...the future world analytics hub

Now 2 notches ahead, PH gunning for world analytics hub title by 2015

 

by Bernie Magkilat

Manila Bulletin
April 22, 2014

 

 

After becoming the world’s outsourcing hub for voice, the Philippines is now gunning to grab the world’s analytics hub title by 2015 with the domestic industry already ahead of competition by two notches.

Trade and Industry Secretary Gregory L. Domingo has assured “Analitika,” a consortium among social, professional organization and individuals spearheaded by IBM Philippines pushing for the practice of smarter analytics, of government’s strong support noting the 2015 target as “achievable.”

“Rest assured that the DTI will give its full support to help Analitika realize its vision to make the Philippines the global center for smarter analytics by 2015. This target is achievable if we do things right,” he said.

The Philippines already accounts for 10 percent or $230 million of the $212-billion global analytics industry. Of the $212 billion, the services segment of this business analytics account for $70 billion of which the Philippines already has a share of 10 percent.

In fact, a study by Gartner showed that that smarter analytics can provide 4.4 million jobs by 2015 of which only 30 percent can be served by the world.

“This is a big opportunity for the Philippines,” he said.

According to Domingo, the domestic analytics industry, which is distinct from the current IT-BPO industry, has been ahead of competition having linked this very new industry with the academe and the private sector as early as 2012.

IBM signed an agreement in December 2012 with the Commission on Higher Education to develop a Smarter Analytics Education Roadmap for the Philippines, particularly focused on the Business and Information Technology Courses.

Domingo cited the 12 universities that have already developed curricula for business analytics and courses that lead to specializations in this area following the CHED’s introduction of Analytics courses in 2013 to select universities.

Aside from the DTI, the Department of Science and Technology has been working with industry in utilizing analytics to enable the country’s research and development initiatives in weather prediction, agriculture, genomics and disaster management.

Domestic industries that can benefit the most from smarter analytics are telecommunications, insurance, retail and banking as these are industries with readily available huge data.

Data analytics is a way of analyzing huge data from social media, online data and all other data available. With smarter analytics, companies can anticipate business trends, suggest consumption patterns, address consumer issues and make timely decisions from thorough analysis of a mammoth of data that are not easily apparent.

All medium to large scale industries will require business analytics as one of the much-needed competencies in their business and IT portfolio, to remain competitive in the market place. For a company to be competitive and sustainable, it must have the right analysis from the data available.

“Data analytics is where you put a lot of intelligence in mining data… if properly analyzed, it would be put to a lot of productive use like helping companies make good decisions out of that data,” Domingo said.

IBM Philippines President and General Manager Mariels Almeda Winhoffer said the industry roadmap is expected to be finished in 6 to 8 months. Spearheaded by Analitika members, it will determine jobs roles in analytics in the future, listing of skills and marketing and promotion of the Philippines to the world as an analytics hub.

Winhoffer said the Analitika is attacking this challenge by addressing both the elementary grades and college levels by promoting curricula that leads more to engineering and scientific data analysis.
She said that Singapore, a close competitor, is concentrating on the masters programs for graduate students, but the Philippine strategy is to instill analytics both in the elementary education, particularly Grades 11 and 12, and as college courses.

Part of the roadmap is also to make the Philippines the center for the grant of certification for “Data Scientists.” A certification program for “Data Scientist” is yet to be done.

“The dream is to have that certification be done here,” Winhoffer said.

While smarter analytics is different from IT-BPO, Winhoffer said the IT-BPO can be a starting point but workers will need to move up the value chain through additional education.

Data analytics is not also going to replace IT-BPO, but Winhoffer said it is growing
globally at a faster clip of 15 percent than the 5 percent global growth of the IT-BPO industry, which is estimated to be a $200 billion to $300 billion industry.

Already, companies are investing in technology to take advantage of this huge opportunity because it is more sustainable than IT-BPO and offers a wide ranging of job opportunities in all sectors.

 

...the business accent

'Accent' matters: Philippines acquiring 70% of India call centers

            

By Camille Diola

philstar.com

April 7, 2014

 

A building in Manila occupied by a call center. Rajesh Pamnani

MANILA, Philippines — Most voice and call center businesses in India are transferring to the Philippines due to Filipino workers' more "neutral" English acccent, among other reasons, an Indian business group said.

The Associated Chambers of Commerce and Industry of India (Assocham) said that India is losing 70 percent of all incremental domestic business process outsourcing (BPO) businesses, particularly call centers, estimated to be worth $30 billion in foreign exchange earnings.

"Philippines ... has become the top destination for Indian investors, thus the need to reduce costs and make operations leaner is increasingly becoming significant across the BPO industry," Assocham secretary general D.S. Rawat said in a statement Sunday.

Citing Assocham's study, Rawat said that the Philippines has an advantage over India due to its large pool of "well-educated, English-speaking, talented and employable graduates."

Rawat said that only 10 percent of graduates in India are qualified to work in call centers and training could take a considerable amount of time. About 30 percent of graduates in the Philippines, on the other hand, are employable.

"Employees in Philippine call centers speak English fluently with a neutral accent which is what customers look for and that is something missing in Indian accents and that is a prime reason why BPO business is thriving in that country," Rawat explains.

"Cultural proximity to the US together with availability of talented manpower are key reasons as to why BPO companies prefer expanding their operations in Philippines," he added.

The country's IT-BPO sector saw its revenues rise by 17 percent in 2013 as more companies chose to locate and expand their operations in the Philippines.

The industry is estimated to hit revenues of up to $25 billion by 2016, and may account for approximately 10 percent of the nation's gross domestic product, employing about 4.5 million Filipinos.

 

...the PH growth punch

Philippines jabs for growth after Yolanda knockout

 

By Carmina Reyes,

ABS-CBN News

03/26/2014

 

 

MANILA – Like its boxing icon Manny Pacquiao, who was shockingly knocked out by an opponent but found redemption in his next fight, the Philippines should bounce back in 2014 after a deadly blow by typhoon “Yolanda” last year.

Three foreign institutions in separate reports said they expect the Philippines to maintain a strong growth rate this year, boosted by the government’s infrastructure projects and reconstruction program in the aftermath of the typhoon.

But for the Philippines to finally advance to another boxing division like Pacquiao, the Philippines must quicken its pace of project implementation.

“Our Philippines research highlights that the greatest single threat is disappointment with the administration due to slow pace of implementation,” said Australia’s Macquarie, which two years ago had set up with Philippines’ Government Service Insurance System (GSIS) a AUS$625-million fund to invest in infrastructure projects in the country.

Macquarie sees the Philippines maintaining a 6%-6.5% growth rate this year, while World Bank forecasts growth domestic product (GDP) growth rate at 6.6 percent.

DBS, Southeast Asia’s largest bank by assets, even raised its GDP growth forecast to 6.6% for 2014 from the previous estimate of 6.5%.

“The economy is largely unhurt from the devastating typhoon at the end of last year. If anything, the reconstruction efforts taking place in the first-half of 2014 will likely provide another boost to GDP growth momentum,” DBS economist Gundy Cahyadi said.

The country’s full-year GDP in 2013 grew 7.2%, higher than the government’s expectations of 6-7%, despite being struck by the one of the strongest typhoons to ever make landfall.

