Why the Philippines

As the second most populous nation in Southeast Asia, the Philippines is emerging as a key destination for foreign trade and investment. As the northernmost point of maritime Southeast Asia, it sits aside some of the world’s busiest shipping lanes. The population is expected to grow by 20 per cent to 138 million by 2055, with working-age Filipinos making up over two-thirds of the population. The expanding workforce is supporting opportunities for increased productivity and innovation, with the Philippines Government investing heavily in the education sector to increase labour market capability.

The Philippines has been identified as a key market for two-way trade and investment in the Australian Government’s Southeast Asia Economic Strategy to 2040. Recent measures to open up the economy will support future growth, with the Philippines Government prioritising housing and urban development, manufacturing, connectivity, education, tourism, agriculture, health and financial services as key areas for development. More information on the bilateral relationship is available in Section 5.1 and from the Department of Foreign Affairs and Trade’s Philippines Country Brief.

The Philippines Government is promoting emerging industries and relaxing the historically rigid foreign investment framework, creating new opportunities for Australian businesses. As of 2024, there were more than 250 major Australian businesses operating in the Philippines, employing over 44,000 Filipino citizens in business process outsourcing (BPO), infrastructure, banking, telecommunications, energy and education.

Complementing the wide-ranging tariff reductions of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), the 2023 AANZFTA upgrade saw improved outcomes for trade in services, investment and supply chain integration, entering into force in 2025 . As bilateral ties deepen and the Philippines continues to implement business- friendly policies to drive trade and investment, it will become an increasingly attractive market for Australian businesses to consider.

Comparing Key Indicators: The Philippines and Australia

Like other emerging middle-income economies, the Philippines is transitioning from an economic model based heavily on agriculture to one increasingly dependent on services and manufacturing. Economic growth has been among the fastest in the world, with an average annual GDP growth rate of over 5 per cent over the two decades to 2025.

The economic outlook over the short to medium-term is positive, with real GDP growth forecast to reach 5.7 per cent in 2026 (Figure 1). A gradual easing of monetary policy and an expansion of the manufacturing sector are expected to contribute to solid growth over the coming years.

Figure 1: Real GDP Growth - Philippines and world average (2020-2030), %

The Philippines’ rapid economic growth presents opportunities for Australian trade and investment. These opportunities are particularly strong in sectors that align with the Philippines’ economic development priorities and growing consumer class. This section provides a short overview of prospective sectors.

Food and agribusiness

Increasing disposable household income and changing consumer preferences are opening doors for value-added food and beverage products in the Philippines. Local consumer preferences are shifting towards healthy, nutritious and sustainable foods. There are emerging opportunities for retail, food service and processing for Australian businesses as well as growing demand for fruit and livestock, particularly breeder cattle and goats. Austrade has identified opportunities for Australia’s key exports including dairy (specialty and bulk cheese, milk powder, yoghurt and ice cream), meat (beef, wagyu and chicken), packaged food, fruit and vegetables, grains, pulses and feed and wine and beverages and deli and gourmet items.

Green economy

The Philippines Government’s National Renewable Energy Program 2020-2040 has set a target of 35 per cent renewable energy use by 2030 and 50 per cent by 2040. The eventual depletion of the Philippines’ Malampaya gas field will increase prices as the country becomes reliant on imported gas, accelerating the move to renewables. To drive development of the renewable energy sector, the government has removed foreign ownership limits on renewable energy projects. There are opportunities for Australian businesses to support the energy transition through new technologies, infrastructure development and upskilling programs, including solutions to support the integration of new energy sources into the Philippine grid. Austrade has identified renewable energy solutions as an area of opportunity for Australian businesses.

Services

The Philippines’ business process outsourcing (BPO) sector is a major and growing contributor to national employment and GDP. After year-on-year growth of 9 per cent between 2019 and 2022, the BPO sector is forecast to generate revenues of AUD 63 billion in 2026 – around 9 per cent of the Philippines total GDP With a large pool of educated, English-speaking professionals, global businesses are offshoring non-core business functions like customer service, payment processing, data analysis, IT support, supply chain management and cloud services. Australian Why the Philippines Doing Business Guide: Philippines 05 businesses have the added advantage of sharing a similar time zone, facilitating close communication and collaboration with Filipino counterparts. The sector’s embrace of automation and generative AI and AI upskilling of workers will likely drive future growth, presenting Australian businesses with new opportunities to boost revenue and reduce general administrative costs across sectors like healthcare, telecommunications, IT, cybersecurity and fintech. More details on the process of establishing BPO services in the Philippines can be found in Section 3.3.

Infrastructure, transportation and cities

The Philippines Government has identified 209 flagship infrastructure projects, with a focus on roads, rail, ports and airports, energy and utilities, oil and gas pipelines and water infrastructure. These are presenting opportunities for Australian businesses to participate in procurement processes and public-private partnerships. In real estate, despite a shift towards hybrid workplace arrangements, consistent economic growth has seen commercial property and office space demand remain stable . Supplemented by the rapid growth of the country’s BPO sector office spaces in Manila, Cebu, Davao, Iloilo and Legazpi are quickly being filled. Stability in commercial property tenancy rates, as well as a decrease in commercial vacancy rates is expected to continue until the late 2020s, driving demand for commercial property design, engineering consulting and technology supply – all areas in which Australian companies offer world class expertise. Austrade has identified sustainable building solutions as an area of opportunity for Australian businesses.

Beauty, skincare, makeup

Demand for cosmetics and toiletries has grown in parallel with the expanding young adult population and rising middle class. Filipino consumers have a strong focus on maintaining a healthy appearance and gravitate towards brands containing active ingredients that also offer protection from pollutants. Mirroring global trends, products that contain niacinamide, hyaluronic acid, salicylic acid and retinol are growing in popularity. Since Australian beauty products are perceived as premium and containing natural ingredients, opportunities exist in niche segments such as baby and child-specific products, cosmetics with natural ingredients or mineral make- up and natural or organic hair care, anti-aging and skincare trends, men’s grooming, and cosmeceuticals.

Mining equipment, technology and services (METS)

The Philippines has an estimated unmined mineral wealth of more than AUD 1 trillion, with only 3 per cent of its 30 million hectares of mineable area currently leased to miners. The country is rich in gold, nickel, copper and chromite, with only 2.6 per cent of its 30 million hectares of mineable area currently leased to miners. Recent reforms in the Philippines, such as a digitised permit processes and an enhanced fiscal regime have increased investment certainty, whilst reducing bureaucratic hurdles for foreign companies. There are opportunities for Australian businesses to support local industry through joint operations, expertise and technologies that reduce costs, improve productivity and safety, and pioneer sustainable mining solutions. Austrade has identified mining equipment, technology and services as an area of opportunity for Australian businesses.

Education

The Philippine Government is investing in education to accelerate human capital development. With an estimated 40 per cent of the population under the age of 18 there is increasing demand for high quality education. Under the Marcos Jr. Administration, funding for education infrastructure, resources and upskilling programs has been increased, with an annual budget of AUD 34.4 billion for the sector in 2026 , marking the first time the Philippines has reached the UNESCO benchmark for education spending. . Enrolments in Australian education institutions remain strong, with Australia being the top overseas study destination for Filipinos . As Australian education providers continue to climb international rankings, demand for education both in Australia and locally is forecast to grow.

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