THE SERVICES, business process outsourcing (BPO), semiconductor, and infrastructure industries are expected to be the growth drivers for the economy next year, analysts said.
“The crucial sector will be services. Digital technology has made it possible to realize economies of scale in services since face-to-face transactions are no longer necessary,” Ateneo de Manila University Economics Professor Leonardo A. Lanzona said in an email.
“Trade in services especially with the numerous college graduates, is feasible as long as we improve our internet infrastructure. This can include professional services such as accountancy, advertising and computer services. Educational and health services may also be viable,” he said.
“Services with the new technology can blur distinctions between sectors since services can enhance industry and agriculture by reducing transaction costs between buyers and sellers. We cannot ignore industry since this will absorb relatively unskilled labor,” he added.
In the third quarter, services grew 9.1%, the most of any sector. It also had the biggest contribution to gross domestic product (GDP) growth.
Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said that the semiconductor and BPO industries are also key growth areas.
“The semiconductor and BPO sectors remain our best bet in driving high-value economic growth, and the Marcos government should find ways to further raise incentives and cut costs in these sectors,” he said in an email.
“The country is at a good spot in developing the semiconductor business given the new chips ban on China. Government should be agile in convincing US chipmakers to transfer their factories here instead of our other ASEAN neighbors,” he added.
Last year, the Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) exceeded its 10% growth target.
Electronics exports ended 2021 at $45.92 billion, up 12.9%, on the back of strong demand for new technologies, SEIPI said.
As of September, year-to-date electronics exports totaled $35.34 billion, up 4.71%, according to SEIPI.
Electronics exports remain the top export category, accounting for 60.60% of the $58.31 billion worth of overall commodity exports.
Mr. Ridon also said BPOs remain a significant growth and employment driver, enabling Filipino providers to service various international firms.
In November, the Philippine Economic Zone Authority (PEZA) endorsed 163 information technology and BPO projects for registration transfer to the Board of Investments (BoI). The 163 companies have taken in investment of P13.9 billion.
The industry is expected to generate up to 1.1 million direct jobs by 2028, according to the Finance department.
In June, the IT and Business Process Association of the Philippines (IBPAP) said that the industry is running ahead of the pace for its 2022 goals of 1.43 million full-time employees (FTEs) and $29.1 billion worth of revenue.
In 2021, the industry’s FTEs increased by 120,000, bringing total headcount to 1.44 million, up 9.1%. The industry also generated revenue of $29.49 billion.
Pantheon Chief Emerging Asia Economist Miguel Chanco said that construction and utilities are likely targets for new investment next year, as infrastructure remains one of the key areas in which the Philippines lags its regional peers.
“I’d go so far as to say that these ambitions shouldn’t be limited to just 2023. The Marcos administration would do well to encourage such capital expenditure throughout its entire term. We’re seeing an arguably faster shift out of export manufacturing in China, and into Southeast Asia. The only way the Philippines can benefit from these structural flows is to make sure that it has a more conducive environment for labor-intensive industry,” he said in an email.
Mr. Chanco added that there should also be more public investment in human capital, particularly in public healthcare and education systems.
Infrastructure spending rose 39.3% to P99.1 billion in September. In the nine-month period, infrastructure spending was up 13.4% at P727.7 billion, but 4.11% lower than the P758.9 billion targeted for the period. — Luisa Maria Jacinta C. Jocson