Construction of the 15-kilometer Metro Manila Skyway 3 project has started, but there are other transportation infrastructure that need to be implemented: the NLEX-SLEX connector road of the Metro Pacific group, and the Integrated Transport System (ITS) terminals.



World Bank country director Motoo Konishi said the $8 billion reconstruction program launched recently by the government will reduce the negative impact of typhoon Yolanda.

“The disruption to economic activity in the affected areas will pull down growth through lower consumption, but a speedy implementation of the Reconstruction Assistance on Yolanda (RAY) program would partially offset the decline in consumption and keep GDP growth strong at 6.6% in 2014 and 6.9% in 2015,” World Bank said.

Punches and headbutts

World Bank, however, warned that a slower global recovery and the end of quantitative easing in the US could release a torrent of punches to the economy.

Slower growth in high-income countries and in China would translate into lower demand for Philippine export products. China accounted for 12% of Philippine exports in 2012.

As to how America’s quantitative easing could impact the Philippines, here’s a quick recap: The US Federal Reserve began its asset buying program in November 2008, purchasing US Treasury notes and mortgage-backed securities, and issues credit to the banks' reserves to buy the bonds.

The purpose of this expansionary monetary policy is to lower interest rates and spur economic growth.

The program is now on its sixth year and since January, instead of buying $85 billion a month in bonds, as it has been doing since September 2012, the Fed has lowered its purchases to $75 billion in bonds each month.

The Fed is expected to gradually cut back on the bond purchases throughout this year so it can completely wind down its stimulus program. The rise in rates will likely pick up pace when the Fed finally raises its key overnight lending rate, which has been near zero since late 2008.

Last week, Fed Chair Janet Yellen, in a press conference following the first policy meeting that she chaired, said the Fed will probably end its bond-buying program next fall.

Kendrick Chua, World Bank senior economist for the Philippines, said the scaling back of quantitative easing in the US could result in higher borrowing costs in the Philippines.

This can impact on those who borrowed money to purchase houses or real estate assets. In case the interest rates rise sharply, some people may not be able to pay the amortizations and their properties may end up getting foreclosed.

The Bangko Sentral ng Pilipinas (BSP) is scheduled to hold a policy meeting March 27. Last week, BSP Governor Amando Tetangco told reporters an "early" and "gradual" adjustment in monetary policy stance rather than "discreet movements" would be less disruptive to businesses.

The BSP’s overnight rate has been at a record low of 3.5% since October 2012 when it was cut by 25 basis points.

Chua said that while businesses and households may be affected, the overall impact on the Philippines is expected to be manageable.

"The country continues to benefit from strong macroeconomic fundamentals, characterized by low and stable inflation, healthy external balances, and improving government finances. These strong fundamentals will continue to shield the economy," Chua said.

Going the distance: Tourism, Sciences

Will be the Philippines mirror Pacquiao, who started as a brawler, but later emerged as a skilled ring warrior?

To remain competitive, Macquarie said the Philippines must avoid or at least minimize the tendency of losing competitiveness in one segment before building competitiveness in other areas.

“The Philippines should improve competitiveness in a number of key agribusiness and metals/mining sub-sectors while maintaining and improving competitiveness in electronics,” Macquarie said.

“In addition to merchandising trade, the Philippines has in our view a significant untapped potential in services exports beyond BPO.”

In the context of IT-BPO (business process outsourcing), the industry continues to expand rapidly. IT-BPO revenues increased by 17% in 2013 and have reached $15.5 billion.

Although the growth rates are likely to taper-off, there is no doubt that the industry has multiple avenues of expansion.

The challenge is to continue diversifying away from voice and into faster areas of growth such as: back-office IT services; engineering & healthcare services; and higher value-added applications, such as animation, Macquarie said.

While the Philippines control almost 30% of the global voice BPO market, the country’s overall share of IT exports remains at around 1%, with clearly significant room for growth.

Fortunately, the current administration, which will be in power until June 2016, remains popular, according to Macquarie.

“Although net ratings are down somewhat, they remain considerably ahead of two other long-lasting administrations and there is an overall feeling of popular consensus for reform," Macquarie said.

 

...the world's best BPO destinations

Manila dislodges Mumbai as world's second-best outsourcing destination

By: Jose Bimbo F. Santos,
InterAksyon.com
February 1, 2014

 

MANILA – The Philippine capital has dislodged Mumbai as the second best outsourcing destination in the world.

Aside from Manila, three next wave cities in the Philippines that are outside Metro Manila also improved their rankings in the 2014 Tholons Top 100 Outsourcing Destinations. Davao and Bacolod each went up one place to 69^th and 93^rd, respectively, while Santa Rosa, Laguna moved up two notches to 82^nd.

Cebu and Baguio stayed at their existing places at eighth and 99^th, respectively. Iloilo, which was ravaged by Typhoon Yolanda last year, slid two places to 95^th.

Overall, seven Philippine cities made it to the Top 100 ranking. India remains the dominant country with six cities in the top 10 and 13 overall.

Undersecretary Louis Casambre of the Information and Communications Technology Office of the Department of Science and Technology (DOST-ICT) said the goal for 2016 is to add three more cities from the Philippines in the top 100.

"The goal of the Next Wave Cities Program of the DOST-ICT and the IT-Business Process Association of the Philippines (iBPAP) has always been to develop globally preferred outsourcing destinations outside Metro Manila," Casambre said.

Revenues of the business process outsourcing (BPO) sector last year are estimated to have increased by 15 percent to $13.34 billion. The industry reportedly employs over a million and is seen to add over a hundred thousand this year.

"We have been getting a lot of support for the Next Wave Cities Program… and we intend to maintain our efforts in bringing inclusive growth to the countryside," Emmy Lou Delfin, Next Wave Cities Program manager, said.

 

...the Manila property spot

Manila among top Asian property investment spots

Cliff Harvey C. Venzon
BusinessWorld Online
10 january 2014


MANILA HAS emerged as one of Asia’s top real estate investment destinations for this year, according to a survey by Washington-based Urban Land Institute (ULI) and global financial services firm PricewaterhouseCoopers (PwC).

 

 

The Philippine capital placed fourth among 23 investment prospects in 2014, according to the Emerging Trends in Real Estate Asia Pacific report released on Thursday night. Manila ranked 12th last year.

 

"Manila has risen through the ranks this year, the result of a fast growing economy, increasing popularity of the city as a destination for multinationals seeking outsourced services (both business process outsourcing [BPO] and back office), and a growing awareness that the problems long associated with lack of transparency and governance issues have improved," the report stated.

The BPO industry’s head count grew by 21% to 776,794 in 2012, according to the Information Technology and Business Processing Association of the Philippines (IT-BPAP). That figure was expected to have grown by 20% last year, based on industry projections.

IT-BPAP, meanwhile, aims for revenues to reach $25 billion by 2016 with an estimated 1.3 million in labor force. Industry revenues reached $13.2 billion in 2012.

"The country also benefits from a young demographic, strong capital inflows from local citizens working overseas, and a workforce with a cultural affinity with the West," the report said.

According to the report, prime office rents are still well below pre-global financial crisis rates but are growing at 5-8% per year.

Office take-up hit 400,000 square meters last year, "with demand remaining high," it added.

The report also noted the constitutional restriction on land ownership.

"As with the other emerging markets, Manila can be a hard place in which to invest, partly because of laws that prevent foreigners from majority ownership of land and partly because there is already plenty of domestic liquidity," it said.

