IT-BPM

The Philippines’ Information Technology and Business Process Management (IT-BPM) sector is one of the best-performing and employment generating activities in the past four years. Its global leadership in voice-based services as well as continuing improvements in non-voice and complex process outsourcing show the promising growth trajectory of the IT-BPM sector. To be able to cement its position in the global IT-BPM sector, the Information Technology and Business Process Association of the Philippines (IBPAP) has advocated for deeper policy reforms which will support employees’ skills development and maintain a competitive business environment for the industry.

The industry’s initiatives focus on four action areas: (1) widening and deepening human capital by scaling up industry public-private partnerships; (2) strengthening Philippine attractiveness as an investment destination through advocacy activities; (3) achieving Roadmap 2016 goals by leading cross-sectoral efforts; and (4) building Philippine IT-BPM brand globally through marketing programs.

 

About IT-BPM

As of 2010, the Philippines’ IT-BPM sector has already overtaken India’s standing in voice-based services, making the country the number one provider for such services in the global economy. Voice-based services is also identified as the largest contributor in the local BPO industry, comprising 64% (493,000) of generated direct employment and 67% ($ 7.4 billion) of total revenues in 2011. Aside from this, several non-voice and complex BPO services such as healthcare information management, knowledge process outsourcing, engineering, animation, and software development are gaining prominence in the global BPO sector and are in a higher growth pace vis-à-vis voice-based businesses.

The global foothold of the Philippine IT-BPM industry is largely attributable to the strong skills of the Philippine labor force. In voice-based services, Filipinos hold competitive advantage in English communication skills, strong customer service orientation, and adaptability to consumers’ Western culture. In non-voice and complex services, The Economist and Everest Group analysts report the growing number of businesses providing healthcare information management, human resources management, business intelligence, and offshore financial consulting in the Philippines. Coupled with Filipinos’ hard work and openness to learning, these two existing advantages provide investors with a strong advantage once they set up shops in the country.

As an enabler of business, the Philippine government provides IT-BPM firms with one of the best investment environment so that they can operate their enterprises productively. For instance, the Board of Investments (BOI) provide income tax holidays, tariff reductions in capital equipment and streamlined business registration and coordination procedures for non-voice and knowledge process outsourcing enterprises which produce original content. The Philippine Economic Zone Authority (PEZA) also provides an incentives package for IT-BPM businesses, including voice-based services in its scope of qualified investors. Aside from better coordination procedures with government, IT-BPM enterprises benefit from a sound telecommunications infrastructure in the country as well as a stable pool of skilled professionals in urban cities, where the population base is growing at stable replacement rates. These conditions assure that businesses can conduct their activities within a stable macroeconomic and investment climate.

 

Programs

Industry Development Program

The IT-BPM industry Technical Working Group (TWG) conducts meetings to discuss and address industry concerns and issues. Among its recent activities are:

