The Philippines should reduce its dependence on remittances and business process outsourcing to better shield the economy from global disruptions, an economist said.
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Calixto V. Chikiamco, president of the Foundation for Economic Freedom, told reporters that both sectors are highly vulnerable to geopolitical shocks. He argued for greater investment in agro-industrial and manufacturing industries to create a more stable economic base.
Agri-industrialization could tap into the country’s natural strengths, he noted. Global demand for ube could be met with processed goods like candy and ice cream, transforming raw agricultural output into higher-value products with broader market appeal. Beyond ube, the furniture industry presents another opportunity, where production could transition from traditional hardwood to sustainable alternatives such as bamboo. This shift would not only align with growing international preferences for eco-friendly materials but also leverage the Philippines’ ability to cultivate fast-growing, renewable resources.
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“As a tropical country, we can grow trees here faster than in Europe because they have the winter season,” Chikiamco said.
Manufacturing’s share of the economy has been shrinking for years. According to World Bank data, its contribution to GDP dropped from 20.6% in 2014 to 15.7% in 2024. The sector remains critical for raising productivity, wages, and reducing poverty, as it tends to create higher-paying, more stable jobs compared to informal or service-based employment. A stronger manufacturing base would also support supply chain resilience, reducing reliance on imports for essential goods.
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Chikiamco also pointed to structural hurdles like high labor and energy costs, along with poor infrastructure, which deter investors. Addressing these could help restore confidence in the economy’s ability to withstand external shocks. Streamlining business regulations, improving port and road networks, and ensuring reliable power supply would lower operational expenses for manufacturers and agro-industrial firms, making the Philippines a more attractive destination for long-term capital. Additionally, investing in workforce training programs could align labor skills with the needs of expanding industries, further enhancing competitiveness.