"Core product is therefore difficult to find, but on the opportunistic level a yield spread of 350 to 400 basis points can provide operating cash flow returns in the mid-teens," it added.

Meanwhile, Tokyo emerged as the top real estate investment destination for this year, displacing Jakarta, which slipped to third place after Shanghai.

Completing the list were Sydney, which placed fifth, Guangzhou (6th); Singapore (7th); Beijing (8th); Osaka (9th); Shenzhen (10th); Bangkok (11th); China’s secondary cities (12th); Melbourne (13th); Kuala Lumpur (14th); Seoul (15th); Taipei (16th); Auckland (17th); Hong Kong (18th); Ho Chi Minh (19th); Bangalore (20th); New Delhi (21st); Chennai (22nd) and Mumbai (23rd).

ULI and PwC researchers personally interviewed 120 individuals, while survey responses were received from 130 individuals who were affiliated in property, financial and investment companies.

...the Convergys pool of talents

Quality talent pool pushes Convergys Philippines' 10-year growth

             

By Dexter Rodrigo Matilla

philstar.com

August 15, 2013

 

 

Convergys heads Marife Zamora (Managing Director for AP and EMEA), Andrea Ayers (President and CEO) and Ivic Mueco (Country Manager) share a light moment during a roundtable with the media recently.

 

 

MANILA, Philippines - One of the pioneers in the BPO (business process outsourcing) industry chalks up its dynamic ten-year growth to the availability of a high quality talent pool in the Philippines.

In 2003, Convergys started with its first site in Makati when the industry was still in its infancy. The company has since emerged as a top and long-running industry performer, boasting over 35,000 employees nationwide, opening a 22nd site by September, and reaping several awards along the way.

A three-time winner of the BPO Employer of the Year award and two-time winner of the BPO Company of the Year in the International ICT Awards, Convergys is also in the PEZA Hall of Fame for winning Top Employer and Top Exporter three times in a row in both categories.

The BPO giant has multiple sites located in nearly every significant business district in the country; from Makati and Ortigas, to Baguio, Bacolod and Cebu. It announced expansion in 8 new sites, notably Alabang 2, Alabang 3, Bacolod 3, Baguio, Cebu-TGU, Megamall, MDC-100 in Libis, and Cebu 5. On its tenth year, Convergys has set its sights on Mindanao and will open its first Davao site by next month.

“From 0 to 35,000 employees in the Philippines today, we achieved in just ten years,” Convergys Country Manager Ivic Mueco said. “We take great pride in our “build-from-within” philosophy: more than 80% of our leaders have grown their careers in Convergys, many of whom started as Agents.”

The Philippines is one of the prime hubs for the Cincinnati-headquartered global company. The country is now its largest geography, taking 44% of their 80,000 global headcount.

Its diverse workforce in the Philippines also includes returning OFWs (overseas Filipino workers) and qualified senior citizens and retirees looking for a second career opportunity.

Mueco said that the factors in having the Philippines as the top location for Convergys varies from the high literacy rate to a business-friendly government. She credited the Filipinos’ way of adapting to various cultures as the main factor of the continuous expansion of the company.

“As part of our commitment to help improve employability of the talent pool, we have a free program called Near-Hire Training. It is a communications training that helps improve chances of success into getting hired for Convergys. We only launched this program in April, but have already trained almost 700 individuals and hired 343 graduates,” Mueco said.

Marife Zamora, Managing Director of Convergys for Asia Pacific and EMEA, pointed out that, “The Philippines has emerged as a top-notch destination for the provision of customer management services to Convergys clients from North America, United Kingdom and Australia. The biggest advantage continues to be the availability and high quality of the potential employee pool found in the Philippines.”

Convergys President and CEO Andrea Ayers, who was in town for the company’s anniversary celebration, was all praises for the local management team.

“We are grateful to our Philippine team for their passion and commitment to superior service delivery for our clients and customers. We are honored and proud that Convergys continues to be the largest private employer in the Philippines,” Ayers said.

Competition to get the best of this potential talent pool remains fierce in the BPO industry. Compared to other industries, BPOs face the challenge of higher employee attrition. Mueco said the company has learned to handle the situation well through various internal programs.

“We emphasize a rewarding work experience and leverage employer branding-- best training, best facilities, best engagement initiatives, and best career opportunities,” she said. “Our goal is for every employee to become a key point of differentiation and a competitive advantage for the company.

 They are our greatest resource and by emphasizing talent development, we are able to help them develop their skills, and move into different roles within the company. We invest in the continuous development of our employees at all levels.”

Asked how the country’s workforce can remain competitive, Mueco advised, “Our opportunity to further grow the BPO industry in the Philippines lies in having a steady supply of talented, English-proficient, customer-service oriented employees and we work closely with the government and academe to ensure the continuing provision of English language skills to the country’s youth.”

 

...the preferred BPO site

'PH still among preferred sites for BPOs'

 

By Ted P. Torres,

The Philippine Star

06/21/2013

 

 

MANILA -- The Philippines remains among the preferred sites for business process outsourcing (BPO), according to a leading US-based BPO and information technology (IT) company.

 

Shore Solutions Inc., one of the bigger players in the BPO business, said revenues from the BPO industry in the Philippines is expected to hit $16 billion this year, or almost 20 percent higher than the $13.4 billion last year.

It noted that with increasing demand from prospective investors and subscribers, the industry would need at least 1.3 million direct hires by 2016 from 720,000 last year.

“That should require 516,000 additional seats, and some 2.5 million square meters of additional office space,” Darcey Lalonde, Asia chief executive officer of Shore Solutions said in a forum yesterday.

The industry employed over 720,000 in 2012, with another 1.6 million indirectly.

Expansion has already been noted in the key urban centers outside Metro Manila such as Cebu and Davao.

In Metro Manila, the major BPO centers are in Makati, Quezon City, Manila, Taguig and Mandaluyong.

Lalonde said that the next or third wave of BPOs is targeting key cities in Laguna, Batangas and Bacolod.

However, he said government should consider anew opening up to a limited extent or to select sectors, ownership of land to foreign entities.

...the place of action

Expats: PH is where the action is

By Alena Mae S. Flores
Apr. 21, 2013


”There’s nowhere else in this industry like anywhere else in the world, not China, India, US. This is where the action is. This is the forefront of all innovation, and change and growth and excitement if this is your chosen industry,” - Jason Lock, Transcom Senior Vice President for North America and Asia

Jason Lock

 

 

Two foreign executives of Transcom, a leading global outsourcing service provider, are bullish about the growth of the business process outsourcing industry in the Philippines, which has created a new middle class.

New Zealand native and Transcom executive Jason Lock has been in the Philippines for five years and says he has grown to love the country like his own. Lock, who holds the position of senior vice president for Transcom’s client delivery for North America and Asia, says his intention was to work for only two years in the country, but ended up staying much longer, which he enjoys to this day.

His decision, according to Lock, was influenced by both professional and personal reasons.”There’s nowhere else in this industry like anywhere else in the world, not China, India, US. This is where the action is. This is the forefront of all innovation, and change and growth and excitement if this is your chosen industry,” he says.

Lock has been with Transcom since July 2009. Prior to that, he worked with a different business process outsourcing firms in the Philippines. Lock says he decided to transfer to Transcom because of the company’s potential for growth at the time.

