As far as HSBC is concerned, the Philippines would be better off strengthening its services sector instead of playing catch up with manufacturing, according to a business article published by the Manila Bulletin.
To put things in perspective, posted below is an excerpt from the business article of Manila Bulletin. Some parts in boldface…
The Philippines should leverage its services sector to stand out in the global investment landscape, as competition with manufacturing-led economies is well out of reach, according to an HSBC economist.
The country has been lagging behind its peers in Southeast Asia in terms of attracting foreign investments.
Last year, the Philippines secured the sixth spot in the region, trailing behind Singapore, Indonesia, Vietnam, Malaysia, and Thailand, according to the report from the United Nations Conference on Trade and Development (UNCTAD).
This trend is expected to continue this year amid uncertainties in global trade and especially due to the country’s relatively low manufacturing activity.
HSBC Asia Economics Associate Director Ines Lam said the limited scale of the manufacturing sector in the Philippines hinders its ability to draw foreign capital.
Lam explained that attempting to be competitive in manufacturing at this late stage could ultimately be ineffective and counter to the government’s efforts to secure investments.
“Everyone wants to get a piece of the global supply chain. Everyone wants to be a supplier to Apple. But for the Philippines, I think the Philippines’ unique value proposition is its people and soft skills,” she said during the 23rd International CEO Conference hosted by the Management Association of the Philippines (MAP).
Instead of trying to catch up in manufacturing, Lam said the country could instead shift its focus to strengthening its services sector, in which it has an advantage compared to regional partners.
The economist said upskilling the country’s talented pool of workers is a critical component in boosting the sector. She noted that the educational proficiency and English expertise of Filipino workers are the top qualities sought by global employers and investors.
“I’m not saying that manufacturing is not important, but because the Philippines has already found its advantage, I think it’s important that the Philippines does not lose this,” said Lam.
“You provide something new and you improve your offerings in terms of BPO (business process outsourcing) and exports of services. Then, that will help the Philippines to stand out in this world,” she added.
Let me end this post by asking you readers: What is your reaction to the recent developments? Do you agree with HSBC’s economic opinion about the Philippines? Do you think the Philippines should focus more on strengthening the services sector instead of manufacturing? What do you think makes the Philippines not so good at manufacturing when compared with its Asian neighbors?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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