  • Human Resource Development. With funding from DOST-ICTO, an initial batch of 20 graduates was provided Lean Six Sigma training by IBPAP and UP National Engineering Center. In addition, IBPAP, AIM, and UP Open University are pushing for the creation of hubs for training IT-BPM talents nationwide. Several CEO/stakeholder consultations were conducted with at least 5 different IT-BPM sectors.  Several deliverables were completed and progress achieved in each of the three components: a) completion of the draft of the AIM Thought paper; b) completion of the IBPAP criteria for Selecting Knowledge Hubs; and c) completion of UPOU’s Learning Profile Research and commencement of the review of the existing IBPAP courseware. Project implementation period is September 2013-November 2015 (26 months). Furthermore, IBPAP and DOLE signed a two-year partnership agreement to promote best people practices and voluntary compliance with general labor standards (GLS) and occupational safety and health (OSHS).  Under the agreement, DOLE and IBPAP will implement a two-year action plan to assist employed workers keep their jobs, assist unemployed workers find jobs, and protect workers’ right and benefits.
  • Baseline Statistics. DOST-ICTO and UP School of Statistics are currently implementing the ICT Industry Mapping Project which will establish a unified baseline data on the IT-BPM industry and serve as guide to project goals and targets of IT-BPM roadmap. The preliminary results of the 2012 Census of Philippine Business and Industry on BPO activities, culled from the section on Information and Communication and Administrative and Support Service Activities, was presented in July 2015. The Philippine Statistic Authority is targeting to present the final results by January 2015.
  • PH-Taiwan LOI on Technical Cooperation IT-Enabled Services. In connection with the 20th PH-Taiwan Joint Economic Conference (JEC) held in Taipei in October 2014, the LOI on ICT Cooperation was elevated with the signing of three (3) MOUs in Smart Education, eLearning products, and promotion through hosting events, activities or awards.
  1. MOU on Digital Content Cooperation between the Animation Council of the Philippines Inc. (ACPI) and the Game Developers Association of the Philippines (GDAP), and the Institute for Information Industry
  2. MOU on ICT School Consultation between Federation of Associations of Private Schools & Administrators (Philippines) and Shou Yang Digital Technology Co. Ltd, and Over Paradigm Inc. (Taiwan)
  3. Signing of the MOU on Mutual Product Representative between Xepto Computing Inc. (Philippines) and Shou Yang Digital Technology Co. Ltd. and Shuttle Inc. (Taiwan)
  • National Quality Standard. IBPAP noted with interest the imminent publication of the International Standard ISO 37500: Guidance on outsourcing by ISO. BOI proposed a MOU between IBPAP and DTI-BPS.  BOI is coordinating with IBPAP Lead on Quality Standards to have the MOU signed in the first quarter of 2015.
  • Promotions. To strengthen the Philippine brand and create greater awareness on the IT-BPM and GIC industry locally and internationally, DTI approved the printing of 5,000 promo collaterals for IT-BPM. In June 2014, 5,000 copies of promo collaterals were delivered to FTSC and private sector.
  • Talent-Related Initiatives. Projects implemented to execute the roadmap action plans were talent-related initiatives addressing education and training needs. The following were recorded as of School Year June 2014.
  1. Service Management Program (SMP): 545 teachers from 13 SUCs are now trained to teach SMP subjects (Service Culture, Business Communication, Systems Thinking, and BPO 101/102; SMP Faculty Training Completion Rate: 80% (545 out of 685) with an SUC participation rate of 82% (14 out of 17); Midterm Assessment is to conduct an SMP Master Teachers Training Program for 100 teachers coming from SUCs so they can become SMP training centers for all interested HEIs in their respective administrative regions.
  2. Advanced English Pre-employment Training (AdEPT): 525 teachers from 14 SUCs have completed BEST and/or AdEPT
  3. Expanded Learning for IT Services (ELITES): 54 teachers from 5 SUCs are now trained for ELITES; ELITES Faculty Training Completion Rate: 54% IT faculty TES) training.
  4. Global Competitiveness Assessment Tool (GCAT): GCAT for 1,270 students and 229 teachers

 

Champions

Information Technology and Business Process Association of the Philippines

Mr. Jose Mari Mercado
President

5th Floor C2 Building, Bonifacio High Street,

30th Street cor. 7th Avenue,

Bonifacio Global City, Taguig City

Tel. No: (632) 817-2727

Telefax: (632) 817-8141

E-mail: [email protected]

Website: www.ibpap.org

Board of Investments (BOI)

Mr. Paul Edward E. Tajon
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 897-6682 loc. 279

Email: [email protected]

Housing

The Philippine housing industry believes that every Filipino family has the right to live with dignity in the comfort of one’s own home regardless of economic status. It aims to eliminate the housing backlog by the year 2030.

The Philippine housing sector has enormous potential for growth, as demand for living spaces continue to increase. Through several industry-led initiatives, the sector hopes to sustain its robust growth and development – at affordable prices for the Filipino household.

Towards this vision, the industry’s objectives are:
1. Increase housing production capacity to sustain 12% annual volume growth
2. Implement a comprehensive government housing subsidy for targeted segments
3. Improve the regulatory environment for housing
4. Generate and mobilize funds for end-user financing

 

About Housing

The housing backlog is 3.9 million households. Assuming that production of housing units would average 200,000 units every year from 2012 to 2030, the backlog would still persist and hit 6.5 million households by 2030. The highest demand would come from the economic housing segment, followed by socialized housing, and lastly by low-cost housing.

