THE Philippines is a “key target” for international businesses seeking to enter new Southeast Asian markets, according to the HSBC Global Connections survey.
The survey noted that 19 percent of those with existing operations in the country said they planned to prioritize expanding their operations in the country over the next two years while 21 percent of those without a current Philippine presence reported plans to enter the market over the next two years.
The research commissioned by HSBC Commercial Banking showed that international businesses from nine major economies are “increasingly optimistic” about their growth prospects in Southeast Asia.
“These findings confirm what we have been seeing from our own customers: that businesses around the world are increasingly
confident about scaling up in Southeast Asia, especially the Philippines,” said Sandeep Uppal, President and CEO of HSBC Philippines.
These 9 markets are China, India, UK, France, Germany, USA, Australia, Hong Kong, and [Gulf Cooperation Council] GCC countries (United Arab Emirates, KSA, Bahrain, Qatar, Oman, or Kuwait).
According to the report with the title, “Global Connections: Connecting the Philippines and the world” which HSBC released, the Philippines’s “young, English-speaking workforce and a growing consumer sector” makes it appealing to international businesses on both the supply and demand side.
Competitive wage prices and the opportunity to develop and test new products and solutions ranked equally as the key drivers for business expansion, with 28 percent of firms with operations in the Philippines selecting each attribute, the report noted.
Meanwhile, labor costs in the Philippines are particularly attractive to companies based in India and the GCC, with 36 percent of respondents in each country selecting this.
Chinese and US companies, the report said, are especially interested in the ability to test new products, as highlighted by 33 percent of each group.
In contrast, macroeconomic challenges and the impact of cultural differences are tied as the top challenges reported by multinational firms conducting business in the Philippines, with 31 percent of decision makers respectively identifying each of these as a “particular problem” faced by their business.
The report also noted that 26 percent of international businesses operating in the Philippines recognize the growing digital economy as particularly attractive.
Meanwhile, under sustainability considerations, the report said the top sustainability concerns for businesses operating in the Philippines remain unchanged from the 2022 survey, with 40 percent selecting tackling climate change and improving human rights as the most important issues to address.
The study also showed that international businesses in the Philippines are worried about the impact of policy settings on their sustainability ambitions.
The report noted, “27 percent cite a lack of subsidies or government support as a challenge, while 28 percent say new regulations on carbon reduction could impact their business.”