“This company Transcom had all the hallmarks of an organization that had lots of key things in place and look like they will expand and grow. I was excited to come here and build something,” he says.

Lock believes the Philippine BPO industry will continue to grow. “The Philippines is unique in the world. Nowhere else in the world have you got such a large, English speaking, well educated, service-oriented, labor force, community, culture that can, because of the exchange rate, provide service to the rest of the world,” he says.

Lock considers the Philippines as his second home, especially as his daughter, his “little Filipina”, was born at the Makati Medical Center in 2010. “I love living in the Philippines, as a country that has so much to offer to the world,” he says.

Lock says his wife who works at the New Zealand embassy and his two boys also love their stay in the country.

He says he feels the responsibility, being in a privileged position, “to give back to the country that has welcomed us.” He and his wife are involved in numerous charitable organizations and promotes rugby as a sport in the country. Lock in fact coaches a team of 75 Filipino young kids from ages 4 to 16 called the Makati Young Mavericks.

“Rugby is one of my personal passions. It’s almost like a religion in New Zealand. We’ve gotten involved in the youth development of rugby in the Philippines and I coach a team comprised of 95 percent of Filipinos,” he says.

Lock handles the operations at Transcom Center Building in Frontera Verde, Pasig City, which houses around 4,000 employees.” He believes in Transcom’s mission of putting the needs of people first to propel the growth of the company. “The organization has always had a philosophy of putting its people first and the view that if the people are happy, our company will be successful. We invest heavily in facilities, in different programs, charities, community outreach programs,” he says.

“We focus on family. I love it when we have members of the same family or friendship groups working in the organization. Transcom feels that it’s the way to go. If you’re working with people that you care about then it becomes an extension of home. If you can create big friendship groups, you’ve gone a long way to create an environment that feels like home,” he says.

Transcom organizes family day events, when it opens the company and its facilities to the family members of its employees. Transcom also sponsors events for the kids, hires rock bands and holds other fun-filled activities that make the day memorable.

Lock also recently led the donation of 50 “trisikads” or pedicabs to the city government of Bacolod where Transcom has a facility.

Meanwhile, Neil Rae, who joined Transcom in 2004, as a key account manager and has since accumulated significant experience in the organization, sees “something special” in the Philippines.

“Part of the reason is not just tech, not just process, it’s truly our people, and our commitment is to be here in the Philippines,” he says.

He says Transcom’s investment in the Philippines “represents a passion and commitment and dedication” to this industry that ultimately is the reason it has grown. The executive says the Philippines is among the top five countries with the highest level of customer experience among English-speaking countries. “It’s the excellence in customer experience that you can get [in the Philippines],” he says.

Rae is now the regional general manager and executive vice president for North America and Asia.

He says Transcom goes beyond compensation to look at its employees’ personal and professional development.”You optimize it by respecting and understanding the people by empowering the people locally to become our future leaders. It’s not bringing expats into the organization. This is about building something, future leaders. Filipinos leading Filipinos to show the true success,” Rae says.

Rae says Transcom’s strength lies in its employees where the company has put premium in caring for its employees.”To me, there is a direct correlation between our staff and our people and the level of customer experience we deliver. I firmly believe, and the organization believes that we need to focus in first on our people,” he says.

“How we care for them, that’s the most important thing. And this is something that I view as our number one priority in differentiating our organization in the Philippines from other organizations,” he says.

Rae says the BPO industry has created the new middle class in the Philippines. “It’s more than just a job. If you compare the Philippines to North America, it’s a career here. It’s created the middle class.

It has created something so powerful, I have not seen it globally. There’s a lot of factors, social, economic but if you strip that, it’s truly the people,” he says.

 

...the new "hot, young thing", TIMP

Move over BRIC, here comes TIMP - Turkey, Indonesia, Mexico, PH

 

By Conrad de Aenlle

Reuters

03/29/2013

 

 

LONG BEACH, California -- One day you're a hot young thing and everybody loves you. Then suddenly you're more mature, move a bit slower, and some hotter thing is threatening to replace you.

That cruel reality confronts the four large emerging stock markets known as the BRICs: Brazil, Russia, India and China. These erstwhile ingénues have struggled - the MSCI BRIC Index fell 6.5 percent in the 12 months through March 25 - while four smaller markets with an acronym of their own - Turkey, Indonesia, Mexico and the Philippines, the TIMPs - have excelled, recording gains ranging from 9.4 percent for Indonesia to 37.7 percent for the Philippines.

Brazil

Russia

India

  

China

The TIMPs are blessed with rapid growth, as are many emerging economies. The International Monetary Fund forecasts inflation-adjusted increases in gross domestic product this year of 3.5 percent for Mexico and Turkey, 4.8 percent for the Philippines and 6.3 percent for Indonesia.

Turkey

 

Indonesia

 

Mexico

 

Philippines

What made the TIMPs stand out to Bob Turner, who coined the term and is chief investment officer of Turner Investment Partners, a Berwyn, Pennsylvania, asset management firm, is that they possess qualities that should keep them and their stock markets expanding rapidly and profitably. These include favorable demographics and strengthening economies and political institutions.

"They have young populations, with a high number of workers to retirees," Turner explained. "They also have infrastructure that needs to be built out and banking systems that are underleveraged." He meant that individuals and governments are not overextended on credit, unlike in many mature countries, leaving room to borrow more to fuel growth.

But not every fast-growing small economy qualifies as a TIMP for Turner. He dismissed other countries that also have young populations and fast growth potential because they lack liquid stock markets, diverse industrial bases or adequate financial and legal systems.

APPEALING IDIOSYNCRACIES

Each TIMP country has some idiosyncratic feature that adds to its appeal, Turner said. He highlighted Turkey's location, which allows it to bridge Asia and Europe along one axis and Russia and the Arab world along the other; Mexico's "manufacturing renaissance"; Indonesia's middle class, which is growing swiftly by Asian standards; and the Philippines' booming call center industry.

Rick Schmidt, co-manager of the Harding Loevner Emerging Markets Fund, identified many of the same pluses in the TIMPs as Turner. However, Schmidt prefers to order a la carte, as it were, rather than taking the whole set menu.

"The demographics are clearly more attractive in those countries," he said. "I like the markets. I just don't like the concept of grouping them together."

Viewing them as a single entity might keep investors from scouting around for more productive markets if conditions in any of these four become less favorable, he cautioned. He also wonders if their returns are too good to last.

"All of these stories are true, and the markets have done extremely well as a result," Schmidt observed. "Is past performance a guarantee of future results?" He doesn't think so in the Philippines, which he said he's avoiding due to high valuations, although he has holdings in the other three. The MSCI Philippines Investable Market Index recently traded at a price-earnings ratio of 19, compared to 14 for the Standard & Poor's 500.

Scott Klimo, co-manager of the Amana Developing World Fund, expressed similar concerns about the Philippines, but he finds the TIMPs' collective future sufficiently bright to say that they "are certainly among the countries I feel more enthusiastic about." He encourages small investors to get exposure through funds rather than individual stocks, however, because the markets are relatively obscure.

Exchange-traded funds that focus on the TIMPs include iShares MSCI Indonesia Investable Market Index Fund; Market Vectors Indonesia Index ETF; iShares MSCI Philippines Investable Market Index ETF; iShares MSCI Turkey Investable Market Index Fund and iShares MSCI Mexico Investable Market Index Fund.

