As the Philippine economy battles with the recession and its fate dependent on the Covid-19 situation, odds and uncertainties remain. If you’re an investor, you might wonder if it’s still good to invest in the Philippines this 2021. To clear the air, here’s an article that presents an overview of the state of investing in the Philippines, as well as the industries that can bring your confidence back to it.
Philippine Economy in 2021: What to Expect
Pre-pandemic, the Philippines was enjoying a good status with more than 6% year-on-year GDP growth rate. During the pandemic, the country’s economy was shaken, the same fate experienced by most countries in the world.
Now, as positive developments emerged along with the development of the vaccine, there’s a positive outlook for the Philippine economy.
In a recent report, Fitch Solutions and the Asean+3 Macroeconomic Research Office (AMRO), over 7% growth in the Philippine economy has been forecasted in 2021. Furthermore, the report also forecasted a continuous increase in the country’s gross domestic product (GDP) by 7.6%.
Why Invest in the Philippines this Year
The Philippines remains on the list of top countries to invest in. Usually, a country is considered as primed for investing based on key factors including economic stability, entrepreneurship, skilled workforce, technological proficiency, dynamism, favorable tax environment, innovation, and corruption.
On the other hand, investors also look into a country’s people, environment, relationships, and framework for them to consider it as worth investing in. These include its people, environment, relationships, and framework.
If you’re not yet sure if you should invest in the Philippines this 2021, here are a few reasons why.
- Remittances account for 10% of the country’s GDP. This means that a tenth of its economy is closely tied with the success of around 10 million Filipinos around the world, particularly in Canada, Japan, Saudi Arabia, Singapore, the UAE, UK, and the USA. Basically, once the economy in these countries picks up, the Philippines GDP will also bear a positive impact.
- Compared to the aging population of other Asian countries, the Philippines’ fertility rate continues to be high. This means that even when its population increases, a solid base is also formed to strengthen its foundation.
- The Philippines is rich in natural resources. If you invest in the Philippines and there’ll be a need for unique and useful raw materials for economic growth, the country has a lot to offer.
- In recent decades, the Philippines was able to set basic but fundamental economic settings to foster finance savings and investment, decent productivity growth, urbanization, and manufacturing growth.
- Long term growth prospects look promising in the country especially with the continuous developments in place in spite of the pandemic.
- A high literacy rate is another advantage. English is considered a second language in the country. It also ranks among the countries that can read, write and speak English fluently. This makes it easier to tap into dependable manpower in the country and eliminates language barriers, especially among foreign investors.
- The Philippines is one of the countries in Asia with a high employment rate. This means that investors get steady access to a pool of skilled and highly competent workforce.
- Filipinos have traits that can help propel the success of businesses. Some of the traits that Filipino are known for include hardworking and adaptive.
Top Industries in the Philippines to Invest in this 2021
1. Real Estate Industry
Real Estate remains a flourishing industry. Just like in the past when it has already achieved so much, this 2021, it is still one of the best industries to invest in in the Philippines. Here are some of the reasons why.
- As the government’s Build, Build, Build (BBB) program continues to take its plight, it can only be expected that there will still be commercial and residential structures that will rise.
- Another thing to look into is the creation of better infrastructures that make transportation faster and more convenient. Now, locations that used to be hard to reach are more accessible. Cities that used to be inaccessible will start to look more feasible for land developers as well as prospective property owners.
- Of the top industries in the Philippines, real estate is among those that receive a huge share of annual foreign direct investments. This is an indicator that foreign investors see the potential growth in real estate in the Philippines.
- Acquisition of distressed assets as a result of the pandemic can also contribute to the flourishing of the real estate industry in the Philippines this year.
- As businesses seek new sources of capital, Real Estate Investment Trust companies are expected to set in. They can be the major player that will pose opportunities for even ordinary investors to participate in real estate.
2. Construction Industry
In relation to the real estate industry, the construction industry is also expected to thrive this year.
