OFWs, BPOs deemed too vulnerable to disruption

THE PHILIPPINES needs to reduce its reliance on remittances and business process outsourcing (BPO) by developing the agro-industrial and manufacturing sectors to help cushion the economy against external shocks, an economist said.

Speaking to reporters last week, Foundation for Economic Freedom President Calixto V. Chikiamco said the overseas Filipino workers (OFWs) and the BPO industry are both vulnerable to geopolitical shocks.

“We can promote agri-industrialization because we can have a competitive advantage,” he said on the sidelines of an event.

Mr. Chikiamco said global demand for ube, for instance, should be leveraged via manufactured products such as ube candy and ice cream.

He also noted that furniture is another possible area to develop, using alternatives to traditional hardwood like bamboo.

“As a tropical country, we can grow trees here faster than in Europe because they have the winter season. We have a competitive advantage in that,” Mr. Chikiamco added.

Citing the World Bank (WB) Group’s World Development Indicators database, he noted that the contribution of manufacturing to Philippine economic growth has declined steadily.

According to WB data, Philippine manufacturing value-added fell to 15.7% of gross domestic product in 2024 from 20.6% in 2014.

Mr. Chikiamco also noted the importance of manufacturing in boosting worker’ productivity and wages, as well as in alleviating poverty.

He added that the Middle East war poses risks to the deployment of OFWs to the region, which could affect remittance inflows.

Cash remittances rose 2% to $2.718 billion in April, the weakest reading since May 2022, according to the central bank. 

The BPO industry, meanwhile, faces uncertainties due to artificial intelligence and pending US laws to discourage offshore hiring.

Mr. Chikiamco also cited the need to address high labor and energy costs, as well as inadequate infrastructure, to boost investor confidence. — Beatriz Marie D. Cruz