Infrastructure development is a key pillar and priority in the Philippines. Amid the challenging economic climate brought on by the pandemic, infrastructure development will be one of the key drivers of economic recovery for the country. As such, investments in infrastructure such as bridges, roads, rail, and water are expected to continue beyond 2021. In addition to these areas, the pandemic has unveiled the need for infrastructure development to enhance health facilities, internet & digital connectivity, and transport networks, giving rise to emergence of new projects and opportunities.
Companies may also see opportunities arising in areas such as township, business park and industrial park development. The Philippines’ Bases Conversion and Development Authority is currently working with Surbana Jurong to plan and design the 9,450-hectare New Clark City, which is envisioned to be the Philippines’ first smart, green and disaster-resilient city. New Clark City will provide space for businesses and industries to grow, and companies that invest in the development of the city could tap its special economic zone location to gain tax benefits and incentives.
Companies looking to access construction and infrastructure projects will also benefit from a recent change in the Contractors License Law, which allows 100% foreign owned construction companies to obtain a Regular License. The Regular License allows contractors to engage in construction contracting within the field and scope of the license, for local infrastructure projects for as long as the license validity is maintained through annual renewal.
Singapore companies keen to access infrastructure projects and opportunities in the Philippines could look out for projects under the Public-Private Partnership model, or tap Enterprise Singapore’s networks to get connected with complementary partners in the market to participate in upcoming projects. These partnerships allow you to focus on the technical solutions while allowing your in-market partner to navigate complex tender processes and regulatory requirements.
Speak to our officers to find out more about upcoming projects and get connected with the relevant partners in the market.
The Philippines’ power consumption stood at 101,756 GWh in 2020. Today, the country derives 57% of its energy from coal sources, 19.2% from natural gas, and 21.2% from renewable sources such as biomass sources, geothermal, hydropower, solar, and wind. With the moratorium on new coal-fired announced in May 2020, and the fast-depleting supply of natural gas in the Malampaya gas fields expected to last only up to 2027 or earlier, the Philippines is facing a mounting energy crisis.
To ensure affordable and reliable energy to meet the growing power demand, the energy infrastructure market in the Philippines is opening doors to foreign investment and accelerating the push for renewable energy. Foreign companies will now be able to fully own and operate biomass powerplants in the Philippines, as well as large-scale geothermal exploration, development, and utilisation projects.
In fact, with the Philippines targeting to attain renewable energy capacity of at least 35% by 2030 and the rising emphasis on energy security, the 7,000 islands of the archipelago hold great potential for the adoption of renewable energy solutions. As solar energy and energy storage becoming increasingly economical, hybrid solar-diesel-battery microgrids are widely seen as the most viable solution. This gives rise to opportunities for Singapore companies to provide microgrid solutions and financing.
Singapore companies have tapped these opportunities successfully, such as TEE Infrastructure Pte Ltd’s investment in a 25MW greenfield power station in Mindanao in 2015. Companies have also entered the Philippines market through joint ventures, such as Sunseap’s partnership for a 62MW solar farm project development in Bulacan.
Half of the Philippines’ population live in urban centres. Of this, almost 25% live in the capital, Manila, which is the most crowded city in the world. The resulting domestic and industrial demands on fresh water is tremendous.
Water management has improved with better enforcement of environmental laws and the growth of water supply systems. However, the Philippines still faces risk of water shortage within the next ten years, unless there is stronger management and conservation efforts. The Philippines’ Department of Environment and Natural Resources has warned of a regional water crisis in Central Luzon, by 2025.
If you specialise in utilities solutions, your expertise in holistic and fully-integrated water management solutions across the entire value chain, from desalination and reverse-osmosis, to municipal and industrial water treatment, will be in great demand in the Philippines.
Supported by a population of 109 million that increases by two million every year, the Philippines is one of the largest growing consumer markets in Southeast Asia. Household consumption in the Philippines has seen sustained growth, driven by improving employment, steady inflow of remittances, as well as low and stable inflation. Together with a stable banking system, a reformed progressive tax structure and a young, primarily English-speaking population open to global brands, new experiences, and a willingness to spend on non-essential goods and services, the country is a promising market for Singapore companies in the retail and food services sector.
