The Philippines is a promising country, offering significant potential to investors. Its exports are moving away from agriculture towards higher value manufactured goods. The country has a virtually untapped mineral-rich south, which could be more accessible if political progress in the region continues on the right track.

Our coverage – using our unique Total Analysis model – ensures that our clients make well-informed investment decisions in the Philippines. Our teams keep them informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. We also provide in-depth analysis of the Philippines’ 21 most important industries. Our winning combination of interactive data and forecasting, alongside our risk-assessed and results-proven analysis, will ensure that you, as one of our clients, are always one step ahead in the Philippines.

Country Risk

Philippines Country Risk

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Core Views

* We forecast real GDP growth of 6.0% for the Philippines in 2015, as we expect sustained solid growth in domestic demand. Positive growth momentum will in turn keep the Philippine peso resilient. That said, the ongoing economic slowdown in China and weakness in the Japanese economy could act as a drag on Philippine exports.

*We have pared back our expectations for a rate hike in the Philippines, and are now forecasting the Bangko Sentral ng Pilipinas (BSP) to keep its benchmark interest rate unchanged at 4.00% in 2015. This is due to our expectations for the Philippine economy to continue along a growth-inflation sweet spot and for the central bank to not go against the wave of monetary easing seen across central banks in the region.

*Fiscal reform efforts by the Philippine government have continued to bear fruit. We expect continued...

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Philippines Operational Risk Coverage (9)

Philippines Operational Risk

Philippines Crime & Security

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The Philippines poses considerable security threats to international investors, and we hold a generally bearish outlook in regards to criminal, terrorism, and interstate conflict risks.

Petty crimes, particularly those to the person, remain a pertinent issue in the Philippines, affecting both locals and foreign tourists and business travellers. Organised crime is also an issue, with foreign criminal gangs, particularly from China, Hong Kong, and Taiwan, operating in the country. As with most countries of the world, but especially emerging markets, official crime statistics understate the true level of crime. The Philippine National Police (PNP) is limited in its capacity to respond and assist victims of crime due to a lack of response vehicles, radios, and other essential equipment. Moreover, corruption is a major problem in the Philippines. According to Transparency International's Global Corruption Index, 69% of Filipinos consider the...

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Philippines Labour Market

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The Philippines is a country with huge potential to be one of the premier destinations as a market for labour, with a large population and growing pool of educated workers. However, it frequently underperforms the rest of the Asia region across a number of indicators in our Labour Market Risk Index, with competitive labour market countries such as India able to undercut its low minimum wages to attract investors. Overall the Philippines scores a total Labour Market Risk ranking of 47.2 out of 100 in our Labour Market Risk Index.

One area in which The Philippines looks set to perform well is through its high production of English-speaking, science, engineering and ICT graduates, which has resulted in an a boom in companies looking to outsource work to the Philippines, preferring the accent of Filipino-English speakers to that of the Indian accent. Unemployment and underemployment remains high, with a potentially large pool of workers available...

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Philippines Logistics

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Two of the worst risks facing incoming businesses are the limited reliability and comparatively high costs for utilities and fuel, and the inadequate and poorly maintained transport networks. However, these risks are mitigated by the comparative ease of trading to and from the Philippines, and the limited costs and bureaucracy which make the country an attractive destination for companies reliant on imports or focused on trade. With an overall score of 55.7 out of 100, placing it in 16th place regionally in our Logistics Risk Index, it is clear that there are a number of detrimental factors increasing the operational risks facing potential investors and businesses considering entering the Philippines.

We believe that with greater reform and investor awareness, the Philippines may fulfil its potential in South East Asia in the near future. Private consumption growth will follow investment growth, resulting in an increase in containerised goods...

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Philippines Trade & Investment

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BMI believes that there are a number of trade opportunities in the Philippines, but highlight that risks remain fairly pertinent. The country scores 43.7 out of 100 in our Trade And Investment Risk ranking, placing it in 15th position out of its 29 Asian peers. This puts the Philippines just ahead of Vietnam and Kiribati, but behind Fiji and China.

While the Philippines still lags behind its regional peers in terms of foreign direct investment (FDI) inflows, we believe that the country will soon catch up, owing to its strong macroeconomic fundamentals, an ongoing improvement in its business environment, a possible relaxation of its foreign ownership rules which could act as a catalyst, and its increasingly stable political climate.

The country's banking sector outlook is relatively positive, as we expect healthy demand for loans, combined with steady remittance inflows, improving governance, and...

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Philippines Industry Coverage (21)


Philippines Agribusiness

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BMI View: We hold a positive view on Philippines agribusiness sector in the long term, given the country's potential for new sectors expansion, such as palm oil. We particularly like the outlook for sugar production, and believe the livestock sector will continue to show healthy growth rates. The Philippines' vast consumption market, along with strong government support will foster domestic and foreign investment and favour output expansion. However, backyard farming and infrastructure problems, especially transport costs, will continue to hamper the sector's growth. These inefficiencies will become increasingly crippling as South East Asia moves towards the ASEAN Economic Community, which is supposed to lead to trade and investment liberalization in the region. Although the Philippines' government appears to have taken the measure of the challenge and is now supporting rice and sugar...