The low-cost, socialized, and economic housing units account for a large share of housing production. From 2010 to 2011, housing production in the high-end, mid-end, and low-cost categories increased, while production of houses in economic and socialized housing was relatively flat. From 2000 to 2011, economic, socialized, and low-cost housing cornered close to 70% of total housing production. During this same period, the socialized segment accounted for 27%, the economic segment accounted for 29%, and low cost segment 13%.

As of 2011, there are 3,164 players in the housing industry. Despite the huge number of firms engaged in housing, only a few firms dominate the industry. Most of these firms are highly integrated developers that are engaged in various real estate developments besides housing. Many other firms are into retail real estate, hotels, commercial office buildings, and industrial estate development.

The Subdivision and Housing Developers’ Association (SHDA) is the largest organization of housing developers in the Philippines, counting 160 members from its chapters in Luzon, Visayas, and Mindanao. Other industry participants are members of the Chamber of Real Estate and Builders’ Associations (CREBA), the Real Estate Brokers Association of the Philippines, Inc. (REBAP), the Philippine Association of Real Estate Brokers (PAREB), the National Real Estate Association of the Philippines (NREA), and the the Organization of Socialized Housing Developers of the Philippines (OSHDP).

 

Facts and Figures

Housing demand and supply profile, 2001-2011

Market Segment Housing demand Housing supply Surplus (Deficit)
Socialized Housing 1,143,048 479,765 (663,283)
Economic Housing 2,503,990 541,913 (1,962,077)
Low Cost Housing 704,406 242,246 (462,160)
Mid Cost Housing 72,592 322,995 250,403
High End Housing 18,235 242,246 224,011

Backlog: 3,087,520, excluding 832,046 households that can’t afford

 

New Housing Need, 2012-2030

Market Segment Price Range Units Needed % of TOTAL Need
Can’t Afford/Needs Subsidy 400K & below 1,449,854 23%
Socialized Housing 400K & below 1,582,497 25%
Economic Housing 400K – 1.25M 2,588,897 42%
Low Cost Housing 1.25M – 3M 605,692 10%
Mid Cost Housing 3M – 6M No need
High End Housing > 6M No need
TOTAL Need 6,226,940

Total New Need Average: 345,941 housing units per year

 

Estimated Backlog by 2030* 
Those who can’t afford 832,046
Backlog, as of 2011 3,087,520
Total Housing Backlog, as of 2011 3,919,566
New Housing Need, 2012-2030 (345,941 units/yr X 18 yrs.) 6,226,540
Housing Production Capacity (200,000 units/yr X 18 yrs.) 3,600,000
Backlog by 2030 6,546,106

*If no special housing program is created.

 

Policies

IPP 2014-2016

Economic and Low-Cost Housing (horizontal and vertical) (based on a price ceiling of Php3.0 million and subject to geographical considerations) is among the preferred activities listed in the IPP. This covers the development of economic and low-cost housing and the manufacture of modular housing components.

a. Economic and Low-Cost Housing

The following are the qualifications for registration:

  • The selling price of each housing unit shall be more than Php450,000.00 but not exceeding Php3.0 million;
  • Minimum of 20 livable dwelling units in a single site or building;
  • Must be new or expanding economic/low-cost housing project;
  • For vertical housing projects, at least 51% of the total floor area, excluding common facilities and parking areas, must be devoted to housing units.

In cases of un-incorporated joint venture and similar arrangements between landowner and developer wherein the sharing scheme is in terms of the number of lots or units built, only the share of the developer may qualify for registration.

Projects that have already been completed and have incurred sales (booked sales) of housing packages shall not qualify for registration.

Any of the following may be considered as an expansion project:

  • Construction of additional floors or annexes intended for housing units;
  • If the project will locate adjacent or contiguous to an existing housing project owned by the same entity and shall share common facilities including access to the existing project.