Specific to consumer behaviour, the mall culture in the Philippines is extremely strong. Prior to the pandemic, retail malls served as social hubs where Filipinos go to shop, eat, and socialise. The 860 malls in the Philippines and prevalence of huge retail malls thronging with crowds underscore the vibrant mall culture in the society. Despite the pandemic, major mall developers are still investing and opening new developments in the short to mid-term primarily outside of Metro Manila. Malls have also been continuously innovating in their service offerings to meet the new lifestyles and needs of its customers. With the deeply entrenched mall culture in the Philippines, malls will likely continue to be an important gathering place for families and groups of friends in the new normal. Thus, Singapore retail and food service companies planning to take your business to the Philippines should consider setting a foot in these developments and exploring new growth destinations outside of Metro Manila.
Prior to the pandemic, adoption of e-commerce and food delivery services had been slow due to the dominance of the mall culture in the Philippines. However, with the COVID-19 pandemic restricting mobility, the population of Filipinos have been increasingly adopting digital services into their daily lives, accelerating the adoption of these digital services. The top two e-commerce marketplaces in the Philippines are Shopee and Lazada, and through its shopping festivals, deals and engaging campaigns, have continued to grow its user base of customers and shops. Popular product categories purchased online include consumer electronics, fashion, and personal care items. With the huge long-term potential for e-commerce, Singapore retail companies could explore establishing online presence via marketplaces or through your own webstores. The Enterprise Singapore team will be happy to connect you with partners to help you activate this new channel for market entry.
Beyond e-commerce, Singapore companies can explore bringing new retail concepts with a wider range of lifestyle retail experience to the Philippines. This could take the form of an experiential concept that combines retail, food & beverage, and community building activities, which would engage the local consumer.
From a regulatory perspective, Singapore companies need to take note that the minimum paid-up capital requirement for foreign companies to set up a consumer business stands at PHP25 million (approximately US$500,000). This was recently lowered in January 2022, as part of the country’s push to liberalise and attract greater foreign investment in the retail sector. Some key amendments to the Retail Trade Liberalization Act include:
Notwithstanding the above, many Singapore companies in the F&B and retail space have successfully entered the market. Examples include Baker & Cook, BreadTalk, Charles & Keith, Hawker Chan, Paradise Dynasty, Play Nation, and Salad Stop. We continue to see rising interests from Singapore companies.
To help you enter the Philippines market, Enterprise Singapore can facilitate your search for good local partners, including distributors, mall operators, mall developers, large retailers and multi-brand retail operators, based on the needs and business model of respective Singapore enterprises.
The Philippines is emerging as one of the fastest growing startup ecosystems in the world in 2020. Today, the Philippines has approximately 400 to 600 startups and around US$378 million in funding and exit values.
As the 13th most populous country in the world, with high rates of mobile subscription and smartphone penetration, the pandemic has galvanised the adoption of digital services in the Philippines, particularly in the fintech space. As fintech services help to facilitate transactions and bring convenience to consumers and businesses in the Philippines, these services are expected to in high demand in the new normal, presenting opportunities for Singapore companies. In particular, nascent verticals such as credit scoring, electronic Know-Your-Client (eKYC) and peer-to-peer lending represent the next wave of fintech solutions that would help demand drivers further digitise and transform in the market.
To help Singapore startups soft-land in the Philippines and facilitate stronger collaborations between companies in the two markets, Enterprise Singapore launched the Global Innovation Alliance (GIA) Manila Node, in partnership with Plug & Play and LaunchGarage in December 2020. Tech companies that are keen to enter the Philippines can tap the GIA by participating in the acceleration and demand-led programme to understand more about the market, plug into the local innovation ecosystem, and secure partnerships and business opportunities with in-market corporates. For more information on the GIA Manila and ongoing programmes, click here.