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Philippines Autos

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Based on latest sales figures from the Chamber of Automotive Manufacturers of the Philippines Inc. and the Truck Manufacturers Association, auto sales in the Philippines rose 19.3% year-on-year in January, to 18,662 units. The strong start to the year bodes well for our bullish outlook on the vehicle market and we are maintaining our forecast for auto sales to grow 13.2% in 2015.

While our full-year auto sales growth forecast remains below the rise in sales in January, it is informed by our view of base effects weighing on growth in the coming months. Given that sales have surged since 2012, they will now face a high base established in 2014, which will make it harder for the market to continue posting heady double-digit growth rates.

We expect growth in the passenger car segment to outperform in 2015, similar to 2013 and 2014. Our view is predicated on the robust...

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Commercial Banking

Philippines Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

Philippines Consumer Electronics

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BMI View: We expect strong sales growth in the Philippine consumer electronics market over the medium term as incomes rise and device prices decline amidst intense vendor competition. We forecast growth of 7.4% in 2015, a deceleration from 2014 as the AV segment returns to a lower growth trajectory after TV set upgrade demand brought forward by the FIFA World Cup tournament in Brazil...

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Defence & Security

Philippines Defence & Security

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BMI View: Rising tensions with China have seen the Philippines significantly increase their defence spending with the aim of revamping their military assets. Relations with China have further deteriorated following territorial disputes in early 2014. In addition, the Southeast Asian country is facing new internal threats such as communist insurgency, Muslim separatists in the south, and terrorist organisations with links to Al-Qaeda and the new Islamic State (IS). These developments have led to an increase in budget allocation towards defence spending by the government, which has seen roughly a 30% rise on the previous year. Potential risks stem from the scaling back of US support for the Philippines counter-terrorism programme.

Relations with China further deteriorated following the Philippines sentencing of 12 Chinese fisherman arrested for illegal fishing in non-disputed waters. Another...

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Food & Drink

Philippines Food & Drink

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BMI View: While the Philippine economy continues to expand at a healthy rate and despite its expanding base of young consumers, we believe that the country offers limited potential in its grocery and food and drink markets. Multinational investment has been slow to penetrate the market, which in itself continues to present numerous challenges to players in the sectors. Issues such as widespread poverty, highly uneven income distribution, under-developed mass grocery retail networks and high levels of unemployment will continue to weigh on the consumer outlook.

Headline Industry Data (local currency)

  • 2014 per capita food consumption = +4.68%; compound annual growth rate (CAGR) forecast 2013 to 2018 = +4.46%

  • 2014 alcoholic drinks value sales = +7.97%; CAGR...

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Freight Transport

Philippines Freight Transport

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BMI View - The overall picture for the Philippines freight industry is mixed by mode in 2015. Whereas at one end of the spectrum, we expect to see the air freight sector contract by over 11%, at the other, rail freight is set to see tonnage throughput growth of 5.00% in 2015. Exports are forecast to be outperformed by imports this year. Looking ahead, we expect the general slowdown in regional economies to continue weighing on the performance of exports over the coming quarters, which will inevitably result in some downward pressure on economic growth in 2015.

The main drag that we expect to affect the Philippines freight industry over the short term at least will be moderating economic growth in China and general weakness in the Japanese economy - both key export partners. Indeed, Japan and China were the first and third largest export destinations, respectively,...

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Information Technology

Philippines Information Technology

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BMI View: The Philippines' IT market is identified as a regional outperformer over the medium term, alongside other frontier APAC markets such as Vietnam and Indonesia. We expect a combination of a supportive economic and policy environment, and the relatively low penetration of products and services, will provide a fertile environment for a period of robust catch-up growth including IT hardware, software and services. However, it is the IT services segment that has the brightest outlook 2015-2019 through a...

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Philippines Infrastructure

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  • BMI View: The Philippines will continue to see strong growth in 2015, underpinned by growth in residential construction, while a stable monetary policy will also lift private construction. We expect a moderation in growth beyond 2015 as the upcoming elections hinder construction projects, while the Supreme Court's ruling on the Disbursement Acceleration Program will also result in more cautious spending on infrastructure by government agencies.

Key Trends And Developments

  • We expect the Philippines' construction sector to register double-digit real growth in 2015, expanding by 10.9% in 2015, with growth largely underpinned by the private sector. The residential building boom continues to lift construction...

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Philippines Insurance

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BMI View: The Philippines insurance sector is increasingly attracting international attention, with multinational insurers drawn to high growth rates and substantial future growth potential. At present the life sector is considerably more developed than the non-life sector, with higher rates of penetration (premiums against GDP) and density (premiums per capita). Both life and non-life insurance lines are expected to grow at healthy rates throughout our forecast period, however, with domestic economic growth and a rise in household consumption increasing demand for a range of insurance products. The market remains fragmented, and we expect to see further consolidation among the smaller players moving forward.

In recent years, growth in the Philippine insurance industry has been driven by life insurance,...