Investors who would like to give individual issues a try can find several TIMP stocks with American depositary receipts, shares denominated in dollars and traded on U.S. markets.

Klimo is a fan of phone service providers across the TIMPs, including Perusahaan Perseroan (Persero) Telekomunikasi Indonesia Tbk PT and Indosat Tbk PT in Indonesia; Turkcell Iletisim Hizmetleri AS in Turkey and America Movil SAB de CV in Mexico.

America Movil could face additional competition as the government proceeds with plans to deregulate the industry, Klimo said, but he expects the company to benefit as broadcasting is deregulated at the same time.

He professed mixed feelings about another telecom, Philippine Long Distance Telephone Co. He likes it, but not at Wednesday's price of $71, or about 18 times earnings. "I think it's a fine company, but I'm looking for a little bit better entry point," he said.

Schmidt's selections include Astra International Tbk PT, an Indonesian car manufacturer, and the Turkish bank Turkiye Garanti Bankasi AS. Both have ADRs, although trading is very thin.

He is heavily invested in Mexico through such companies as Grupo Aeroportuario del Sureste, SAB de CV, which runs the Cancun airport and is, in his view, "a fantastic business that turns the airport into a shopping mall." Other Mexican holdings include the beverage maker Fomento Economico Mexicano SAB de CV and its subsidiary Coca-Cola Femsa SAB de CV.

Turner likes Grupo Financiero Santander Mexico SAB de CV, a subsidiary of a Spanish bank; Jasa Marga Persero Tbk PT, an Indonesian toll road builder and operator, and Turkcell.

As high as his hopes are for the TIMPs, Turner acknowledges potential hazards.

"With emerging countries, there is always sovereign risk - for instance a new leader who comes in and is less capitalistic," he said. Also, "any global slowdown has a bigger effect on emerging countries."

He expects the TIMPs, nevertheless, to stay hot for the foreseeable future as they travel the same path to progress as earlier generations - until some other hip, young things come along to replace them.

 

...the Chase in Manila

JPMorgan to transfer more operations to Philippines

 

 

Sunstar

Monday, March 25, 2013

THE largest US-based financial holding firm by assets, JPMorgan Chase & Co., will likely transfer more business support functions to its global in-house center (GIC) in Manila in the months ahead, a legislator said on Monday.

“Under tremendous pressure to slash costs, we see JPMorgan moving more business support activities to its back office in Manila over the next 24 months,” said House Deputy Majority Leader Roman Romulo, a supporter of the Philippines’ booming business process outsourcing industry (BPO).

“This augurs well for our fresh college graduates and young professionals looking for gainful outsourcing service jobs,” Romulo said.

Romulo’s congressional district of Pasig City is home to 16 Philippine Economic Zone Authority-registered information technology (IT) parks that in turn host a growing number of BPO firms.

New York-based JPMorgan earlier bared plans to cut 17,000 jobs in America, or almost seven percent of its 258,965 global workforce by 2014, in a bid to generate at least $1 billion in annual operating cost-savings.

By revenue, JPMorgan Chase Bank, N.A.–Philippine Global Center has emerged as Manila’s largest GIC of a global corporation.

Established in 2005, the center generated almost P10 billion in revenues in 2011, and has a staff of more than 10,000 at The Net Plaza in Taguig City and at The Asiatown IT Park in Cebu City.

The center provides strategic support, including voice-based customer services, to JPMorgan’s various lines of business 24 hours a day, seven days a week.

It supports card services, retail financial services (home lending, auto finance, education finance, telephone banking, business banking), and treasury and securities services.

The center also assists in human resources, performance improvement, quality assurance, IT, accounting, account servicing, collections, operations management, project management, and risk and compliance.

Global corporations have aggressively conveyed non-core, labor-intensive and IT-enabled business support jobs to the Philippines, a lower-cost location with ample supply of fluent English-speaking college graduates.

They have either established their own GICs in Manila, or contracted out the jobs to independent multinational BPO providers operating here.

The other GICs in the Philippines include Citigroup Business Process Solutions Pte. Ltd.; Wells Fargo Philippines Solutions Inc.; Bank of America Continuum Philippines Inc.; Deutsche Knowledge Services Pte. Ltd.; Emerson Electric Asia Ltd.; IBM Daksh Business Process Services Philippines Inc.; IBM Business Services Inc.; IBM Solutions Delivery Inc.; HSBC Electronic Data Processing Philippines Inc.; Shell Shared Services Asia B.V.; Thomson Reuters Corp. Pte. Ltd.; Lexmark Research & Development Corp.; Chartis Technology & Operations Management Corp. Philippines; Manulife Data Services Inc.; and Dell International Services Philippines Inc.

The BPO industry is projected to produce $25 billion in revenues and directly employ 1.3 million Filipinos by 2016.

With a labor force of 780,000, the sector posted $13 billion in revenues in 2012, up by $2 billion, or 18 percent, from $11 billion in 2011.

This year, the industry is expected to generate $16 billion in revenues and add 146,000 full-time jobs, according to the IT and Business Processing Association of the Philippines (IBPAP).

The industry includes contact center services; back offices; medical, legal and other data transcription; animation; software development; engineering design; and digital content.

Romulo is author of the new Personal Data Privacy Act of 2012, which has helped to drive outsourcing to the Philippines. (PR)

 

...the strong economy

Philippines economy to remain strong in next 2 years

 

 

By Nelson C. Bagaforo
Sunstar - Davao

Monday, February 25, 2013

GOVERNMENT economic planners have remained optimistic the Philippine economy will remain strong in the next two years, as the country is determined to maintain its sound macroeconomic fundamentals and continue improving its investment climate through policy and regulatory reforms and infrastructure development.

"For this year, we expect the economy to grow six to seven percent. For next year, the growth is expected to accelerate to 6.5 to 7.5 percent," Socioeconomic Planning Secretary Arsenio Balisacan said in his speech, a copy of which was obtained by Sun.Star, during the recent economic briefing and general membership meeting of the Managers Association of the Philippines in Manila.

Amid some possible external risks, he said, the government is confident to meet these economic growth outlooks.

"Notwithstanding the positive economic outlook in the near-term, the government remains vigilant of the global and domestic risks to growth," he said in the same forum.

Global risks to growth, he said, include the uncertainty in the Euro zone and the fiscal problem in the US, which can adversely affect the global economy.

"We are also mindful of the possibility of oil price increases due to a higher global demand for petroleum products," said Balisacan, also director general of the National Economic and Development Authority (Neda).

But given the fiscal space and business confidence the past year, Balisacan said 2013 opens opportunities to sustain the growth momentum and achieve inclusive growth.

"As we have underscored in the Philippine Development Forum, these two objectives need not contradict each other. Inclusive growth is not only a goal but a growth strategy. To sustain the growth of our economy, we must ensure that economic growth benefits everyone, regardless of location or social status," he said.

In 2012, the Philippines posted a 6.6 percent growth in real Gross Domestic Product (GDP), higher than that of Thailand (6.4 percent), Indonesia (6.2 percent), Vietnam (5.0 percent), and Singapore (1.2 percent).

For this year, economic growth target is expected to be driven by agriculture, industry and services sectors.

