Tuesday, 7 June 2011

Services touted as next big export for Manila

By Darwin G. Amojelar, Senior Reporter
Manila Times

THE services sector is a viable option for the Philippines to diversify its export as trade in goods is no longer the only vehicle, according to a World Bank study.

In a draft study titled, “Exporting Services: A Developing Country
Perspective,” Sebasti?n S?ez, World Bank senior trade economist and one of the authors of the report said the experience of exporting outsourced business services in the Philippines shows that by creating an enabling environment where the private sector can deploy its creativity, developing countries can reap the benefits that services exports opportunities are opening.

“Service sector performance critically depends on human capital, the quality of the telecommunications network, and the quality
of institutions,” S?ez said.

The report said services exports as a percent of total exports increased from 9 percent in 1999 to 21 percent in 2009 in the Philippines.

Its services exports rose by 3.6 percent on average per year during the period, higher than that of Asia as a group, which averaged 1.5 percent a year.

Unlike many developing countries, the Philippines has been a net exporter of services since 2006.

The Philippines is the third largest player in the global business process outsourcing (BPO) sector, accounting for 15 percent of the worldwide market, after India with 37 percent and Canada, 27 percent.

“That’s a tremendous achievement in just over a decade,” Bert Hofman, World Bank country director said.

Hofman said the liberalization of the Philippine telecommunications sector in the early 1990s improved the quality and efficiency of telecom infrastructure through greater competition.

“That’s a very important factor for the success of the industry. But the bigger story is really the rich human capital that the country possesses and which it has to continue to nurture,” Hofman said.

Fred Ayala, chairman of Business Process Association of the Philippines (BPAP) said the BPO sector employs close to 500,000 people and has generated about $9 billion worth of exports in 2010.

The industry, he said, has agreed to an aggressive goal of $25 billion in annual revenues by 2016 and a direct workforce of 1.3 million.

“There is an urgent need to develop supervisors, middle managers, and more skilled workers to respond to increasing market demand for a broadening array of knowledge-based, complex services,” Ayala said.

“Additional investments in human capital, strengthening of intellectual property rights through the passage of a comprehensive data protection law, and improvement of quality control may further promote the growth of high-value-added activities within the BPO industries not yet fully exploited in the Philippines and successfully tapped by other countries, such as India,” he added.

The World Bank report also highlights the importance of developing the tourism sector. Tourism accounts for about 6 percent to7 percent of the country’s gross domestic product (GDP) and directly employs about 3.5 million people. The report said that tourism could contribute more to help address poverty should reforms outlined in the National Tourism Development Plan (NTDP) be effectively implemented.

The study says major impediments to tourism competitiveness are largely associated with weak ground and air transport infrastructure—roads, railways, ground transport network, and airports. Weak physical infrastructure lowers accessibility to tourism destinations and discourages private sector investments in accommodation facilities.

Daniel Corpuz, Department of Tourism undersecretary, said the government has begun to put in place important reforms that will increase tourism arrivals in the country.

He cited the liberalized air policy in selected international airports outside Metro Manila.
“More reforms are underway to transform the Philippines into a ‘must experience destination in Asia,’” Corpuz said.

He said the NTDP seeks to improve market access and connectivity with the country’s major tourism markets, upgrade tourism transportation and infrastructure through public-private partnerships and improve institutional and human resource capacities.

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