All economic/low-cost housing projects must comply with the following:

  • Socialized housing requirement (SHR) by building socialized housing units in an area equivalent to at least 20% of the total registered project area or total BOI registered project cost for horizontal housing and 20% of the total floor area of qualified saleable housing units for vertical housing projects.

This may be done through any of the following modes:

  • Development of a new settlement directly undertaken by the registered entity;
  • Development of a new settlement through joint venture arrangements with any of the following:
    1. Local Government Unit,
    2. Affiliate or other related enterprise of the BOI-registered entity,
    3. Developer accredited by the HLURB.

In the case of joint venture projects, the BOI registered entity shall be required to provide proof of funds transferred to the implementing entity.

  • Development of a new settlement through donation of land with basic infrastructure facilities (roads, water system, etc.) and/or construction materials intended for the calamity stricken areas as identified in the “Comprehensive Rehabilitation and Recovery Plan of the Areas Battered by Yolanda” in partnership either with any of the housing agencies, relevant LGUs, or with HLURB accredited NGOs.

In lieu of the above modes for compliance with the SHR, vertical housing projects may opt to donate provided: (1) the donation is made to BOI accredited NGO and (2) the amount to be donated shall be equivalent to 30% of (20% of the building construction cost based on the actual number or equivalent total floor area of qualified saleable low cost housing units) or not less than 40% of the estimated ITH. Equivalent total floor area refers to the sum total of the floor area of all the registered low-cost housing units.

  • For purposes of ITH availment, compliance with the 20% socialized housing requirement shall be computed based on the actual units sold during the ITH availment period. Failure to submit proof of compliance shall result to forfeiture of ITH for that particular taxable period.
  • Non-compliance with the 20% SHR on previous registrations using the ITH-based Compliance (IBC) shall result in denial of applications for registration for succeeding projects.
  • Project shall conform with the design standards set forth in the Rules and Regulations to Implement B.P. No. 220/P.D. No. 957 and other related laws.

Eligible projects in NCR, Metro Cebu, and Metro Davao may only be granted three (3) years ITH unless the SHR compliance of the said projects would be undertaken in any of the identified calamity-stricken areas in the “Comprehensive Rehabilitation and Recovery Plan of the Areas Battered by Yolanda”. In such cases, said projects may be eligible to four years of ITH.

Interest income arising from in-house financing shall not be entitled to ITH.

Application for registration must be accompanied by a copy of the Development Permit issued by HLURB or concerned LGU.

Prior to registration, horizontal housing project applicant must submit copies of License to Sell (LTS) and Certificate of Registration (CoR) issued by HLURB. For vertical housing project, applicant may submit a copy of its temporary LTS provided that the copies of the final LTS and CoR shall be submitted prior to start of commercial operation.

b. Modular Housing Components

This covers the manufacture of modular housing components preferably using indigenous materials. These include roof/framing systems, wall/partition systems, flooring systems, door/window systems, and finishing/ceiling systems.

Application for registration must be accompanied by an endorsement from Accreditation of Innovative Technologies for Housing (AITECH).

Social Housing Finance Corporation

Created by virtue of Executive Order No. 272, series of 2004, the Social Housing Finance Corporation (SHFC) is a wholly-owned subsidiary of the National Home Mortgage Finance Corporation (NHMFC) mandated: (a) to undertake social housing programs that will cater to the formal and informal sectors in the low-income bracket; and  (b) to take charge of developing and administering social housing programs, particularly the Community Mortgage Program (CMP) and the Abot-Kaya Pabahay Fund (AKPF) Program (amortization support program and development and financing program).

 

Programs

Pag-IBIG Affordable Housing Program

The Home Mutual Development Fund (HMDF, or Pag-IBIG) offers the Affordable Housing Program (AHP), which is designed for minimum wage earners or whose gross monthly income does not exceed P17,500. Up to P750,000 may be borrowed under this program, with interest rates of 4.5% or 6.5% in the first ten years of the loan, depending on the gross monthly income of the borrower.