Before the pandemic, the construction industry in the Philippines had been the fastest growing in Asia-Pacific. Although it has also been hit by the crisis, experts from data and analytics firm GlobalData predicted it to bounce back this year. Its annual average rate is also expected to grow at 8.3% from 2021 to 2024.
Again, the government’s Build, Build, Build program continues despite the pandemic. There is a big budget for the completion of government projects. As the development of the country’s infrastructures is continued, it can be expected that more jobs and opportunities will be created in this industry.
3. E-Commerce Industry
One of the sectors that are forecasted to surge in 2021 is the e-commerce industry. Despite the pandemic, it has shown growth in 2020. This year, the Department of Trade and Industry stated its plans to increase the contribution of the e-commerce industry to 5.5% of Gross Domestic Product. This emerged as it aims to make the most of the shift to digital at this time.
It has also been stated under the Philippine e-Commerce Roadmap 2022 that from P599 billion in 2020, the contribution of digital transactions to the economy is seen to rise to P1.2 trillion by 2022. In line with that, it has also projected engagement of 1 million firms in online selling by next year compared to around 500,000 last year. Clearly, this is one of the top industries in the Philippines to consider for those who want to invest in the country.
4. Tourism Industry
The economy is expected to be revitalized with the continuous partnership between the government and the private sector. the tourism, leisure, and hospitality industries are some of the worst-hit sectors. In spite of that, it is forecasted that there will be an increase in volumes of deals in these industries.
Tourism has a key role in the economic development of the country before the pandemic struck in 2020. It still plays a role in the country’s economy for the coming years. Philippine policymakers and stakeholders are now giving priority to domestic tourism in aid of national recovery.
Currently, restrictions have already eased when it comes to domestic travel. There are some popular tourist destinations that have also reopened for local tourists, including El Nido, Boracay, Bohol, some parts of the Ilocos region, Baguio City, some parts of Bataan, Batangas and Legazpi City. With the vaccination plan in place, the tourism industry is bound to thrive and will definitely be a good option for those who want to invest in the Philippines.
5. Manufacturing Industry
The manufacturing industry is usually given the biggest FDI as foreign investors see the potential in it. And while the pandemic has an impact on this sector, the DTI expressed that the manufacturing industry is now starting to pick-up and is showing signs of recovery. This includes the resumption in auto production which started in September last year. The values and volumes in terms of production in the manufacturing industry in the Philippines also showed recovery based on the indices in recent months. The electronics and electrical exports are also showing positive signs. To quote:
“We can also see the same trend in our electrical and electronics exports, which have been climbing up to a growth of 6.3% in September from a low of -44.0% in April 2020,” Lopez said.
6. IT, BPO, and Business Services
In the last decade, the IT, BPO, and Business Services industry served as among the key economic contributors in the Philippines. Even though the country has already established itself as a premier hub for international business outsourcing, the pandemic has still hit the industry during the early part of 2020. There has been a global slowdown, business disruption, investment plans have been postponed during that time.
Despite those setbacks, 2021 is predicted to be a rebound year for the BPO industry. There is now a more stable and optimistic look in this sector especially with a more sound working environment that has been adapted to the new normal.
- Improved healthcare protocols have been implemented in the workplace
- Employees are more knowledgeable about protecting themselves
- Protective equipment is made available for employees
- Working schedules have been made more flexible
- Teams are delegated on-site and off-site
In addition to that, the emergence of a third TELCO promises improvement in terms of Internet connectivity which adds up to the country’s competitiveness when it comes to the global digital job market.
7. Retail Industry
Another sector that is forecasted to recover this year is the retail industry and this is amidst the COVID-19 related problems that still hound the country.
Of all the retail products, food, home, personal care and health products are expected to have a huge growth this year. These goods are among the products that marked a 50% revenue surge during the height of the pandemic. Other products that are expected to perform well are the equipment used in work-from-home set-ups including electronic gadgets and furniture.
According to Patrick Cua, Retail Intelligence Leader at NielsenIQ, the retail industry will start with a “soft” recovery for the first half of 2021. For the latter part of the year, it is poised to perform better.