"Agriculture will be buoyed by the government's conscious efforts in pursuing programs and projects that will increase the efficiency of producing staples and high-value commodities and crops," Balisacan said.

He said the positive agriculture outlook benefits from improvements in infrastructure, logistics, and the reduction in price volatilities.

Balisacan said the industry is also set to expand faster in 2013 and beyond, mainly driven by manufacturing and construction.

"Construction is expected to grow robustly due to strategic public and private infrastructure projects. Likewise, manufacturing is expected to be more vibrant, particularly semiconductor and electronics, food manufacturing, and light manufacturing industries," he said.

The services sector is also expected to remain robust due to the upsurge in the number of domestic and local tourists, domestic trade, real estate, renting and business and BPOs.

"We need to create new drivers of growth which have the potential of creating high quality jobs, particularly manufacturing, BPO, tourism and agribusiness," he said.

"Our initial estimates suggest that US$3 billion in investments in these sectors will create 621,000 jobs, both directly and indirectly through multiplier effects. This represents an average investment of roughly about P200,000 per worker. The amount needed to create jobs would be much less in rural areas, particularly in agriculture," he added.

 

...the Korean apple of the eye

Philippines catches eye of S. Korea investors

Philippine Daily Inquirer

Tuesday, February 12th, 2013

 

 

More South Korean investors are expected to invest in the Philippines after a credit-rating firm based in Seoul upgraded its outlook on the country from “stable” to “positive.”

A positive outlook suggests a probability that the Philippines’ present credit rating of BB+, which is a notch just below investment grade, may be upgraded within the short term.

NICE Investors Service Co. Ltd. said that when it made the decision to revise its outlook on the Philippines, it took into account the government’s improving fiscal situation, the country’s rising reserves of foreign exchange, and strength of its economy.

The factors indicate that the Philippines has an improved capacity to settle its debts to foreign creditors, NICE said.

On the fiscal front, the recent implementation of the new Sin Tax law, which raised taxes on cigarettes and alcohol, reflected the Aquino administration’s commitment to shoring up revenue collection.

NICE likewise cited the strength of domestic demand in the Philippines that allows it to weather the problems of an ailing the global economy.

Domestic demand is being fueled partly by remittances from overseas Filipino workers and investments in the business process outsourcing (BPO) sector.

“Solid private consumption and BPO industry expansion have led service business-centered economic growth. Consumption based on remittances is robust enough to absorb external shocks to some extent,” NICE said in its report.

“Solid private consumption and BPO industry expansion have led service business-centered economic growth. Consumption based on remittances is robust enough to absorb external shocks to some extent,” NICE said in its report. Michelle V. Remo

...the booming PH real estate

EXPERTS’ 2013 FORECAST

Bullish PH economy to rouse real estate industry

By Tessa R. Salazar
Philippine Daily Inquirer

Friday, January 18th, 2013

CENTURY Properties’ Acqua Private Residences is expected to do well this year since residential demand will stay strong across all subsectors.

What’s in store for the country’s property industry this year?

Going by the fearless forecast of five property analysts, the outlook for 2013 is rosy.

Julius Guevara, associate director for advisory services and head of consultancy and research of Colliers International, said that in general, “the bullish performance of the economy is seen to continue” in 2013. He said 2012 “proved to be a very good year for the Philippine economy and specifically for real estate.” He continued that “an end-of-year GDP (gross domestic product) growth rate between 6 and 7 percent has been forecast by various analysts, and we saw the stock market hit all-time highs during the past few months.”

Guevara added, “the residential condominium market has also exceeded historical sales levels this year, as low interest rates and record overseas remittances continue to fuel the housing boom.”

Colliers International recently released 10 forecast statements on the economy and property sectors for 2013—a collection of insights from various industry experts and Colliers.

“Similarly, the business process outsourcing (BPO) industry continued to drive the office property sector, and current vacancy rates in the major CBDs are in low single digits. The retail sector has also done tremendously well; occupancy rates in regional and superregional malls in Metro Manila are in the 90s. All in all, 2012 exceeded most of our expectations,” Guevara added.

Best real estate market

Rick Santos, CBRE founder and chair, noted: “We are now experiencing the best real estate market in the Philippines in the last 20 years. The Philippine real estate sector will have bright prospects in 2013. We see sustained growth in the BPO/office, residential, gaming and leisure sectors.”

Enrique Soriano, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory, said: “Five years after the financial crisis triggered by a housing bubble, the global economy is convalescing. The Philippine economy is poised to move up. Real estate markets in all segments will grow. Some developers will fail and others will do better because they have a strategy and they have found exactly the right position.”

Claro dG. Cordero Jr., Jones Lang LaSalle’s head for research, consulting and valuation, said an estimated 11,200 units is expected to be completed within 2013 for the residential segment. He also explained that, though “the residential demand will stay strong across all subsegments, there are also various externalities which may challenge the growth of demand over the near- to medium-term.”

The first indicator cited by Colliers showed the Philippine economy would grow by around 6 percent in 2013. The forecast was made by Japanese financial services group Nomura and the World Bank.

 

The World Bank raised its forecast for the Philippine GDP in 2013 to 6.2 percent, up from 5 percent. Nomura also raised its forecast for the GDP to 6.6 percent in 2013. “Growth is expected to tick even higher in 2013 because of the impact of the elections, fiscal improvement and governance reforms in private investments,” Nomura said.

Karlo Pobre, Colliers International’s analyst for research and advisory services, explained that the recent growth in GDP indicates that economic activities in the country have further expanded.

“The higher the GDP is, the more attractive we become, specifically to foreign investors. Investment opportunities should reflect on the property industry, considering the recent developments in the market. This should preferably materialize in the office and industrial sectors,” he said.

Sector contribution

Pobre added that currently the construction sector contributes roughly about 8 to 9 percent of the GDP, while real estate services is at 11 percent.

Soriano said: “the long anticipated growth trajectory will happen this year; something that we have not felt for a long time. We have had growth spurts in the past years but never a real, sustained momentum. This time it’s for real. Our economic fundamentals are getting better. The housing and construction market has assumed the lead role in this trajectory, domestic demand is growing, PPP (public-private partnership) infrastructure will continue its aggressive pace and the midyear local elections will boost spending.

“Overseas remittance will grow as the US economy continues to improve, albeit at an annualized rate of 1 percent and Europe’s crisis is apparently showing some signs of remission. With this I expect the economy to pick up steam and grow to 6.8 percent.”

...the top BPO sites in the world

Manila, Cebu Up the List of Preferred BPO Sites

 

By Malou M. Mozo

Manila Bulletin

January 18, 2013

         3  Manila       70  Davao        93  Ilo-ilo       94     Bacolod  
       8   Cebu        84  Sta. Rosa (Laguna)          99     Baguio


 MANILA, Philippines --- Manila and the Cebu City again carved their name as among the top preferred outsourcing destinations in the world, ranking third and eighth in the list of emerging business process outsourcing (BPO) sites based on a study by investment advisory firm Tholons.

Manila’s ranking improved by a notch from last year, an indication of the improving status of the country in terms of being a preferred BPO site around the world.

“Cebu is now ranked 8th in the Tholons Top 100 Outsourcing Destinations Report for 2013, which is a rank higher than in 2012,” said Cebu Investment and Promotions Center (CIPC) Managing Director Joel Mari Yu.

“This means Cebu City continually displays its great competency in the global outsourcing industry,” he said.

