PH called for prioritization of the electronics and workforce sectors to become more attractive to global investors

The co-founder of a technology company with a wide network of over 75,000 startups in the U.S. stressed the need for the Philippines to focus on the service sector, migrant labor and electronics assembly industries as pillars in its bid to attract global investors and ignite greater economic prosperity.

Jose Avelino Flores, co-founder of accelerators Plug and Play in the USA AND Launchgarage in the Philippinesbelieves that despite global marketing efforts, the country lacks compelling narratives in these industries, hampering its effectiveness as an investment hub.

He highlighted the Philippines’ strengths in the information technology business process outsourcing (ITBPO) sector, valued at $36 billion, and its thriving migrant worker and electronics assembly sectors, contributing significantly to the economy, the former being worth $36 billion and the latter almost reaching revenues of $50 billion. However, there is nothing attractive for foreign investors due to the government’s reluctance to prioritize them.

During the Friends, Partners and Allies Program in San Francisco in April, Flores recounted a meeting with two French representatives of a 500-million-euro venture capital firm who were visiting Manila as part of an Asian tour looking for investment opportunities.

Unfortunately, he could not give a clear answer, feeling embarrassed by the lack of specific investment opportunities in the Philippines compared to other Asian countries such as Singapore for FinTech or Thailand and Indonesia for food and agriculture technology.

“I really couldn’t give them a clear answer, which was embarrassing. I could tell them, “Oh, you can invest in FinTech,” but I know they will find better FinTech companies in Singapore, for example. “I can tell them you can invest in food and agriculture technology, but I know you can find better companies in Thailand and Indonesia,” he added.

He stressed the importance of compelling investment narratives in attracting venture capitalists as they showcase the country’s strengths and potential to protect investors’ funds. The next challenge is to translate them into tangible financial benefits, given their significant value.

These sectors face increasing vulnerability to global competition and, more recently, technological advances such as artificial intelligence (AI), which pose the risk of leaving up to 1.7 million employees in the ITBPO industry. Flores said the threat is real because emerging technologies are currently undergoing testing phases that could potentially replace human work.

But instead of giving in to fear, the Philippines should see this as an opportunity. He suggested creating a platform to collect problem reports from these industries, thereby taking advantage of the situation to innovate and adapt.

“Based on the problem statements, we bring the best startups and the best technologies from around the world to the Philippines to solve these problems and seize opportunities,” he said.

“We will start with service industries, but that does not stop us from moving forward, discovering and cultivating new technologies and building new products based on other available industries,” he said.

Flores’ goal, in line with the vision of the Department of Trade and Industry (DTI), is to support the country’s IT-led economy by leveraging existing strengths, with particular emphasis on the role of start-ups in achieving this goal.

A specific area of ​​opportunity lies in the ITBPO industry, where there is potential to develop innovative tools and products. These advances would support the integration of AI technologies into workforce activities.

Initially, these AI tools will be implemented internally in the services sector. When faced with inquiries beyond their expertise, customer service representatives can rely on AI assistance to provide accurate information, thereby enhancing service capabilities and ensuring customer satisfaction, ultimately making the industry more attractive to customers.

Once successfully implemented in the domestic market, Flores anticipates that AI tools and products will be sold on a global scale. Given the common challenges faced by service industries around the world, there is significant potential for these solutions to be in high demand outside the Philippines, thus opening up further business opportunities in the global market.

“It’s actually a $2 trillion-plus industry. And I think that by building this platform in the country, we will attract the best startups because I can easily sell to them. “Why don’t you build your product in the Philippines?” Because we have a $130 billion testbed for you,” he explained.

Flores further stated that there is no vertical service industry, so the Philippines has a great chance of being the only country that will have a unique story to tell to corporations and investors.

He said that with this venture, the Philippines will have a credible and credible story that appeals to all stakeholders in the startup ecosystem. The aspiration is to create hundreds of companies, attract billions of dollars in foreign direct investment (FDI), and ultimately create numerous employment opportunities.

Over the past year, they have pitched the idea to various government bodies, including the DTI, the Department of Science and Technology, as well as the National Economic Development Authority (NEDA).

“I’m happy to tell you that in November, one of the government agencies, specifically the DTI, along with Secretary Fred Pascual, was the first to dig into the nitty-gritty that I was trying to, you know, solve. So, in November last year, we signed a memorandum of understanding to work on this program,” he said, in which DTI will be a partner of the government.

Each cycle of the acceleration program will last six months, with two cycles per year. The goal is to select a minimum of 20 startups per cycle or 40 startups per year to participate in the program.

The program is scheduled to start in June, and preparations for setting the calendar and activities in the country are in the final phase.