The Pag-IBIG AHP housing loan may be used to finance the following:

• Purchase of a fully developed residential lot or adjoining lots not exceeding 1,000 square meters;

• Purchase of a residential house and lot, townhouse, or condominium unit;

• Construction or completion of a residential unit on a lot owned by the member.

Based on computation, a qualified Pag-IBIG member can borrow up to P394,722.32 loan amount under the AHP, with a monthly amortization of P2,000 for the first ten (10) years of the loan. This illustration is under a 4.5% interest rate and 30-year repayment period. The gross monthly income required for this loan amount and interest rate shall not exceed P15,000 for those working in the NCR and for OFWs, and P12,000 for other regions.

Community Mortgage Program (CMP)

The Community Mortgage Program (CMP) aims to improve the living conditions of homeless and underprivileged Filipinos by providing them affordable financing with which they can secure tenure on the land they occupy.

The CMP is a mortgage financing program which assists legally organized associations of residents of blighted or depressed areas to own the lots they occupy, providing them security of tenure and eventually improve their neighborhood and homes to the extent of their affordability.

Abot-Kaya Pabahay Fund Developmental Loan Program (AKPF – DLP)

The Abot-Kaya Pabahay Fund Developmental Loan Program (AKPF – DLP) aims to provide low-income families with affordable housing packages in key Philippines urban areas and other localities with pronounced housing demand. The purpose of the DLP loan assistance is to serve as seed money for the development of property and construction of housing units thereon.

Industry Development Program

The housing industry technical working group (TWG) conducts meetings to discuss and address industry concerns and issues. Among its activities are:

  • New Requirements for High-Rise Buildings (Old and New). The requirement of an accelerograph for all high-rise buildings and an Automatic Fire Suppression System (AFSS) to vertical projects is deemed to be in conflict with BP 220, the National Building Code, and Fire Code IRR. The proposed amendment to the IRR of the  Fire Code  and the rationalization of  the installation of accelerograph for buildings have been worked closely with the DILG and DPWH, respectively, in 2014 and these are among the industry’s continuing effort/initiatives in 2015.
  • New Category for Socialized Housing. The proposal is to include medium-rise buildings (MRBs) of P550,000 (excluding land) and P840,000 for urban areas. It is under NEDA/HUDCC’s evaluation. Likewise, the proposal to amend R.A. 7279 Section 18 to include the definition of socialized MRB, and the provision for government to make in-city development affordable, is being discussed by the TWG in Congress.
  • Reverse Trade Arrangement (RTA). The intention is to have preferential supply arrangements between the housing developers and construction materials manufacturers/associations (e.g. paints, iron & steel, PVC pipes). A Memorandum of Understanding (MOU) was entered into by the SHDA and Pacific Paint (BOYSEN) Philippines, Inc.’s during the HUDCC-SHDA National Developers Convention in September 2014 in Cebu City. DTI-BOI and SHDA is looking into pursuing RTAs or similar partnerships with other paint manufacturers, Cambridge Paints, Inc. and Davies Paints Philippines, Inc.; with ceramic tile producers, Mariwasa and Ten Zen Tiles; and with electrical wires producers who are members of the Philippines Electrical Wire Manufacturers Association.
  • Assistance to Yolanda-affected Areas. The guidelines to encourage housing developers to construct their socialized housing compliance projects in the Yolanda Stricken-areas have been finalized and approved by the BOI Board.

 

Champions

Subdivision and Housing Developers Association, Inc. (SHDA)

Ms. Armenia C. Ballesteros
President

5th Floor, Kalayaan Bldg., Dela Rosa cor. Salcedo Sts.,

Legaspi Village, Makati City

Tel. No: (632) 893-4328, 893-4132

Telefax: (632) 856-1554

Website: https://shda.ph/

Board of Investments (BOI)

Ms. Mary Anne E. Raganit
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 897-6682 loc. 264

Email: [email protected]

 

Services

Services has been one of the strongest and fast-growing sectors of the Philippine economy. Its gross value added contribution reached to 57% in 2014 (from 36.6% in the 1970s), and it also grows by an average of 6.3% from 2000 to 2014.

