A FREE TRADE AGREEMENT (FTA) between the Philippines and the European Union (EU) is expected to help unlock new markets for the information technology and business process management (IT-BPM) sector, an industry executive said.
IT and Business Process Association of the Philippines (IBPAP) President and Chief Executive Officer Jack Madrid said that the Philippine IT-BPM sector continues to cater mostly to North American clients, noting the need to expand into other markets.
“Free trade is always a good idea. (Our market in Europe) is growing, but I would like it to be bigger. We’re still dominated by North America,” he said in a chance interview on March 19.
The Philippines and EU earlier this month formally resumed FTA negotiations, seven years after it was stalled due to concerns over the human rights record of then President Rodrigo R. Duterte.
Mr. Madrid said there is a need to promote the Philippines “a little bit more” in Europe, so they can be aware of the “special talent of the Filipino workforce.”
He was part of the business delegation that accompanied President Ferdinand R. Marcos, Jr. on his working visit to Germany and state visit to the Czech Republic earlier this month.
“There are a number of German companies that have been doing good business here for many, many years, but (the) Czech (market) is something we want to eventually capture. It’s a country with a low population, so I think we can identify what verticals we can help them with,” Mr. Madrid said.
IBPAP and the Confederation of Industry of the Czech Republic signed on March 15 a memorandum of understanding (MoU) during a business forum in Prague.
“We hope to identify mutual investors with each other, and we also talked about sharing best practices,” he said.
The Department of Trade and Industry (DTI) previously said that the two groups will cooperate on trade and investment promotion, as well as exchange information on policies, talent development and artificial intelligence implementation.
In a separate interview, the Philippine Economic Zone Authority (PEZA) said that the EU-Philippines FTA will help make the Philippines more attractive as an outsourcing hub for European companies.
“As one of the investment promotion agencies in the country, this will likewise be instrumental in PEZA’s quest towards positioning the Philippines as the ideal base for off-shore operations by EU companies eyeing to penetrate the much more vibrant ASEAN (Association of Southeast Asian Nations) and Asia-Pacific markets,” it said.
Meanwhile, Philippine Chamber of Commerce and Industry President Enunina V. Mangio told BusinessWorld that the FTA should expand opportunities for the Philippines, “especially in services such as business process outsourcing, knowledge process outsourcing, digital commerce, and agritechnology.”
Ms. Mangio said the issues that stalled FTA negotiations in 2017 are still a concern for the EU, such as intellectual property rights and data exclusivity.
“The EU must be realistic in its expectations of the Philippines. And our negotiators, while being able to leverage on our comparative advantages for an EU-Philippines partnership, must ensure that the conditionalities imposed by the EU are justifiable under our level of development,” she added.
Sought for comment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the FTA would help the IT-BPM sector expand its client base.
“This would further expand and diversify more outsourcing clients and present opportunities for the Philippines to include more EU global companies that may wish to outsource in the country to realize more cost savings and become more competitive,” he said.
“So, there is still great potential to tap European global companies to outsource in the Philippines, with or without the FTA,” he added.
However, IBPAP’s Mr. Madrid said that the country needs to address the talent supply shortage to meet the sector’s demand for skilled workers.
“We don’t have a demand problem; we have a talent supply challenge. And the reason for that is not because of the numbers, it’s the matching of skills to jobs,” he said.
“The skills are becoming a little bit tougher. So, we need to exert more effort to increase our set of skills.”
The IBPAP recently signed agreements with Microsoft Corp. for digital courses specifically aimed at upskilling IT-BPM workers.
“These kinds of talent partnerships are important for IBPAP because we are increasingly seeing more interest in micro credentials than four-year courses,” he added.
He said that Microsoft is yet to identify how many IT-BPM workers will benefit from the partnership and cited that the IBPAP already has an existing partnership with LinkedIn (which is also owned by Microsoft) for upskilling. — Justine Irish D. tabile
