This is a best prospect industry sector for this country. Includes a market overview and trade data
Last Published: 7/13/2017

Overview

The Philippine ICT industry is expected to continue its upward trajectory due to opportunities from the financial, telecommunications, Business Process Management (BPM), and health IT sectors.  Increased consumer spending, low PC penetration, and small and medium enterprise (SME) modernization will also contribute to its growth.  Business Monitor International (BMI) forecasts total IT spending for 2016 to be US$4.4 billion, an 8.3 percent increase from 2015.  BMI expects the annual growth rate in this sector to increase to 10.6 percent and reach US$6.6 billion in total spending by 2020.
 
The financial sector is one of the vertical industries expected to leverage ICT to deliver better and more secure customer service.  The BPM industry is expected to employ 1.3 million people and generate US$25 million in revenue by 2016.  The BPM industry is driving the growth of the hardware, software, services, and cloud opportunities as more offices are opened. 
 
Philippine SMEs now prefer cloud services as a lower cost alternative to more expensive software licenses.  The cloud is now considered as a great equalizer in the Philippines as it makes technology solutions more affordable and available to SMEs. 
 
Other sectors that are expected to increase IT spending are retail, consumer goods, and health IT.  The International Data Corporation (IDC) issued a press release stating that Philippine healthcare IT spending is expected to reach US$60 million in 2019, with a four percent annual growth rate from 2016 to 2019.  IDC indicated that the largest investors in IT are healthcare providers, including hospitals.  This group accounted for 88 percent of healthcare IT expenditures in 2015.  Hardware spending ranked highest with a 79 percent share, followed by services and software.  IDC analysts consider this trend as being consistent with ASEAN where the priority is focused on upgrading existing IT infrastructure.  However, IDC Philippines commented that there is a clear distinction between the private and public sector in healthcare IT.  Privately-owned hospitals are more aggressive in IT adoption in order to stimulate the growth of medical tourism.  Public /Government hospitals are still focused on developing basic healthcare services and making them more accessible.  IDC expects increased demand in mobility, tele-health and CRM solutions for the healthcare industry.
 
The Department of Science and Technology’s Information and Communications Technology Office (DOST-ICTO) launched the “Free Wi-Fi Internet Access in Public Places” project in late 2015 with a budget of US$66 million.  TV white space spectrum wireless technology will be used for last-mile connectivity in areas lacking broadband infrastructure. All participating internet service providers will peer with PhOpenIX, the country's only third-party, non-profit, publicly funded internet exchange point.
 
Filipinos are prolific users of social media.  Estimates this year show that there are 48 million active social media users from the Philippines.  Of this number, 42.1 million are on Facebook; 13 million on Twitter and 3.5 million are LinkedIn users.
 
The Philippine telecommunications industry remains very robust and is a major contributor to the country’s economy. Continuous capex for the upgrade of communications equipment contributes to the growth of the ICT industry.  Below are growth projections for the telecommunications industry:

  • Mobile: As of the end of 2015, there are 116.8 million subscribers with a penetration rate of 116 percent.  BMI forecasts a 119.8 percent penetration by 2020. 

  • Broadband: There is tremendous growth potential for broadband with wireless subscriptions accounting for 80 percent of all subscriptions.  Smartphone ownership is increasing as it becomes more affordable along with the growing demand for high-speed Internet access.  Smartphone penetration is estimated to be about 40 percent.  BMI forecasts 16.5 million broadband subscriptions by 2020.

The challenge for the Philippines is to continue to upgrade its telecom infrastructure to keep up with the growing demand for broadband.  According to Akamai’s “State of the Internet Report” for the fourth quarter of 2015, the average internet speed in the Philippines is 3.2 megabytes per second (MBPS), the second slowest in Asia Pacific.

  • Fixed Line: fixed line penetration is around four percent with an estimated four  million subscribers. This sub-sector is expected to remain stagnant.

The Philippine Long Distance Telephone Company (PLDT) and Globe Telecom are the two major telecommunication carriers in the country. PLDT, through its mobile group, SMART Communications and Sun Cellular, controls 70 percent of the mobile market, with Globe accounting for 30 percent. The current Philippine cellular infrastructure is Global System for Mobile Communications (GSM). 3G service was launched in 2006. 4G was made available in 2010. More recently, SMART and Globe launched long-term evolution (LTE) networks in 2012.
 
PLDT has an existing digital fiber optic connecting the entire country, as well as an existing digital microwave radio system and a data network. Globe Telecom also has fiber optic cables and was the first to offer Worldwide Interoperability for Microwave Access (WiMax).  SMART announced in April 2016 that it is deploying the country’s first LTE-Advanced (LTE-A) service. LTE-A allows for higher data speeds of up to 250 Mbps.
 
A third mobile phone carrier, San Miguel Telecom, is expected to launch its service in late 2016.  San Miguel was previously in talks with Telstra of Australia but the two were unable to reach a formal agreement.  Industry analysts have attributed the failed San Miguel-Telstra tie-up to significant barriers to entry, such as the cap on foreign direct investment for utilities, and the current duopoly in the telecom industry. 
 

Sub-Sector Best Prospects

  • IT Security

  • Midrange enterprise servers

  • Networking equipment

  • Enterprise software (CRM, ERP)

  • Broadband solutions

  • Wireless applications

  • Database storage and management

  • SAAS

  • Fiber Optic Network

  • Smartphones and tablets


Opportunities

  • Increased enterprise IT spending led by the financial and telecommunications industry.

  • Growing BPM industry will sustain demand for computer hardware, software, and services.

  • Positive forecast for household income growth from 2016-2020 is projected to strengthen the demand for PCs, smartphones, and tablets.

  • The Philippine Government is expected to continue its efforts to provide electronic services to its citizens, and offer free Wi-Fi in more public places.  There is also increased interest in Smart City solutions in the Philippines where the focus is in transparency and increased efficiency by automating government services. 

 

2014

2015 (estimated)

2016 (estimated)

2017 (estimated)

Total Market Size

1,712,635

1,968,924

2,067,370

2,170,739

Total Local Production

6,095,718

5,279,122

5,543,078

5,820,232

Total Exports

5,805,446

5,027,735

5,279,122

5,543,078

Total Imports

1,422,362

1,717,537

1,803,414

1,893,585

Imports from the U.S.

283,728

276,939

290,785

305,325

Exchange Rate: 1 USD

44.4

45.5

47.3

N/A

$US thousands (total market size = (total local production + imports) - exports)
Data Sources:
        Total Local Production: Estimated (Total Exports + 5 percent)
        Total Exports: Philippine Statistics Authority (PSA)
        Total Imports: Philippine Statistics Authority (PSA)
        Imports from U.S.: U.S. Census Bureau
* Listed exchange rates are not used in the above calculations.  Exchange rate shows average value of Philippine Peso to U.S. Dollar.  (Source: Central Bank of the Philippines).

 

Trade Events:

Asia IoT Business Platform 2013
May 23-24, 2016 / Manila, Philippines

CommunicAsia / BroadcastAsia 2016
May 31-June 3, 2016 / Singapore

 

Web Resources

Information Communications Technology Office (ICTO)
International Data Corporation (IDC)
Globe Telecom
PLDT
SMART Communications

 

Post Contact information:

Ms. Yna C. Quiambao, Commercial Specialist
U.S. Commercial Service, Philippines
E-mail: Yna.Quiambao@trade.gov; businessphilippines@trade.gov

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Philippines Information and Communication Technology Trade Development and Promotion