While this performance is considered as stellar by most analysts, there is still huge potential for increasing value-added in services outputs, as well as deepening participation in global value chains. Taking advantage of this unique competitive advantage in the services sector, the Philippines aims to position itself as the core of services trade in Southeast Asia and the Asia-Pacific region.

 

Vision of the Industry

The vision of the Services Roadmap is to create a globally competitive services sector that is capable of creating quality jobs, moving up the global value chain particularly in IT-BPM, and becoming a regional hub in human resource development and skills training, services embedded in manufacturing, ship repair, aircraft MRO, and construction engineering.

 

Goals and Strategies

Goals

Short-run (2014-2017) Goals:

  • Improve competitiveness in tourism
  • Accelerate infrastructure investments (ICT and other infrastructure, logistics, ports, airports, roads, telecommunications, energy, water)
  • Move up the IT-BPM global value chain: knowledge process outsourcing, manufacturing engineering, and architectural engineering

Medium-run (2018-2021) Goals:

  • Attract more investments in HRD, design, R&D, finance, and infrastructure
  • Nurture the development of services embedded in manufacturing
  • Establish innovation ecosystem linked with manufacturing

Long-run (2022-2025) Goals:

  • Continue to upgrade the services sector to sustain its growth and competitiveness

 

Strategic Actions

Innovation

  • Utilize government procurement as tool to drive innovation
  • Continue to strengthen intellectual property rights protection enforcement
  • Establish the National Quality Infrastructure (government support in technology extension services, incubation, metrology, standards testing, quality control)
  • Establish standards and rating system; require third party accreditation

Investment promotion and market access

  • Pursue greater market access for the services sector and maximize FTA gains by promoting trade and services that harness the potentials of global value chains

Competition and regulatory environment

  • Create a pro-competitive environment, need an effective competition law and policy
  • Relax foreign ownership restrictions in services
  • Improve regulatory and institutional frameworks for services, improve government regulation at all levels (local and national)

Human Resource Development

  • HRD and skills development, make education more industry appropriate

Clusters and SMEs

  • Support services clusters and networks and provide support to SMEs

 

Economic Contribution and Growth Performance

Since the 1990s, the services sector has been a major source of economic growth for the Philippines. On the average, the sector has grown continuously, particularly in the last two decades, as its growth increased from 4% in the 1990s to 5.3% in the 2000s. For the 2010 to 2014 period, it posted a very modest growth rate of 6.6%. Broad growth has taken place in the sector as most of its sub-sectors have also registered consistently rising growth rates over the years.

The 2010 to 2014 average growth rates of most of the sub-components of the services sector have increased from their 1990s and 2000s values. The most notable increases have been manifested by the construction, finance and real estate sub-sectors. Meanwhile, the sub-sectors that have experienced a slowdown in average growth rate are private services, transport, communication and storage. Nonetheless, it is crucial to point that the recent average growth rates of these two sub-sectors are still above 5%, indicating modest growth performances.

Growth Performance (in percent)

Year 1991-00a 2001-10a 2010b 2011b 2012b 2013b 2014b 2010-14b
Gross Domestic Product 3.1 4.7 7.6 3.6 6.8 7.2 6.1 6.3
Service Sector 4.0 5.3 7.9 3.4 8.1 7.3 6.1 6.6
Construction 5.0 2.8 14.3 -9.8 15.7 9.6 8.5 7.7
Electricity, Gas and Water 5.8 4.1 9.9 0.6 5.1 4.9 3.2 4.7
Transport, Communication & Storage 5.2 6.6 1.0 4.3 8.1 5.6 6.6 5.1
Trade 3.9 5.7 8.4 3.3 7.5 5.7 6.0 6.2
Finance 4.7 7.3 10.1 5.2 8.2 12.6 6.7 8.6
Dwellings & Real Estate 1.9 4.0 7.5 8.4 7.5 8.7 8.1 8.0
Private Services 3.7 7.2 8.4 5.6 7.7 7.1 4.2 6.6
Government Services 2.9 2.7 5.8 1.9 6.1 3.8 3.5 4.2

aat constant 1985 prices; bat constant 2000 prices.

