Why New Zealand firms will be investing more in Philippines

Posted at 06/17/2014 9:55 PM | Updated as of 06/18/2014 9:09 AM

MANILA - More companies from New Zealand are now taking a closer look at investing in the Philippines.

New Zealand Ambassador Reuben Levermore

New Zealand Ambassador to the Philippines Reuben Levermore said the Philippines' fast-growing business process outsourcing industry (BPO) represents an opportunity for New Zealand companies, particularly those in engineering and IT, to expand their businesses.

"New Zealand companies have seen this (Philippines' success in BPO) and they're not just sending call center work but IT companies are setting up office. Actually, we're small companies and we can't get graduates to grow our business. Maybe if we set up in the Philippines, we can grow our business. They create jobs here. That's very positive. Engineering companies, geothermal companies, many of them are offering services... You find we can bring our technology and expertise. What the Philippines has is scale," Levermore said in a press briefing.
 
New Zealand Trade Commissioner to the Philippines Hernando Banal said he has seen a growing number of IT companies set up their back offices in the Philippines.

"When I first started three years ago, we had engineering companies and food and beverage companies setting up distribution here, but recently we had more IT companies setting up their back offices here and their experience with Filipino IT professionals is quite good, and these companies are growing. One company grew from just 2 staff four years ago and now they're 500," Banal said.

New Zealand, which has a population of 4.2 million, produces only a few university graduates every year. This is a problem for companies, which can't find the right graduates for jobs.

"We have a lot of niche products that we can offer the world, but the problem is we don't have the scale to mass produce those. For example, a mobile app needs to be tested and testing requires many people for 3 months. We don't have that... So they're setting up back offices here and training BPO people to do the labor intensive part of the product development. Design and concept would be created in New Zealand and the actual production and testing would be done in PH. This is a match we can see," Banal said.

At present, there are around 100 New Zealand companies exporting products to the Philippines. Most of them deal directly with distributors, while only 15 have actual offices in the Philippines.

Meanwhile, New Zealand is seeing continued growth in its exports to the Philippines, particularly food and beverage products.

Banal said exports of food and beverage products to the Philippines have been growing at 11.3 percent annually, and this is expected to continue.

Food and beverage make up around 80 percent of total exports to the Philippines in 2013. The bulk of these are daily products such as milk powder, cream, butter and cheese, which are mainly used as ingredients for food processing.

New Zealand has seen a shift in Filipinos' preference, from low-value commodities such as dairy powder to high-end products like yogurt and ice cream.

"This shows that Filipinos are becoming more selective and can afford quality and safe food products," Banal said.

The Philippines is a significant market for New Zealand. It is the 12th largest export market for New Zealand, with NZ$750 million worth of merchandise sent to the Philippines.

On the other hand, the Philippines exports NZ$150 million worth of merchandise to New Zealand.