For Canadians, beach vacations are a favoured choice to escape winter blues and unwind. Typically, we visit the beaches of the United States, Mexico and the Caribbean Islands. However, for those looking to diversify their travel experiences, the Philippines offers a tropical paradise with more than 7,500 islands. Beyond its natural beauty, the country also presents significant opportunities for Canadian exporters seeking to diversify from traditional markets. Whether for a relaxing getaway or exploring new business prospects, the Philippines has much to offer.
The Philippines is one of the fastest-growing markets in Southeast Asia, with an impressive average annual growth rate of slightly more than 5% over the past two decades. During this period, its economy has expanded more than fourfold in nominal terms, with a gross domestic product (GDP) of about US$440 billion. With around 115 million people, the Philippines is the region’s second-largest market by population.
The bond between Canada and the Philippines is reinforced by nearly a million Canadians of Filipino heritage. However, trade ties between our countries still have room to grow. Despite Canadian exports to the Philippines growing by more than 70% since 2019, they still make up less than 1% of the country’s total imports.
The Philippines: Booming consumer market
The Philippines’ growth is largely driven by robust consumer spending. In 2023, household consumption accounted for almost three-quarters of the economy. With the country projected to sustain an average growth rate of 6% over the next five years, rising incomes are expected to lead to a significant expansion of the middle class. In fact, by 2030, the Philippines will add 37.5 million new consumers, representing 1.5% of the global consumer base, while the spending power of the Filipino middle class will surpass that of Italy’s. A young workforce, with a median age of 25, ensures a vibrant consumer market, creating substantial opportunities for Canadian businesses in retail and consumer goods.
As the middle class in the Philippines grows, so will the demand for a better quality of life, including higher-end and sustainable food products. Filipino stores are increasingly offering a variety of imported food and beverages to meet the quality and safety expectations of this burgeoning demographic. Canadian suppliers of prepared food products will find considerable opportunities to enter this market by partnering with local retailers.
Agricultural opportunities abound, with cereals, particularly wheat, being the primary agricultural import of the Philippines. Despite Canada being a major wheat exporter, our share of the Philippines’ wheat imports was only 4% in 2023, highlighting the strong potential for growth. Additionally, with domestic meat production struggling to keep pace with consumption, there are promising opportunities for Canadian meat exporters to fill this gap.
With a trade-to-GDP ratio of 58% and foreign direct investment (FDI) stock of US$119 billion (27% of GDP), the Philippines is actively working to enhance its outward orientation. These efforts include reforms to ease foreign ownership restrictions in various sectors such as telecommunications, transport, and power generation. The country also plans to spend around US$150 billion on infrastructure upgrades, primarily in transportation and connectivity, as a means of boosting competitiveness. This opens opportunities for Canadian companies to provide the necessary products and services for these projects. Canadian pension funds and institutional investors can also explore equity investment opportunities.
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The Philippines is setting ambitious targets to decarbonize its economy and boost its renewable energy share to 35% by 2030 and 50% by 2040. This commitment to sustainability opens up meaningful opportunities for Canadian cleantech companies, particularly those specializing in solar, wind, hydroelectric and waste-to-energy technologies. There’s also a demand for micro-grid or off-grid electricity solutions beyond the main islands. While nuclear energy solutions are still in their infancy, they hold potential for future collaboration and investment.
With the modernization of the Filipino economy, the digital sector is growing rapidly. In 2023, the digital economy expanded by 7.7% to more than 8% of GDP. This surge in digitization presents numerous opportunities in digital infrastructure, including cybersecurity, software development and telecommunications. Furthermore, the rise of digital services in banking, health care and education offers lucrative prospects for Canadian technology companies. The Philippines’ expertise in business process outsourcing services also positions it as a promising market for enterprise applications, data storage, and processing solutions.
While the Philippines offers numerous opportunities, it also presents challenges typical of emerging markets. Infrastructure issues such as traffic and port congestion, along with high power and internet costs, can pose operational risks. The country’s complex regulatory environment requires careful navigation. Exporters must also remain vigilant about geopolitical risks, including territorial disputes with China. And, natural disasters such as typhoons and floods can disrupt business operations by damaging infrastructure and creating logistical hurdles.
The bottom line
The opportunities awaiting Canadian exporters in the Philippines are as vast and diverse as the country’s islands. A dynamic consumer market offers fertile ground for Canadian businesses looking to expand their international presence and tap the surging demand of this fast-growing corner of the world. While challenges exist, strategic navigation, partnerships and diligent risk management can unlock significant potential. But Canada must act swiftly to seize these opportunities, or risk losing out to competitors.
Export Development Canada (EDC) recently opened representation in Manila. If you want to know more about doing business in the Philippines, please contact Chia Wan Liew, our chief representative, who oversees the Filipino market.
This week, a very special thanks to Nadeem Rizwan, economist in our Economics department.
As always, at EDC Economics, we value your feedback. If you have ideas for topics that you’d like us to explore, please email us at economics@edc.ca and we’ll do our best to cover them.