Source of basic data: National Accounts of the Philippines, National Statistical Coordination Board

 

The Philippine economy’s output structure is characterized by a relatively large services sector. The share of the services sector increased from an average of 52.4% in the 1990s to 55.7% in the 2000s. Moreover, from 2010 to 2014, the sector’s value added share further increased, on the average, to 65.4%.

Of all the sub-sectors of the services sector, the trade and private services sub-components are among those which have the biggest value added contribution for the period of 2010 to 2014. Utilities (transportation, communication and storage) and government services meanwhile have the smallest value added share in the gross domestic product for the same period. Majority of the sub-sector have value added shares for 2010 to 2014 that are higher than their 1990s and 2000s figures.

 Value Added Contribution (in percent)

Year 1991-00 2001-10 2010 2011 2012 2013 2014 2010-14
Service Sector 52.4 55.7 65.0 64.9 65.7 65.7 65.7 65.4
Construction 5.6 4.5 5.7 5.0 5.4 5.6 5.8 5.5
Electricity, Gas and Water 3.1 3.2 3.6 3.5 3.4 3.3 3.3 3.4
Transportation, Communication & Storage 6.2 8.4 7.5 7.5 7.6 7.5 7.6 7.5
Trade 15.4 16.8 16.6 16.6 16.7 16.5 16.5 16.6
Finance 4.5 5.4 6.6 6.7 6.8 7.1 7.1 6.9
Private Services 7.0 8.3 10.2 10.4 10.5 10.5 10.3 10.4
Government Services 5.2 4.4 4.5 4.4 4.4 4.2 4.1 4.3

Source of basic data: National Accounts of the Philippines, National Statistical Coordination Board.

 

In terms of employment contribution, the services sector has started in the 2000s to become the largest employment provider. Currently, it is still the biggest provider of jobs. In the past decade, it registered an average share of about 54.3% in total employment. This is higher than its average contribution of 47.3% in the 1990s.

Of the services sub-sectors, the wholesale and retail trade segment and the aggregated community, social and personal services are some of the biggest contributors to employment relative to the other sub-sectors. With the exception of the construction sub-sector, all sub-components of the services sector have manifested an increased average employment contribution in the 2010 to 2014 period relative to their 1990s and 2000s average shares.

Employment Contribution (in percent)

Major Sector 1991-00 2001-10 2010 2011 2012 2013 2014 2010-14
Service Sector 47.3 54.3 57.9 58.2 58.9 60.0 60.6 59.1
Electricity, Gas and Water 0.4 0.4 0.4 0.4 0.4 0.4 0.3 0.4
Construction 5.1 5.2 5.6 5.6 5.9 6.2 6.6 6.0
Wholesale and Retail Trade 14.8 18.7 19.5 19.9 18.3 18.6 18.7 19.0
Transportation, Storage & Communication 6.1 7.5 7.6 7.5 7.9 7.2 7.0 7.4
Financing, Insurance, Real Estate & Business Services 2.3 3.5 4.3 4.6 4.6 4.8 5.1 4.7
Community, Social & Personal Services 18.6 19.0 20.5 20.2 21.8 21.9 22.0 21.3

Sources: Yearbook of Labor Statistics (1980-2000) and Current Labor Statistics (2001-2002), Bureau of Labor and Employment Statistics, Department of Labor and Employment and Employed Persons by Major Industry Group, National Statistics Office Labor Force Survey (2003-2010).

 

Net services trade balance shifted from continuous deficits during the first half of the 2000s to surpluses during the 2006 to 2010 and 2010 to 2013 periods. A change in the structure of services exports is also evident as exports of travel, transportation, and communication services declined over the years alongside a tremendous increase in the average shares of computer and information and other business services.

