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THE PHILIPPINE ADVANTAGE Secretary Peter B. Favila Department of Trade and Industry PHILIPPINE ECONOMIC SCORECARD GDP growth of 5.6% (S2 2006) Agriculture 5.2% - Industry 5.1% - Services 6.1% Fiscal performance on track Jan to July 2006 revenue collections up by 20% Deficit is PhP B34.1 lower year-on-year Philippine Peso is one of Asia’s best performing currencies 4-year high bolstered by OFW remittance, exports and portfolio investments Headline inflation continued to ease at 6.5% (as of July 2006) Gross international reserves reached an all-time high at US$21.3B (as of July 2006) Stable and low interest rate environment 2005 Milestones 5.1% GDP growth 3.9% Export growth 149.8% Net FDI growth strong performance continues into 2006 . . . FOREIGN TRADE AND INVESTMENT PERFORMANCE 1st Semester 2006 5.6% GDP growth 16.8% Export growth 114.6% Net FDI growth Strong export performance is supported by the continuing diversification of merchandise exports … US$ 22.7B Exports in 1st Semester 2006 Top Exports (Jan to Jun 2006) Electronics Value (US$B) % Share 14.196 62.6 Automotive/Machinery 1.225 5.4 Garments 1.208 5.3 Minerals/Petroleum products 0.771 3.4 Other Consumer and Industrial 2.196 9.7 Food/Agro-based products 2.088 9.2 Source: DTI-Tradeline (derived from primary NSO data) … and the rise of new markets and expansion of trade relations. EXPORT PERFORMANCE BY REGIONAL BLOCS Jan-Jun 2006 2000 Other Hong Kong Countries 5.0% 7.8% Taiwan Japan 14.7% 7.5% China 1.7% ASEAN 15.7% Other Hong Kong Countries 7.1% 7.4% Taiwan 3.9% Japan 17.6% China 8.9% U.S. 29.5% E.U. 17.9% Source: BETP (derived from primary NSO data) ASEAN 18.1% U.S. 17.6% E.U. 19.3% FDI flows remain on the uptrend . . . 1000 FOREIGN DIRECT INVESTMENT, net (US$M) 500 0 S1 2004 Source: Bangko Sentral ng Pilipinas (BSP) S1 2005 S1 2006 . . . and investment approvals signal that the growth trend will continue. Total approved investments at US$ 2B in 1st Semester 2006 BOI-PEZA Approved Investments by Sector January – June 2006 Real Estate, Renting and Business Activities 8% IT Services 5% Others 3% Wholesale & Retail Trade 25% Infrastructure/ Industrial Manufacturing Facilities 18% 42% Sources: Board of Investments (BOI) and Philippine Economic Zone Authority (PEZA) POLICY DIRECTIONS Continued fiscal consolidation Countrywide development through the super regions Increased infrastructure spending Clear agenda for competitiveness Reforms for good governance Macroeconomic achievements are carried through at the operating level . . . A more responsive government and a business-friendly environment Focus on infrastructure development and competitiveness-enhancement Emergence of new growth industries Renewed investor confidence THE PHILIPPINE ADVANTAGE IN e-SERVICES Location, Location, Location Strategic location in Asia Strong infrastructure support Centrally-located IT parks Supportive Regulatory and Policy Environment Government priority Incentives package Significant Impact on Bottomline Human resource advantage Efficiency and productivity Cost savings – IT personnel, real estate, telecoms Discover The Philippine Advantage!