“We expect 2021 to be a bounce-back year, but we need to recognize that the first half was a much higher base. And as we gradually reopened the economy, consumer spending will return,” he said.
In addition to those data, the growth in the retail sector will be propelled further by online shopping. Mobile technology has opened a channel for online retailers. With the pandemic, a lot of consumers have also relied on the convenience of online shopping.
8. Energy Industry
Strict lockdowns affected the energy sector which resulted in a steep drop in electricity and fuel demands. However, the local power providers have also taken quick steps to ease the financial impact on customers such as lowering rates and extending payment windows.
Furthermore, even during the pandemic, interest has also been sustained in oil and gas exploration activities, as well as investment in midstream infrastructure which is a positive indicator in terms of industry developments for the longer term.
Aside from that, excellent opportunities are present in the renewable energy and natural gas sector. In the years to come, the Philippines is poised to meet the increasing energy demand, as well as to help lighten pressure on the national grid.
In 2017, the Philippines earned recognition as the leading country in developing Asian countries in Asia when it comes to solar energy adoption and usage. And as solar energy continues to be a cheap alternative to usual energy resources, the potential for expansion and creating more businesses in the energy industry is very high–definitely a piece of good news for those who want to invest in the Philippines, particularly in this sector.
9. Agriculture Industry
2020 was not a good year for most industries. In Southeast Asia, natural calamities affected agricultural production. The pandemic that affected the world also left the key economic sectors in the Philippines crippled. Despite these unfortunate events, the agriculture industry in the Philippines managed to maintain positive growth in 2020. There is also a bright outlook for Philippine agriculture this year.
According to Director Glenn B. Gregorio of the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (Searca), “It must be acknowledged that there were earlier production growth targets that may not have been achieved. But being able to maintain positive growth is an enduring story of resilience at a time when it is needed the most.”
Furthermore, he said that SEARCA keeps its hopes up that the agriculture industry in the Philippines will experience significant growth this year and will play a key role in socio-economic transformation centered on the well-being of the farmers and their families.
Opportunities in Real Estate Investment: What You Can Explore
House Flipping
This is one of the best real estate investments in the Philippines to explore. If you have huge cash for investment, you can use it to buy depreciated properties that you’ll renovate to sell at a higher price. Basically, it is a continuous process that can turn in huge profits for every investment made.
Buy and Hold
Unlike house flipping which follows a buy and sell premise, this type of real estate investment is for the long-term. This is ideal for those who have the money now and want to preserve it instead of generating income.
Property Leasing
If what you’re after is to generate regular income, you can look into rental properties. Given a good location such as those near universities or business districts, there is a huge potential that you’ll generate income from your property.
CitiGlobal’s developments include condotels in some of the country’s top locations including Tagaytay and Palawan. If you’re interested in property leasing, check out the investment opportunities offered by the company to know your top options and make the most of the booming tourism,construction, and real estate industries.
REITs
Unlike the previous options that involve acquisition and management of physical properties, Real Estate Investment Trusts only involve buying and selling of stocks. This means you’ll be investing in companies that manage commercial real estate. As REITs are categorized as dividend-paying stocks, those who invest their money here can receive regular income.
Land Partnership
For those who want to earn money from their property without spending on renovation or selling it, a land partnership is the best option. This type of venture maximizes the earning potential of a property through a joint venture with a real estate developer in the Philippines.
CitiGlobal has master-planned communities in some of the key locations in the Philippines such as Tagaytay and Palawan that you can lease out to tenants or buy and hold to preserve the value of the money you have now. We also offer land partnership opportunities for those who want to make the most of their properties.
ALSO READ: Why Invest in Pre-Selling Condotels in the Philippines this 2021
2021 holds great promise for the world especially with steps being taken to bounce back from the effects of the global pandemic. If you’re interested in investing in the Philippines, there are industries that you can focus on as they are forecasted to thrive better than others. With the right support from the government and private sectors, it isn’t impossible for these forecasts to happen and even exceed expectations in terms of economic resumption.
Want to invest in the Philippines and secure your money in a thriving industry?