Swedish wave expected to hit Philippines’ BPO sector

Swedish companies, which previously had little interest in the Philippines, are expected to turn their attention to the country’s growing business process outsourcing (BPO) industry, according to Business Sweden, Malaysia office.

“The Philippines is a bit of a special case among ASEAN countries since most of the other countries are industry-oriented but the Philippines is service-oriented so they have a comparable advantage,” said Carl Malmqvist, manager of the Malaysia office at Business Sweden (the Swedish Trade and Invest Council), in Makati City on February 20.

Manila recently ranked 3rd as most preferred BPO destination overtaking Delhi, India. In 2012, data from Everest Group and outsource2Philippines forecast that call center revenues would increase to $14.7 billion by 2016, when the sector is tipped to employ 862,000 people.

“Four years back no one knew [about the Philippines]. Only the large companies such as Ericsson knew,” Malmqvist said.

“Now the smaller ones are now starting to see interest. That’s where we’ll mostly see the growth — in the SMEs,” he added.

The Philippines is currently nearing the bottom of the list of countries, which Sweden has investment interest in. According to Malmqvist, there are 350 Swedish companies in Singapore, 120 in Malaysia and roughly 70-80 in Thailand. However in the Philippines there are only 35.

Angelica Macayas, director of the International Marketing Department at the Board of Investment (BOI), said approved investments from Sweden has been very minimal for the past few years. From 2006 to 2012, approved Swedish investments totaled only P168.4 million.

“It’s going to be very difficult to have the Philippines as a hub because of where it is geographically. It hasn’t been of interest until now, but it’s picking up,” said Malmqvist.

Business delegation

A delegation of 12 Swedish Companies and 20 businessmen visited the Philippines between February 18 and 20 to discuss possible trade and investment opportunities.

The group included a mixture of companies already doing business in the Philippines, and some who were looking to explore possibilities.

The companies present included Atlas Copco, Celemi, Clean Motion, Comex Intl., Electrolux, Ericsson, Handelsbanken, Ikano, Swedish Foreign Trade Association, SEK, Tetrapak and Volvo.

According to Bayani Mercado, Philippine Ambassador to Sweden, they’ve seen increased interest from the Swedish community in the last year partly due to President Aquino’s anti-corruption drive, which has renewed investment interest among foreign companies.

Pitch for manufacturing

Trade Undersecretary Adrian Cristobal Jr. said another growth industry that Swedish businesses can take advantage of is manufacturing.

“The Philippines is now considered one of the most competitive areas for manufacturing. After the unfortunate events in Japan, flooding in Thailand, the rising costs in China and Vietnam, the Philippines now is in a position to lead on the growth in this region,” he said.

According to Malmqvist, there is also a market for trucks, buses and mining equipment.

H. E Eva Walder, directory general for Trade Policy at the Swedish Ministry of Foreign Affairs, said their main concerns were the 60/40 foreign ownership rule, the lack of legislation on compensation, and lack of interest in entering into a free trade agreement.

Diplomatic relations between the Philippines and Sweden were established on January 17, 1947. The Swedish businessmen wants to boost economic cooperation between the two countries.

Source: Rappler

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