MANILA (TheStreet) - The fast-growing Philippines is becoming a magnet for U.S. companies, both as source of cheap labor and a thriving consumer market.
Economic growth reached 6.2% last year and the Asian Development Bank forecasts 6.4% this year, making it one of the strongest economies in Asia behind China and India. The country's nagging unemployment rate has also fallen below 7%, thanks in part to the expansion of back-office operations by foreign firms that has created about half a million jobs.
The move by multinationals to rely on the Philippines as a source of inexpensive labor is helping to provide that country's residents with greater wealth. And, in turn, fueling the economic growth in the region.
U.S. companies playing a role in helping to drive this growth include technology consulting firm Accenture (ACN) , which employs Filipinos as back-office workers and also in call centers. Intel (INTC) also relies on residents in the region to staff its 18-year-old Manila sales and marketing office, which the chip giant states on its website is answering a "growing demand for PC technology."
Foreign companies, however, sometimes need more than inexpensive labor to entice them to the Philippines. The country's government is taking other action to make the region more appealing.
The government plans to spend $25.2 million in the coming years to train its residents in such professional occupations as accountants and medical transcribers, in an effort to give multinationals another reason to operate in the country beyond offering inexpensive labor costs and cheap land, says Benedict Uy, a Philippine government trade officer based in Taipei.
Philippine officials are planning to raise the country's infrastructure budget to 5% of GDP next year from 1.8%, in a move to improve its airports, roads, water supply and transportation, according to a report in the Wall Street Journal.
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