Yu added that the improvement is a “big thing” to celebrate in the face of challenges in manpower availability.

Apart from Cebu and Manila, Tholons cited five other cities in the Philippines – Davao, ranked No. 70; Sta. Rosa, Laguna, No. 84; Iloilo City, No. 93; Bacolod City, No. 94; and Baguio City, No. 99.

Cebu Educational Development Foundation for Information Technology Inc. (Cedf-it) Executive Director Jun Sa-a said Cebu deserves to be promoted in the 2013 Tholons list as it has proven it could scale and improve the quality of its manpower.

“This is a proof that the Philippines is giving India a serious challenge in this industry,” Sa-a said.

Jerry Rapes, chief executive officer of Exist Global, shared the sentiment. He attributed Cebu’s improved ranking to the hard work and collective effort of industry players, government and the academe.

“This is a validation that what we are doing is good but we should not just maintain that standing, we should move forward,” Rapes said.

Availability and quality of workers were among the criteria in selecting the top outsourcing destinations. CIPC estimates that there are about 95,000 people employed in the BPO industry in Cebu.

It also said that the average of 24,000 college graduates produced every year, complemented by skilled young individuals who want to start their careers in the BPO industry, has helped Cebu strengthen its reputation as a BPO destination. “The primary roadblock for Cebu to advance higher is the lack of qualified manpower,” Yu said. He admitted that while Cebu City has good infrastructure, demonstrated its capability in almost all IT spectrums, it still falls short in providing the industry with qualified IT/BPO workers.

Yu said that in 2012 alone, about 20,000 to 25,000 jobs were generated by new companies that set up businesses in Cebu.

“Cebu continues to have challenges to face before it can become the top business process outsourcing destination, especially because the competition in many surrounding areas of Asia is fierce. Cebu will have to work to continue to build its reputation as an outsourcing leader to make it to the top,” Yu concluded.

 

...the PH office spaces

Demand for PH office space breaks record

By Daxim L. Lucas
Philippine Daily Inquirer

The office space market in the Philippines is setting new records, led by demand from business process outsourcing (BPO) companies and multinationals, indicating growing business confidence, according to one of the country’s largest property consulting firms.

 

In a briefing on Monday, Jones Lang LaSalle Leechiu’s (JLLL) director for project leasing, Sheila Lobien, said that from January to November 2012, demand for office space rose to a total 425,000 square meters, and may rise further by yearend.

This level is at least 18 percent higher than the annual average demand of 360,000 sqm recorded in 2011.

Non-BPO firms consisting of multinational and local companies accounted for 100,000 sqm, or 25 percent of current demand, she said.

More importantly, companies are already committing to take up space even before office buildings are completed, indicating strong optimism and higher business activity projected for 2013.

Pre-commitments are backed up by signed lease agreements between parties, and advanced rent and security deposits are paid by the lessee.

Lobien said pre-commitments more than doubled in January to November 2012 as compared to the same period last year.

“In the 11 months of 2011, we recorded pre-commitments of 68,358 square meters,” said Lobien. “In 2012, the figure over the same period shot up to 175,922 square meters.”

JLLL studies also noted that a number of companies pre-committed to office space that would be completed as far forward as 2014.

The consulting firm’s findings confirmed a recent study of 22 cities in the Asia-Pacific region conducted by the Urban Land Institute entitled “2013 Emerging Trends in Real Estate.”

The study noted the increased attractiveness of Manila in terms of both investment and development prospects vis-a-vis investors, developers, property company representatives, lenders, brokers and consultants.

...the top choice for offshoring

PH is top choice for ‘offshoring’

Study notes emergence of competing locations

By Doris C. Dumlao
Philippine Daily Inquirer

Friday, November 30th, 2012

Employees work on a construction site in Manila on Sept. 17, 2012. The International Monetary Fund has kept its 2012 growth projection for the Philippines, but reduced its figure for next year as it sees a weaker global economy. AFP PHOTO/JAY DIRECTO

THE PHILIPPINES, India and China are the top three global shoring locations for corporations based on the number of jobs created in shared service centers, call centers and technical support centers from 2008 to 2011, according to a new report from global real estate adviser Jones Lang LaSalle.

The Philippines attracted 115 projects during that period, creating more than 72,000 jobs; India attracted 105 projects with 64,370 jobs and China, 56 projects with 25,455 jobs, said the JLL report “Onshore, Nearshore, Offshore: Still Unsure?” released last week.

The other top locations and the number of jobs created were: 4. United Kingdom (22,304); 5. United States (18,594); 6. Brazil (13,964); 7. Poland (13,476); 8. Mexico (11,515); 9. Romania (11,438), and 10. Costa Rica (8,878).

The JLL study said the changing global economic landscape was affecting corporate strategy and location decision-making. “The threat of recession, political uncertainty and rise of global emerging nations are causing international corporations to re-assess their location strategy. Companies are increasingly selecting from three ‘shoring’ options: onshore, offshore and near-shore,” it said.

Commenting on the decision companies faced, Ian Mackenzie, head of solutions development for JLL in Asia Pacific said: “A longer term focus on improving business productivity, operational efficiency and future scalability is now driving corporate real estate decision-making, rather than straight cost-savings in the short term. Corporations are undertaking comprehensive and early initial business case-and-option analysis” in designing their location strategies.

“For Asia Pacific-based corporations, a growing number are seeking the cost and productivity benefits associated with shoring, often sticking to offshoring or near-shoring options within the region. At the same time, in order for emerging nations such as India, Philippines, China and Malaysia to attract greater foreign direct investments (FDI), greater transparency is needed as well as access to quality labor and better location options,” he added.

Lylah Fronda, associate director for markets of JLL Philippines, added: “We see first-hand that the Philippines continues to be the preferred choice for offshoring. A highly skilled English-speaking population, coupled with a responsive real estate market with the right infrastructure creates a perfect mix for companies that understand the efficiency of going abroad for many business processes and call center operations.”

As to real estate conditions, the cost of offshoring operations in Manila was estimated by the study at $222 a square meter a year, more expensive than $187 in Bangalore or even $189 in Kuala Lumpur. But this was cheaper than the $300 in Mexico City, $606 in Sao Paolo or $372 in Buenos Aires.

The overall vacancy rate in the Philippines was estimated at 3.6 percent, suggesting less choice of office space compared to other typical offshoring destinations. In Bangalore, for instance, the vacancy rate was estimated at 7.7 percent while in Mexico and Sao Paolo, the rates were 13 percent and 11.9 percent. Buenos Aires’ rate was closer to that of the Philippines at 4.2 percent.

Meanwhile, the study noted that onshoring in mature markets was one trend that had re-emerged in recent months with a clear increase in strategic analysis and activity, particularly in the United States.

“Rebalancing within mature economies, as well as weakening currencies and growing availability of skilled labor, have led to a growth in the attractiveness of onshore locations. Locating business functions and supply chains onshore means companies can be closer to their customers, reducing supply chain complexity and risk and potentially allowing greater responsiveness to changes in demand,” the study said.

The study said paradoxically, the same logic of being close to the customer was also driving offshoring activity. “For international companies, particularly those in the pharmaceutical, and FMCG (fast-moving consumer goods) sector, seeking to align business functions and supply chains to high-growth emerging markets, an agile offshore location strategy can be a critical point of entry into a major market,” the study said.

