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PIA Press Release

Speech of President Gloria Macapagal-Arroyo during the CEO Forum of E-Services Global Sourcing Conference and Exhibition

SMX Convention Center, SM Mall of Asia, Pasay City, February 11, 2008

Thank you Secretary Favila for your introduction.

Other officers of the Department of Trade and Industry; International Trade Experts and Speakers in this forum; delegations from the different parts of the world; movers and captains of industry; ladies and gentlemen.

Good morning to all of you and welcome to the Philippines!

Welcome! To our delegates from the various centers of excellence of global offshoring and outsourcing or the O&O industry.

This meeting comes at a time when the global economic situation is clearly an issue for us. The more connected we become, and I.T. has connected us so much, the more we need to manage the ups and downs... through the ups and downs of other nations' economic bubbles. This is true especially with any further volatility in the U.S. economy. At this time, firms are working to support their margins and the good news for the Philippines is that we have matured and diversified our economy so much the last few years that we are confident that our economic turnaround is permanent and our economy is resilient to major economic disruptions.

This is the result of seven years work. Seven years ago, no one thought we could get more revenues, cut down on tax cheats, strengthen the peso and move the stock market. No one thought we could bring our budget close to balance, lower our national debt and raise employment -- but, we have. So our economy has reached a new level of maturity and stability with some of the strongest macroeconomic fundamentals in 30 years.

Moody's investor service upgraded the Philippines to positive last month for very good reasons. We have the fastest growth in a generation -- 7.3 percent for 2007. We have created seven million jobs in seven years, our peso is strong, our stock market up. We have a surge in foreign reserves at the same time our budget is almost in balance.

The strong peso has helped impact the rising cost of oil, reducing the cost... It has reduced the cost of servicing some of our national debt, and it has contributed to keeping the price of imports down and in the process keeping inflation down.

That's why today the Philippines is on a path to permanent economic growth and stability. Investments are pouring in, especially in E-services.

In October 2007, the Philippines was named "offshoring destination of the year" by the National Outsourcing Association of the U.K.

In International Data Corporation's top 10 list of BPO destinations in the Asia-Pacific region, Manila was ranked number 2, second only to Bangalore.

In a survey commissioned by the London Financial Times, Quezon City, Cebu and Davao were included in the top 10 Asian cities of the future, with Quezon City ranked 7th, Cebu 8th and Davao 10th, comparable with cities like Hongkong, Singapore and Taipei which were the top three.

In another study conducted by Tholons, and we thank Tholons for being a partner in organizing this event. In a study conducted on the top 50 emerging cities, Cebu was ranked number 4, just behind three Indian cities.

These distinctions from the global ICT firms and experts in the O&O sector provide our investor friends who have come to e-services Philippines with objective third-party assessments of our O&O capabilities. They validate our position as a major player in the global O&O market.

The Philippines is ranked among the most attractive offshoring destinations in the world because of cost competitiveness and more importantly the country's highly trainable, english-proficient, I.T.-enabled quality manpower.

And as Peter Favila has said, in recent years, the outsourcing sector has expanded beyond call centers and I.T. to include a range of professional and business processes including accounting, human resources, financial analysis, design engineering, animation, medical services, legal services, insurance processes, banking processes, map making, publishing, content creation and research.

This is a quality we are working hard to maintain through investments in human capital to ensure the competitiveness of our workforce. We will continue to leverage our level of I.T. proficiency that currently includes almost a hundred thousand licensed professionals with technical expertise in software development and engineering design.

Upgrading our curriculum in all levels of education is a main thrust of our administration. We recently held an education congress where challenges were presented and solutions explored by our educational institutions and stakeholders from the O&O industry.

The government and the private sector work together under the BPOAP (Business Process Outsourcing Association of the Philipppines) roadmap, we work together to develop talent to support the rising demand for quality workers in outsourcing and to expand outsourcing capabilities to new locations across the country beyond the centers of Manila and Cebu to tap larger talent pools.

And as Secretary Favila has said, a major portion of our joint initiatives is training.

We are accelerating the O&O "near-hire" training effort, as Secretary Favila has said, by allocating a budget of 350 million pesos this year exclusively for this sector together with the technical education and skills development authority. And more than 40,000, maybe 55,000 young potential recruits will be recipients of training vouchers and most probably 40,000 should be offered jobs within two months of completion. This is a sizeable contribution to building manpower development and employment in line with our administration's commitment to create 10 million jobs all over the economy.

The runaway growth of the O&O industry has echoed throughout the entire system, spawning impressive growth in other sectors like real estate, telecommunications, food and retail, among others.

The demand for prime real estate for BPO operations has spawned feverish construction for office space and campuses that can house the current demand for expansion sites. This trend is expected to grow by more than 30 percent in the next few years.

The up-and-coming O&O destinations in the Philippines are of course outside Metro Manila. And in support of this, our public-private sector partnership has been assessing various cities -- which I understand will be presented tomorrow -- to delineate what we will now call -- or well, we have been calling but now we will delineate the area more specifically -- the Philippine cyber corridor, which are positioned as viable alternatives for O&O locators. The scorecard used by the BPOAP together with the government for assessing the competitiveness of each location includes criteria such as number of graduates, telecom infrastructure, office space and local government support.

Indeed, the information revolution has been good to the Philippines. As a government, we have insisted on building world class I.T. infrastructure for developing the skills of our citizens and as an essential backbone to attract global business.

A strong infrastructure network is the backbone of a modern nation. That's why this year we're spending almost 200 billion pesos in infrastructure. We're able to do that because of the additional resources generated by our economic reforms. This is part of the two trillion-peso public-private sector medium-term plan to invest in social and physical infrastructure which includes billions of pesos in education, health care and training along with billions in new bridges, roads, and ports and connectivity to upgrade our competitiveness.

In the classroom, in the community and across our business sector, our investment on I.T. has paid off well and quickly. We have been able to take advantage of our great Filipino worker by utilizing fully the voiceover internet protocols and landline capacity to deliver quality voice and data services to any point on the globe.

The speed of innovation can be your friend or your foe. That's why we have our annual meeting. And that's why we want to cement our gains in I.T. and BPO services to make sure we continue to build up our local industries and move up the value chain. This requires not only good public-private sector partnerships, but a huge investment in our educational system in order to produce the engineers and I.T. professionals of tomorrow.

The competition is fierce, we know that. Change is happening at an accelerated pace. We must live and work in a global environment. We must move quickly to exploit technology innovation to our advantage.

Let me give you an example. When I took office in 2001, the BPO and call center space hardly existed. Today, we employ over 300,000 people and next to India, the Philippines has become the premier global destination for these types of I.T.-enabled services. We are proud of what we have achieved, but we are anxious to solidify our gains. We are anxious not to be complacent in the face of rapid change.

For 2008, we have targeted to grow our O&O workforce by 40 percent in order to cope with the industry demands and also achieve a 40 percent growth rate in the O&O sector.

But let me end by applauding all of you, the movers and shakers of global e-services -- many are here today -- you're on the cutting edge of innovation and change. We admire the risks you are taking to push the envelope, to turn wild ideas into indispensable tools to advance business and the quality of our lives.

Thank you for your support and commitment.

Maraming salamat. (OPS) [top]

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