EU-PHL Free Trade Agreement boosts Philippine back-office services
MANILA, PHILIPPINES—The impending free trade agreement (FTA) between the Philippines and the European Union (EU) is poised to significantly enhance the Philippine back-office service industry, particularly in the Information Technology and Business Process Management (IT-BPM), financial, and digital services sectors.
Competitive edge in IT-BPM
Chris Humphrey, the executive director of the EU-ASEAN Business Council (EU-ABC), highlighted the Philippines’ competitive advantage due to its English-speaking workforce, which is crucial for IT-BPM services.
In an interview with BusinessWorld, Humphrey said, “I think you’re extremely well placed in the Philippines to provide more back-end office solutions for companies. Whether it’s call centers, data centers, or anything else in that vein, you have an excellent track record in this space.”
He further noted that the FTA would expand the services sector, enhancing the Philippines’ position to capitalize on the increasing global trend towards outsourcing back-end office requirements.
Attracting European financial and digital services
The agreement is also expected to attract European companies interested in establishing operations in the Philippines for financial and digital services.
“I think financial services are always attractive to the EU. And the Philippines being part of ASEAN means it’s going to be a good place to do business for the rest of the region as well,” Humphrey added.
Regional and digital economy growth
Being part of the Regional Comprehensive Economic Partnership (RCEP) is seen as an additional advantage.
Humphrey emphasized the Philippines’ strategic position in a region with a rapidly growing digital economy, making it an attractive hub for European businesses looking to expand in ASEAN.
Economic impact and job creation
The resumption of FTA negotiations, announced in March, is expected to increase bilateral trade by 6 billion euros ($6.4 billion). This comes as the Philippines reported a 17.4% increase in exports of services last year, totaling $48.29 billion.
The IT-BPM industry, a significant part of the Philippine Economic Zone Authority (PEZA), accounts for 60% of the 1.1 million direct jobs in economic zones.
PEZA Director General Tereso Panga expressed optimism about the future, stating, “With IBPAP aiming to create a total of 2.5 million new jobs by the end of the Marcos administration in 2028, PEZA can commit at least 60%-70% of this 6-year target.”
The FTA is seen as a pivotal development that will not only bolster the Philippine economy but also solidify its role as a key player in the regional and global market.