Balance of Trade in Services (in billion US$)

Indicator/Year 2000 05 06 07 08 09 10 11 12 13 00-05 06-10 10-13
Service Sector -1.87 -1.34 0.14 2.25 1.44 2.11 1.95 5.28 6.60 7.28 -1.87 1.68 5.28
Transportation -1.59 -2.16 -2.30 -2.52 -2.89 -2.51 -3.58 -2.84 -2.02 -1.96 -1.70 -2.77 -2.60
Travel 0.51 0.99 2.27 3.27 2.18 -0.37 -0.61 -2.18 -2.49 -1.83 0.42 0.97 -1.78
Communication 0.12 0.41 0.48 0.42 0.26 0.23 0.15 0.24 0.31 0.26 0.30 0.31 0.24
Construction -0.03 0.06 0.05 0.09 0.06 0.06 0.10 0.00 0.06 0.01 -0.05 0.07 0.04
Insurance -0.14 -0.19 -0.21 -0.23 -0.24 -0.18 -0.23 -0.27 -0.21 -0.12 -0.16 -0.22 -0.21
Financial 0.05 -0.04 -0.02 -0.12 -0.02 -0.06 -0.04 -0.14 -0.04 0.00 -0.02 -0.05 -0.05
Computer & Information -0.02 0.03 0.03 0.24 0.32 1.66 2.04 2.19 2.35 2.50 -0.02 0.96 2.27
Royalties & License Fees -0.19 -0.26 -0.34 -0.38 -0.38 -0.42 -0.44 -0.44 -0.46 -0.53 -0.23 -0.39 -0.47
Other Business Services -0.50 -0.11 0.26 1.61 2.38 3.92 4.80 9.01 9.69 9.53 -0.36 2.99 8.26
Personal, Cultural & Recreational Services -0.01 0.01 0.02 -0.02 -0.01 -0.01 -0.02 0.02 0.05 0.06 -0.01 -0.00 0.03
Government Services -0.07 -0.07 -0.10 -0.13 -0.21 -0.22 -0.23 -0.29 -0.28 -0.23 -0.05 -0.18 -0.26

Source of basic data: World Trade Organization

 

Revealed comparative advantage (RCA) gives an indication of those industries in which a country may have a comparative advantage. The RCA compares how much a country is exporting a given product relative to its total trade, in comparison to the share of that product in world trade. A country is said to have a revealed comparative advantage when its share of export of a given product exceeds the equivalent share of export of the world. This is captured when the RCA is above 1. An RCA below 1 suggests that the country does not have a revealed comparative advantage in a given product.

The RCA indices show the Philippines’ growing competitiveness in computer and information services as well as in other business services. While the RCA index in communications increased from 2.64 in 2000 to 6.05 in 2003, it steadily declined thereafter from 5.6 in 2004 to 1.00 in 2010. The RCA index in travel also dropped from 2.08 in 2000 to 0.93 in 2010; in transportation, it fell from 1.32 in 2003 to 0.51 in 2010; and in construction, it decreased from 1.5 in 2000 to 0.42 in 2010 indicating declining competitiveness.

 Revealed Comparative Advantage in Services Sector

Year Transportation Travel Communications Construction Insurance Financial Computer & information Royalties and license fees Other business Other personal, cultural, & recreational
2000 0.61 2.08 2.64 1.5 0.2 0.41 1.04 0.04 0.4 0.39
2001 0.87 1.89 4.99 1.02 0.19 0.24 0.23 0.01 0.39 0.39
2002 1.18 1.75 5.34 0.43 0.13 0.17 0.33 0.01 0.38 0.16
2003 1.32 1.61 6.05 0.72 0.12 0.2 0.22 0.02 0.41 0.23
2004 1.13 1.77 5.6 0.88 0.12 0.18 0.21 0.05 0.41 0.15
2005 0.96 1.84 5.22 0.66 0.2 0.18 0.49 0.02 0.52 0.42
2006 0.81 2.08 3.64 0.45 0.15 0.21 0.32 0.02 0.61 0.35
2007 0.62 2.03 2.24 0.47 0.1 0.11 0.66 0.01 1.06 0.2
2008 0.59 1.06 1.7 0.34 0.09 0.08 2.25 0 1.84 0.22
2009 0.54 0.89 1.27 0.26 0.23 0.09 2.82 0 2.02 0.29
2010 0.51 0.93 1 0.42 0.27 0.04 2.85 0 2.08 0.45

Source of basic data: UN Services Trade Data