Land Area: 300,000 sq.km.

Population: 96 Million (July 2008)

Government: Democracy –
Presidential
Economic Overview:

The Philippine economy grew at its fastest

pace in three decades with real GDP growth
exceeding 7% in 2007. Higher government
spending contributed to the growth, but a
resilient service sector and large remittances
from the millions of Filipinos who work
abroad have played an increasingly
important role. Economic growth has
averaged 5% since President MACAPAGAL-
ARROYO took office in 2001.
THE ECONOMY
  Economy has remained stable over time,
7.5% GDP for 2nd Quarter (highest in 20 years)

  Philippine Peso is one of Asia’s best performing currencies

  Ranked RP 2nd among 32 economies in level of business

confidence
 Y2008
Forecast
5.5% - 6.4%

•  GDP growth remains fundamentally sound

  1st semester growth of 4.6% is better than others in Asia-Pacific
  Forecast year-end average growth of above 5% is very
respectable

•  OFW remittances continue to be strong

  2008 year-to-date total registered 17.2% higher for the same
period Jan-Aug at US$10.9 billion

•  Inflation reached 9.4% year to EO October 2008 (NSO Report of 05

Nov 2008)
  Peak of 12.2% in August has bottomed out to realistic levels Source: NSO
•  Sub-prime exposure estimated at less than 1% of total assets
•  Gross International Reserves (GIR) is solid
  US$36.69 Billion covers 5.8 months of imports or 4 times short-term external debt
  a small US$50 Million decline from previous month’s level
   Strategically
located in Asia

  Within 4 hours
flying time to
any Capital in
Asia
   Available quality human resource
  35.2 Million Labor Force
  94.6% Literacy rate
  70% fluency in English

  405,000 University/ College

graduates per year
  English speaking – The Philippines is
the world’s third largest english
speaking nation.
   Reliable Infrastructure Support
  Excellent Telecommunications
Infrastructure
  Airports and Seaports
  Economic Zones & IT Parks
   Hospitable lifestyle
  A survey conducted in March 2005 by ECA
International (Employment Conditions
Abroad Ltd.) of 32 countries said:
  “The Philippines has the lowest living costs for
expatriates … The Philippines is the cheapest
country to live in followed by Argentina,
Thailand and Malaysia”.
Attractive Investment Incentives
  Philippine Economic Zone Authority (PEZA)
  Board of Investments (BOI)
I. Preferred Areas
•  Agriculture/ Agri-business and Fishery
•  Infrastructure
•  Tourism
•  Research and Development
•  Engineered Products
•  Strategic Activities

II.  Export Activities

•  Manufacture of Export Products/Services

•  Activities in Support to Exporters
•  Physical infrastructure – development and/or operation of toll roads, highways,
railways, roads and bridges

•  Power generation – activities as specified in the Power Development Plan, e.g., those
utilizing indigenous and renewable energy sources, other energy sources adopting
environmentally-friendly except oil-fired projects, and those under the NPC
privatization plan

•  Mass housing – low-cost and socialized housing projects

•  Bulk water supply – any kind of water supply except deep wells and limited to supply
to “waterless” areas as listed by NAPC

•  Mass rail transport – for passengers and cargoes including LRT in line with the
transport development plans and programs of the DOTC

•  Pipeline projects for oil and gas – transport of petroleum products and natural gas,
petrochemicals, and similar products

•  Projects under Build-Operate-Transfer (BOT) Law

•  Logistics
–  Passenger and cargo shipping
–  Overseas shipping
–  Passenger and cargo air transport
–  Regional international
airports and terminals
–  Sea Ports and terminals
–  Warehousing
–  Post-harvest facilities
–  IT-enabled logistics services
–  IT services rendered to government agencies and
LGUs
Indicative Capacity Additions

Luzon
550 MW Combined Cycle Natural Gas Plant (2011)
300-500 MX Natural Gas Expansion (2011)
600 MW Coal-fired Thermal Power Plant (2010)
200 MW Hydro Expansion Project

Visayas
200 MW Toledo Coal Expansion in Cebu(2010)
100 MW Coal-Fired Plant in Panay (2009)

Mindanao
46 MW SibulanHydropower by Hedcor/AEV (2009)
21.8 MW MinergyDiesel Plant Expansion (2010)
50 MW Mindanao 3 Geothermal (2010)
200 MW by MG Mining & Energy Corp. (2012)
Geothermal Energy
- The Philippines is 2nd only to the US in terms of Geothermal Energy potential reserves.
With only 1,931 MW installed out of 2,047 MW proven geothermal reserves and 4,790
MW potential reserves, there are obviously plenty of opportunities for expansion and
private sector involvement.

Wind Energy
- Comprised of 7,107 Islands, the Philippines has maximum potential for wind energy
generation. 16 wind power sites were offered to private investors during the 1st wind
contracting round with a potential capacity of 345 MW.

Hydropower
- Indicative Hydropower potentials are currently at 2,400 MW.

