MANILA - Investments by US firms in the Philippines over the years were crucial in generating quality jobs and in developing key sectors such as business process outsourcing and manufacturing, a study on the US-Philippines' economic relations released on Tuesday showed.
From 2003 to 2021, some 395 US-based firms invested a total of $22.4 billion in 692 greenfield or new investment deals in the Philippines, according to the Ateneo School of Government's Ateneo Policy Center.
The US-Philippines Impact Study by Ateneo showed that at least 35 percent of these investments or $7.8 billion was channeled to the Information Technology-Business Process Management (IT-BPM) and Finance.
Ateneo School of Government Senior Research Fellow Dr. Nadia Doytch said 233 US-based firms were responsible for the $7.8 billion investments in the IT-BPM sector.
Of the total investments, 29 percent went to manufacturing, followed by 21 percent in services and 10 percent in the energy sector, data showed.
The study also showed that mergers and acquisitions by US-based firms in the Philippines had reached 117 deals as of 2021.
"What difference have they made? The top sector, the one that received 35 percent of the investment--the IT-BPM sector. We believe that the American currency has actually had a great influence on the development of this sector. Currently, the country is being ranked number one as a destination for voice-related services and contact-related services," Doytch said.
"Many of these companies are known actually for providing technical and managerial training and with which they manage to elevate the level of the workforce and the competency productivity of the workers," she added.
Concentrix has the biggest investment in the sector amounting to $1.1 billion while employing 24,000 workers, according to the study.
Investments also boosted employment in the manufacturing sector, Doycth said.
Semiconductor manufacturing services, which make up 70 percent of electronics exports, are dominated by US companies, according to the Semiconductors and Electronics Industries in the Philippines Foundation Inc
"The US plays a very major role in the Philippine electronics industry," said SEIPI President Danilo Lachica.
In 2019 alone, local affiliates of US-based firms created 367,000 jobs for Filipino workers, the study showed, citing data from the US Bureau of Economic Analysis.
Also in 2019, US investments in information technology and business services, agriculture processing and semiconductor manufacturing contributed $7.3 billion in export revenues, equivalent to 1.9 percent of the country's GDP.
"So, it's the quality of investments that we receive from other countries that have an impact on economic growth and job generation," Ateneo School of Government Dean Philip Arnold Tuaño said.
Tuaño said aside from jobs and economic gains, US investments also contributed to tax revenues for the government that fund social services and infrastructure.
With the renewed bilateral agreement and joint exercises, the Philippines also benefits from enhanced capabilities to conduct counter-terrorism, humanitarian assistance and disaster relief operations, the study showed.
The US and the Philippines are currently holding joint military exercises called Balikatan. The 2 countries have also recently announced that select military bases under the Enhanced Defense Cooperation Agreement (EDCA) may be used by Washington.
Washington and Manila have renewed friendlier ties under the administration of President Ferdinand Bongbong Marcos Jr, in contrast to the hostility shown by his predecessor former President Rodrigo Duterte.
When asked how this intensified alliance between the US and the Philippines could boost the economic gains for the country, Tuaño said one of the advantages is that it could attract more investments.
"The perception of American allies is that the Philippines is a safe place to invest so that will spur investments. The question is by how much because there are still other issues," he told ABS-CBN News.
Philippine economic managers have been promoting the recent amendments to investment laws that liberalize foreign ownership of companies in several industries.
The amended public service act (PSA) opens several sectors to 100 percent foreign ownerships including telcos, airports, tolls, roads and shipping, among others.
Other "game-changing reforms" were also passed into law to attract foreign investors such as the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) and the amendments to the Retail Trade Liberalization Act, and Foreign Investments Act.