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Medical Devices

Philippines Medical Devices

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BMI Industry View: An above average market growth rate of 9.7% is projected for the Philippine medical device market and much of this demand will continue to be met by imports. Demand continues to vary by region, with the capital and surrounding areas continuing to provide the best prospects for growth.

Headline Industry Forecasts

  • The Philippines medical device market is expected to grow at a solid 9.7% in the medium term. This growth will be spearheaded by the growth of imports, health expenditure, the private sector and medical tourism.

  • In US dollar terms, annual imports grew by 7.1% to reach USD243.9mn in 2013. Imports grew every year during the 2009-2013 period, with growth ranging from 25.0% in 2009 to 2.0%...

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Philippines Mining

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BMI View: The mid-2014 exit of Glencore Xstrata from the USD5.9bn Tampakan copper-gold project reflects continuing challenges for mining investment in the Philippines, largely due to subdued metal prices. Moreover, resource nationalism will remain a threat as the Philippine government continues to consider raising taxes on the mining sector.

Falling metal prices and fading attraction of frontier mining will continue to dampen investment into the Philippines' mining space over the coming years. As spotlighted by the exit of Glencore Xstrata from the USD5.9bn Tampakan project in South Cotabato, which announced its decision to sell its...

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Oil & Gas

Philippines Oil & Gas

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BMI View: The Philippines will likely remain a small producer of both oil and gas over our forecast period. Faster consumption growth than output increases will see the Philippines remain a net importer of crude oil and oil products, as well as joining the ranks of gas importers in the world.

The main trends and developments we highlight for the Philippines' oil and gas sector are:

  • We forecast relatively stagnant growth in the Philippines' oil and gas reserves, owing to the limited number of discoveries made.

  • Crude oil production will see small increases throughout most of our forecast period to 2024. We note significant downside risk to our forecast particularly from 2019, as these are based on projects where final investment decisions have not been made.

  • ...

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Philippines Petrochemicals

Pharmaceuticals & Healthcare

Philippines Pharmaceuticals & Healthcare


Philippines Power

Real Estate

Philippines Real Estate

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BMI View: Ongoing improvements in the Philippine's economy have been supported by the rapidly expanding business process outsourcing (BPO) industry, which is helping boost demand for commercial real estate across the country. We see particular opportunities for investors in the office market due to the strength of the BPO industry, as well as retail developers looking to benefit from the country's increasing levels of private consumption.

Despite remaining underdeveloped when compared to Thailand and Malaysia, the Philippines' commercial real estate industry has achieved continued growth thanks largely to business process outsourcing (BPO) which is fuelling a rapid expansion in the services sector. The success of this industry will significantly influence the overall strength of the office real estate...

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Philippines Renewables

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BMI View : The Filipino renewables market is experiencing a strong interest in renewables, with a multitude of new projects in the pipeline: a total of a 48 power projects, 21 of which from renewable sources, are expected to come online between now and 2018, amounting to an estimated 4.7GW of generation capacity. While renewables - particularly wind and solar - are, therefore, on the rise, we also see growing numbers of new thermal projects. Further obstacles on the market continue to be land-related issues and a volatile business climate, as well as a national grid that is unable to fully connect new renewable energy to the...

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Philippines Retail

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BMI View: The Philippines continues to enjoy robust economic growth and this is helping support steady growth in disposable incomes throughout the country, particularly in urban areas. A rising middle class is now leading to elevated levels of household spending which we believe will result in increasing demand for non-essential, luxury items. The 24-hour convenience store sector will continue to play a very important role in the development and modernization of mass grocery retail within the country.

We are optimistic that the Philippines will continue to enjoy steady economic growth over our forecast period. Growth during 2014 totalled an...

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Philippines Shipping

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BMI View: The Philippines' top container facility in terms of container throughput Manila International Container Terminal (MICT) is set to continue holding this position in the country's maritime sector in 2015. With congestion currently not in the picture, BMI forecasts steady growth at the port.

One of the country's largest facilities in terms of total throughput, the port of Cebu, is also expected to post increase in its freight volumes.

Over the medium term, growth will continue at both the MICT and the port of Cebu.

Headline Industry Data

  • 2015 port of Cebu tonnage throughput forecast to grow 3.7%, over the medium term we project a 19% increase.

  • 2015 MICT container throughput forecast to grow 2.6%, over the...

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Philippines Telecommunications

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BMI View : Relatively low penetration and increasing GDP per capita will give impetus for mobile market growth in the Philippines. BMI believes that mobile growth will average 3.5% over 2015-2018. A new entrant - media conglomerate ABS-CBN Corporation - launched its mobile virtual network operator (MVNO) service under the ABS-CBN mobile brand in December 2013 using the network infrastructure of Globe Telecom. Despite the new competition, BMI believes market dynamics are likely to remain in favour of the incumbents, Philippine Long...

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Latest Philippines Articles

  • The sudden rise in US and European bond yields in May following a long, ste...

  • The expected easing of foreign ownership restrictions for Philippines' cons...

  • The Philippines' ongoing growth-inflation sweet spot informs our forecast f...

Latest Philippines Blogs

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Latest Philippines Podcasts

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