Compressed Natural Gas

- Minimum investment of about $4.0B between 2006 –2014

Biodiesel and Bio-Ethanol

- The government targets to implement a 1% CME blend with diesel fuel for vehicles in 2007,
to reach 2% in 2009; and 5% ethanol blend with gasoline fuel for vehicles within 2007-2009,
to reach 10% in 2011.
•  Tourist accommodation failities – hotels, apartels/serviced residences,
condotels, tourist inns, and pension houses as classified and endorsed by DOT

•  Resorts –special interest activities such as but not limited to eco-tourism, agri-
tourism, theme parks, conventions and exhibition/trade

•  Retirement villages

•  Medical tourism
–  Hospital/medical services
–  Ambulatory surgical services
–  Dental services
–  Other human health and wellness services including rehabilitation
and recuperation services, e.g., health spa and rehabilitation and
recuperation services
–  Healthcare and wellness products
•  Commercial and In-house R&D activities
•  Establishment of Centers of Excellence, innovation and skills development training
institutions

-  Knowledge and skills development through the provision of training

facilities and programs
-  Research and development and other productivity enhancement activities
-  Technology scanning, selection and adoption
-  Incubation program
-  Common service facilities
•  Training and learning institutions
•  Basic iron and steel products
-  Long steel products
-  Flat hot-/cold-rolled products integrated with basic iron
and and steel production
•  Manufacture/assembly of motor vehicles
-  Assembly of motor vehicles
-  Manufacture of parts and components

•  Manufacture of machinery and equipment

•  Shipbuilding
•  Basic Iron and steel products, refined
iron ore and primary steel products in
the form of slabs

•  Long steel products (billets, and

reinforcing steel bars)

•  Production of flat hot/cold-rolled

products integrated with basic iron &
steel production
•  Manufacture/ Assembly

-  Passenger Cars
-  Commercial Vehicles
-  Motorcycles

•  Manufacture of parts & components

  Manufacture of machinery and
equipment including their parts and
components
•  Shipbuilding
-  Shipbuilding (design, construction, outfitting
& launching any type of ship)
-  Ship repair – conversion, overhaul,
alteration, modification or repair of hull,
machinery, equipment, outfits and
components of any type of ship
-  Shipyard operations (excluding ship-
breaking)
•  Shipping
-  Domestic shipping
-  Overseas shipping
IT and IT-Enabled Services
•  IT and IT-enabled Services
-  Contact Centers
-  Business / Knowledge Processing (BPO / KPO)
-  Software Development
-  Data Transcription (Medical / Legal Corporate)
-  Animation
-  Engineering Design

•  IT Support Activities (except internet & cyber cafes)

•  Manufacture and test of electronic products
•  Manufacture of parts and components of electronic products
•  Manufacture of production supplies for the exclusive use of the
electronics industry
•  Research and development
•  IC design/ other design engineering services
•  Establishment and operation of Centers of Excellence
•  Original Design Manufacturing (ODM)
•  Sub-assembly / fabrication of parts / components of the final export
products located in EPZ or to exporters operating in BMW
•  Manufacture of supplies directly / reasonably needed in the production of
non-traditional export products to exporters located in EPZ or to exporters
operating in BMW
•  Services comprising a portion of the manufacturing process
•  Product testing and inspection
•  Repair and maintenance
•  Logistic services rendered to exporters
•  Located in the “Ring of Fire”
•  5th most mineralized country in the world
-  2nd in Gold
-  4th in Copper
-  5th in Nickel
-  6th in Chromite

•  Established reserves of 13 known metallic and 29 non-

metallic minerals (Mines & Geosciences Bureau)

•  RP has 9 million hectares of mineralized land

-  Only 420,000 hectares – with mining permits
-  8.6 million hectares – still awaiting investors!
•  Activities under RA 7942
-  Exploration and development of mineral resources
-  Quarrying, and
-  Processing of metallic and non-metallic minerals
•  Contact Center
•  Business Processing
•  Software Development
•  Engineering Design Services
•  Medical/Legal Transcription
•  Computer Graphics/Animation
Philippine O&O industry earned USD 4.9 billion in revenues
(as of end 2007)
Sector 2007 Revenues % change
($000,000) vs. 2006
Contact Centre 3,600 53
Back Office (non- 398 32
voice bpo)
Transcription 197 24
(non-voice bpo)
Animation 105 8
Software 423 56
Engineering Svcs 152 124
Source: BPAP TOTAL Philippine 4,875 50
O&O (export)
Source: Joint BPAP/BOI/PEZA/CICT Task Force; 2008 – BPAP analysis

Export Revenues ($000,000) Growth Rate

Year (%)
2005 2,420 64

2006 3,257 35

2007 4,875 50

2008 (forecast) 6,760 39

2010 (target) 12,999 39 p.a.

Source: Joint BPAP/BOI/PEZA/CICT Task Force; 2008 – BPAP analysis