacific, an investment house in the region.
Known as a research driven company and described by The Wall Street Journal's Laurie Burkitt in an article as an "investment research group," CLSA released its February 20 research titled "The Eagle Flies Again" which said that "the [Philippines'] economic growth has lagged its regional peers. But, without much fanfare, the economy has transformed itself into an emerging services center, laying the foundations for today's growth." The report was penned by Mitzi de Dios, an analyst at CLSA.
The research said that an investment cycle in the private sector is a rare sight in the country, much like the rare and endangered Philippine eagle. But now, in what is being considered a first in 15 years, the Philippines is said to be on the way to another investment cycle. This is said to be the result of the following factors: the Philippines having demographic potential that is long term, as well as a balance sheet that's robust, lower interest rates, rising business confidence and political stability.
Stating that "the Philippines soars like an eagle, again," the report said that the transformation continues for the country, which was once considered one of Asia's "most promising." The report added, "The service sector continues to grow with the BPO segment underpinning rising employment and per capita spend. Tourism and gaming are other drivers." The research pointed out that last year tourist arrivals in the Philippines reached 3.9 million, an all time high. The projection is for a double-digit growth rate for the sector in the succeeding years.
According to the CLSA report, the BPO sector, which is known globally as the country's quality service sector, is likely to generate $25 billion in revenues and double employment to 1.2 million in the next few years to 2016. The resulting job opportunities will encourage more Filipinos to remain in the country. The report added that per capita income will increase and that the Philippines' middle class will continue to grow.
The CLSA paper reported that it was in the early 90s under President Fidel Ramos when the Philippines saw its last investment cycle. It was Mr. Ramos' deregulation of the banking and telecom sectors, which, the report stated, helped build the foundations that, over the past ten years or so, led to the development and gradual success of the BPO sector.
In the last decade, the country saw a population growth of 2.6 percent; for the past twelve years, on the other hand, there was an average growth of 4.54 % percent on the gross domestic product (GDP). The report predicted higher GDP growth starting next year.
Suggesting that now is the right time for the country to leave behind the stigma of the label "the sick man of Asia" and the disappointments of several false starts and missed opportunities, the research paper also said that there is now a real sense of optimism in the business sector and that the country now has other drivers for growth, aside from the considerable remittances from Filipinos overseas.