...the changing Manila skyline

 

Manila rising, so are rents as confidence in Philippines grows

 

By Rosemarie Francisco | Reuters

Mon, Nov 26, 2012

 

 

 

MANILA (Reuters) - Manila's changing skyline demonstrates a city coming up in the world.

A general view is seen of Bonifacio Global City central business district in Taguig City Metro Manila November 15, 2012. The capital of the Philippines is in the throes of a property boom described as the best in two decades, reflecting the increasing confidence in an economy that only recently began shedding its image as one of the region's basket cases.
Picture taken November 15, 2012. REUTERS/Cheryl Ravelo

The capital of the Philippines is in the throes of a property boom described as the best in two decades, reflecting the increasing confidence in an economy that only recently began shedding its image as one of the region's basket cases.

Nowhere is it more obvious than at Bonifacio Global City, a commercial and residential property development on a portion of land carved out from Manila's biggest army base.

Originally sold by a cash-strapped government in the mid-1990s, building only got underway in earnest during the last six years after Ayala Land Inc took ownership. Under the Spanish-Filipino business clan that runs Ayala, construction is now going at full tilt.

"Work here is 24 hours," said Renel Reyes, an engineer and property manager overseeing a 30-storey tower due to be completed by the year-end.

Soon to be home for Nickel Asia Corp and local conglomerate Aboitiz Equity Ventures Inc , NAC Tower is just one of several tower blocks under construction. As his own workers carried in sleek aluminum rails, Reyes said the state of the market was obvious to anyone who looked up.

"There are so many tower cranes, a good indicator of the construction boom right now."

Located near Makati, the main business district that grew up in the 1970s, Bonifacio is a project in progress, but rents at 800 peso per square meter ($19.5) are already catching up with its older, established, but saturated rival.

Though rents paid in Makati have recovered almost 30 percent in the last three years, they are still way below the peak of 1200 pesos/sqm ($29) paid before the global financial crisis hit in 2008, data from property manager and consultancy Jones Lang La Salle Leechiu (JLL) shows.

That makes renting in Manila's business districts far cheaper than Hong Kong, Shanghai or Singapore. But then infrastructure remains a drawback, as anyone arriving at Manila's tired, old airport quickly realises.

VROOM

Still, as Bonifacio lures companies tired of Makati's cramped spaces with its sprawling parks, luxury hotel chains and Italian supercar makers have followed the money.

Lamborghini opened its first Philippine showroom, side by side with Ferrari, in Bonifacio, while Hyatt and Shangri La hotels are opening there soon.

Office space in most new buildings are snapped long before completion. At the NAC Tower, for example, only six floors remain un-let, but Reyes said they have potential takers.

Take up of new office space this year is set to hit a record 400,000 to 450,000 sqm, up as much as 25 percent from last year, according to Jones Lang and CBRE Philippines, another of the country's biggest property manager and advisers.

"Pre-leasing is back," said Rick Santos, chairman of CBRE. "We are now experiencing the best real estate market in the Philippines in the last 20 years."

The primary driver of demand for office space comes from business process outsourcing (BPO) firms catering for European and American multinationals that want to cut costs.

With one of the region's fastest growth rates, GDP grew 6.1 percent in the first half, the Philippines has shown resilience in the face of falling demand in the West and China, that other more export driven economies must envy.

Analysts say the Philippines could achieve its first investment grade sovereign debt credit rating in the next 12 months, about seven years after ending its debtor-nation status with the International Monetary Fund.

Strong private and public consumption has underpinned growth, while inflows of foreign capital have driven the stock market to new peaks and the peso to near five-year highs.

An anti-corruption drive launched soon after President Benigno Aquino came to power in 2010 has help the Philippines' image in the eyes of foreign investors.

Low inflation, low interest rates, and a ready supply of reliable, English-proficient labor are strong draws for foreign businesses seeking to reduce costs by expanding in Southeast Asia.

MANILA CALLING

The vibrancy is evident in Bonifacio, where shops are open until midnight and fast-food chains and coffee shops cater round the clock, mainly for call centre employees.

The BPO sector accounts for 80 to 90 percent of office space take up in the country, and is a major source of employment for the country's nearly half a million new college graduates annually.

The industry is forecast to double its current employee base of more than 600,000 by 2016 as western companies send more accounting, legal, data processing and other back-office jobs to the Philippines, fuelling sustained growth in demand for office space.

But steady growth in demand from the traditional front office market such as banks, insurance firms, and representative offices is also fuelling the property boom.

CBRE's Santos saw the Philippines, known as the world's call center capital, fast becoming Asia's back office banking hub.

JP Morgan Chase, HSBC , Bank of America , Citibank , ANZ , and Deutsche Bank have all transferred critical back office processes to Manila in the last five years, while Wells Fargo is among the more recent newcomers.

Rents are expected to stabilize in coming years as new office space totaling at least 1.3 million sqm become available in 2013 to 2015, according to Jones Lang, with little danger of property bubbles as supply is just keeping up with demand.

Outside Manila, a similar transformation is unfolding, with industrial parks, especially those close to the capital and devoted to manufacturing, drawing more foreign firms than ever before, despite cribs about the high price paid for power.

At least the increase in suppliers has meant the power outages that the Philippines was notorious for in the 1990s are now no more than a bad memory.

"What we are seeing now is the re-emergence of manufacturing, which is really good for the economy because manufacturing employs people that the BPO industry won't employ," Lindsay Orr, Jones Lang chief operating officer, said.

Two hours to the south, at First Philippine Industrial Park (FPIP), in Batangas province, land prices have jumped up to 60 percent from two years ago, while lease and rent rates have climbed a modest 10-15 percent.

B/E Aerospace Iinc , the world's top supplier of aircraft cabin interiors, opened its first Asian manufacturing plant there last month. Japanese firms led by Canon's <7751.T> Philippine unit also moved in this year, and FPIP president Hector Dimacali expects revenue to double this year.

"We are seeing big growth that we have never seen in the past," Dimacali said.

...the property driver in 2013

BPO to drive property market in 2013 - CBRE

 

 

ABS-CBNnews.com

11/20/2012

 

 

"The Philippines is one of the most cost effective outsourcing destinations in Asia ... Manila is now a strategic location for multinational companies and banks as it supports and runs the world's businesses out of the Philippines." - Rick Santos, CBRE Chairman and Founder

 

 

 

MANILA, Philippines - The country's real estate industry will remain strong next year, driven by demand for commercial space, particularly from the business process outsourcing sector, CBRE Philippines said.

 

 

BPO Offices development at One McKinley Hill, Bonifacio Global City

 

"We are now experiencing the best real estate market in the last 20 years. It took two decades to get the stars aligned, but now, we're looking at sustained growth and success," Rick Santos, CBRE Chairman and Founder, said in the statement.

"The Philippines is one of the most cost effective outsourcing destinations in Asia ... Manila is now a strategic location for multinational companies and banks as it supports and runs the world's businesses out of the Philippines," he added.

The BPO sector is expected to rake in as much as $25 billion in revenues by 2016, the BPO Association of the Philippines (BPAP) has said.

Aside from the demand from the outsourcing industry, Santos said demand for residential units will help drive the performance of the country's property market.

Moreover, the gaming industry and expected influx of tourists are foreseen to buoy demand for luxury and leisure properties, he added.