Ladies and gentlemen, a good morning to you all.
On behalf of the Department of Trade and Industry (DTI), we welcome the American business community to this webinar on the Philippines’ Healthcare Information Management Services (or HIMS). We also want to recognize the Philippine Board of Investment (BOI), the Healthcare Information Management Association of the Philippines (HIMAP), as well as our Philippine Trade and Investment Centers (PTICs) in the US for organizing today’s event.
This webinar is part of our “Make It Happen in the Philippines” (MIH) global investment campaign to showcase priority sectors in the country that our friends abroad can consider for investment.
While the Philippines continues to address the economic challenges of the COVID-19 pandemic, we are already seeing very encouraging results in the country’s road to economic recovery. Our 2021 second quarter gross domestic product (GDP) results posted a rebound a positive 11.8% growth, driven by 22.3% growth of manufacturing and 25.7% growth in the construction sector.
Meanwhile, Purchasing Managers’ Index (PMI) remained above the crucial 50-threshold at 50.4 in July. And our exports rebounded to double-digit growth up 72% in April, 31% May, and 9.5% in June. We were also able to maintain our unemployment rate at 7.7% in June as more and more industries open up. You should remember that last year in April of 2020, the unemployment rate went up as high as 17.7% and now, it’s down 7.7%. Consumer and business confidence are also starting to recover.
What’s more, Foreign Direct Investments (FDI) in April increased by 114% compared with the same month last year. Our Foreign Investment pledges alone for January to June 2021, compared to the previous year, is 16.09% higher. And despite of the pandemic, BOI recorded last year its second-highest investment approval level in its 53-year history.
The Philippines also retained its investment-grade credit ratings from the major international credit-rating agencies, lending further credibility that recovery is in sight.
Before the pandemic, the Philippines was one of the fastest-growing economies in Asia, with an average growth rate of 6.6% from 2016-2019. While our economic managers are working hard to bring the country close to pre-pandemic growth rates, the World Bank expects the Philippine economy to bounce back 4.7% in 2021 and 5.9% in 2022.
The Philippines also has a rising population of 110M that has a demographic sweet spot and an average young age of 25 years old, which means several decades ahead with a very good resource base. It now provides a rich pool of 45M manpower resource needed for growth. This is also a continuously growing consumer base with increasing income and purchasing power.
More importantly, this highly skilled, educated, and cost-competitive talent pool is one of the key advantages of the Philippines as a preferred location for Information Technology and Business Process Management (IT-BPM) services, specifically for high-value healthcare information management services. And we’d like to point out that despite the pandemic, HIMS operations in the country remained unhampered.
We would also like to mention that as we continue to combat the spread of COVID-19 and its variants, including Delta, we continue to push for massive and meaningful economic reforms that would make ease of doing business even more for investors.
Currently, we are implementing the game-changing Corporate Recovery and Tax Incentives for Enterprises (or CREATE) Act that rationalizes, modernizes, and offers more relevant incentives to investors. The Act provides the President the flexibility in granting fiscal and non-fiscal Incentives for high-value strategic investments, including longer time period for enjoying income tax holidays and subsidies for key cost items.
It also allows the availment of Income Tax Holidays (ITH) from four to seven years, depending on the level of technology and location of the project. The ITH will be followed by another 10 years of either Enhanced Deductions or a Special Corporate Income Tax (SCIT) of 5% tax of Gross Income Earned—in lieu of all taxes- for export-oriented enterprises.
Other key features of the Act that can be enjoyed by foreign investors include the removal of export and nationality bias. It also grants the President flexibility in granting incentives for highly desirable projects with a minimum investment capital of Php50B or can generate at least 10,000 jobs for up to 40 years.
Lastly, HIMS and IT-BPM services are part of the priority sectors eligible for incentives under our 2020 Investments Priorities Plan as a transitional Strategic Investment Priorities Plan (SIPP) under CREATE.
To accelerate the growth of innovation-led and technology-intensive industries, the Board of Investments (BOI) has also partnered with Commission on Higher Education (CHED) to upskill and reskill our people under the Transnational Higher Education Law. This partnership will help us to map the skills requirements of emerging industries, even as it focuses on STEAM Education—or Science, Technology, Engineering, Arts, and Mathematics—to produce a more future-ready workforce. Of course, this will include the IT-BPM and HIMS sector.
Before the pandemic, we also commenced initiatives on digitalization to facilitate online business registration in different government offices. While this was part of Philippine President Rodrigo Roa Duterte’s push to remove long queues in government offices for our people, this leap to digitalization was timely as it allowed for greater ease of doing business despite COVID-19.
The Executive Order No. 127 signed by President Rodrigo Roa Duterte in March 2021 will also soon be implemented with the finalization of the IRR, a process led by our Department of Information and Communications Technology (DICT). This is a great equalizer as this will empower the geographically isolated areas with interconnectivity, giving everyone access to internet and information. This to me in the present day is a basic human right and something that will pave the way to an inclusive and prosperous society.
Lastly, we’ve enacted major policy reforms that have made it easier for companies to do business in the Philippines. These include the Ease of Doing Business Act, the Philippine Innovation Act, the Revised Corporation Code, and the Telecommuting Act.
We’d like to reiterate that the Philippines considers the US as one of our strongest partners in trade and investment. Last year, the US was our third major trading partner, our second top export market, and our third chief import source. Furthermore, the US was our top source of approved investments in 2020.
Presently, IT-BPM remains as one of the top industry investments in the Philippines by US firms, with HIMS as one of the fastest-growing sub-sectors achieving a double-digit growth despite the pandemic. Some of the key American HIMS companies that have successfully established operations in the country include Legato Health Technologies, Alorica, IQVIA, Abbot Philippines, ADEC, AWS, STAYWELL, and TENET. We would also like to acknowledge our local companies that have been supporting US clients in the healthcare industry, like the Visaya KPO, Pointwest, Collabera, and Access Healthcare.
In closing, we invite you all to participate in the discussions as well as subsequent presentations on how to do HIMS-related business in the Philippines, as well as opportunities in partnerships between both of our countries in the HIMS sector. For any business inquiries and concerns, you may reach out to the BOI as the focal point of contact in the Philippines and our four Philippine Trade and Investment Centers (PTICs) in the United States, specifically in New York, Washington DC, Silicon Valley, and LA.
We want to assure you that—together with HIMAP—we remain committed in realizing the global business goals of your company in the Philippines, especially as it would help to create jobs and employment for our people. Moreover, we aim to be a strong partner of the US in building back towards a better, brighter post-pandemic future.
Together, let us Make It Happen in the Philippines! Thank you and mabuhay po tayong lahat! ♦
Date of Release: 24 August 2021