1. PRODUCT MARKET STUDY (MATRADE Manila)
INFORMATION AND COMMUNICATIONS TECHNOLOGY (ICT) SECTOR IN
PHILIPPINES
Overview
There are still many Filipinos uninitiated to the use of the computer, or to the Internet
although there is a very digital world that we live today. The things that make this
situation more unfortunate is they are young Filipinos living at the rural areas who are
supposed to be at the forefront of the modern age.
Due to that, Commision on Information and Communications Technology (CICT)
created in 2004 as the primary policy, planning, coordinating, implementing, regulating,
and administrative entity of the government`s executive branch for Philippine ICT
development. Ms Patricia M. Abejo, CICT Chief of Staff, and Director of Cyberservices
Group said the government recognizes the vital role of communication and information
in nation-building. Abejo explained that they used to rely on the traditional mode of
information like newspapers, television and radio and now they are moving up to the
use of more improved technology which high speed access to information.
ICT Development in the Philippines
 Recognizing the potential benefits of ICTs in facilitating development initiatives,
promoting good governance, and combating poverty, towards a people-centered,
inclusive development-oriented information society, the Philippine government
crafted the Philippine ICT Strategic Roadmap (first in 2003, then in 2006), which
provides the country’s overall framework for ICT development, outlining strategic
programs and initiatives on ICT infrastructure (universal access), ICT
applications, human capital, e-governance, and enhancing business
development.
 It also contains the legal and policy framework, including the proposal to create a
ministry-level agency on ICT, envisioned to be the primary policy, planning,

2. coordinating, implementing, and administrative entity to ensure effective
coordination and implementation of the national ICT agenda.
 The government initiated the Philippine Community e-Center (CeC) program to
promote the establishment, operation, and/or consolidation of public ICT access
points or CeCs in the country. In 2007, the Philippine CeC Roadmap (2008–
2010) was launched, which envisions affordable access to ICT-enabled services
and relevant content at the municipal level.
 Despite significant accomplishments in ICT, the Philippines continues to
experience a decline in its e-Government Readiness ranking, from 41 in 2005 to
66 in 2008, and its Networked Readiness Index, from 69 in 2007 to a ranking of
81 in 2008.
 The Commission on Information and Communications Technology* (CICT) is the
primary policy, planning, coordinating, implementing, regulating, and
administrative entity of the executive branch of Government that will promote,
develop, and regulate integrated and strategic ICT systems and reliable and
cost-efficient communication facilities and services
Forecast for ICT Market
According to IDC Asean, a research company based in Malaysia, year 2010 was a year
of recovery and transformation for the information and communications technology
(ICT) market in the Philippines. Total IT market spending would increase by 7.6 percent
to reach US$3.14 billion by the end of 2010, and would succeed in regaining a 9.1%
compound annual growth rate (CAGR) by 2013.
On the telecommunications front, spending is estimated to record 7.7% growth in 2010,
following the decline of 2.9% in year-end 2009. Telecommunications spending will
increase and reach US$3.81 billion. IDC expects the Philippine ICT market to post
modest growth across various segments, driven by the transformation in business
objectives, both from the vendor and service provider (SP) community and the end-user
segments, corporate or small and medium enterprises (SMEs) and consumer.

3. "Overall, the ICT landscape in the Philippines will be driven by recovery of the ICT
spending psyche and activities and transformation of key business objectives of the
enterprise sector, as well as the consumers' ICT focus. Furthermore, the ever-evolving
end user needs and objectives will impel vendors and SPs to re-examine key
transformational strategies on marketing, consultative selling, and regionalization, as
well as expansion and product and solution portfolio," says Jubert Daniel Alberto,
Manager for IT Spending research at IDC Philippines.
The following are the Top 10 predictions that IDC believes will shape the ICT industry in
the Philippines:
1. Philippine ICT spending will see modest growth
IDC expects that while full recovery will only happen in 2011, 2010 will provide the
impetus for the ICT market to jumpstart the local ICT environment. Investment
motives are anticipated to shift from initial cost savings to long-term savings and
efficiency. Organizations are seen to prioritize investments that would minimize the
total cost of ownership (TCO) and look beyond the initial cost outlay.
Driving the growth in IT spending for 2010 is the hardware sector, comprising an
estimated 72.2% of the total market, is projected to increase by 7% year-on-year
(YoY), on the back of 6% recovery in total PC systems spending.
Spending on packaged software is predicted to contribute 7.5%, while services
spending will account for 20.3%, as enterprises seek more ONGlonger-term ICT
initiatives.
Key to the telecommunications growth is the continued high demand on and
pervasiveness of mobile phone usage and mobile devices, as well as the accelerated
adoption of mobile data and market competition through competitive pricing.

4. 2. 2010 will be the highest growth Year for Wireless Broadband
In 2010, the Philippine market will see the highest growth for wireless broadband,
particularly universal serial bus (USB) dongle-based portable broadband operating on
3G/High-Speed Downlink Packet Access (HSDPA) technology, and will pose serious
competition to fixed broadband, especially xDSL. IDC believes that the key elements
for a surge in growth are in place. These include the price of devices, including USB
dongles, laptops, and mini-notebooks, having reached acceptable levels for mass
adoption.
3. "Dongled" portable devices will up the mobility ante
IDC expects the presence of laptops and mini-notebooks to boost the adoption of
portable broadband subscribers in the Philippines. The availability and affordability of
such devices is expected to pave the way for the mass adoption of portable
broadband in the country. The continued proliferation of laptops and mini-notebooks
in the market will set the landscape for such technologies adoption.
4. Smartphones will scale new heights
For 2010, IDC expects that demand for smartphones to reach new heights, as
shipments are foreseen to reach 1.36 million units, a 17% growth from 2009.
Features such as Internet access capability, email access, and availability of
downloadable applications would be the primary features that end users would be
looking for. IDC expects that with the rise of smartphones, handset models that will
be introduced in the near term will be equipped with more sophisticated applications
through highly evolved operating systems (OSs).
5. Data services will revolutionize telecoms' pricing strategies
IDC anticipates a transformation in telecoms' pricing strategies in the Philippines from
per kilobyte to time-based pricing to address the increasing demands for data
services in the country. The market for data services will be characterized by high
competition, with telecom players coming up with more products and services for
data usage, transforming data services into a market that offers wider range of

5. charging options. This transformation will hasten the usage and practices of users,
with mobile data services becoming more appealing and affordable to broader user
base.
6. Use of social media technologies for marketing will intensify
In 2010, IDC expects a more enterprises and SMEs to adopt Internet social media as
the new avenue for marketing due to its cost effectiveness. These companies will use
the Internet more often as the venue to interact with current and potential customers.
Solutions like signing up for a social community sites up to building and maintaining
their own Web sites will be the tool that both enterprises and SMEs strategies will
revamp vendor focus ICT spending in the country will greatly be pushed by the
anticipated robust expansion of ICT buying outside Metro Manila, especially as
vendors and SPs are aggressively and constantly pouring in initiatives toward
decentralization of ICT focus. In the time of overall recovery, penetrating the largely
untapped provincial market will be the centerpiece of most vendors and SPs' 2010
strategies.
7. Vertical consultative selling will transform vendor initiatives
While this strategy has been played out in the past several years, 2010 will see new
and intensified verticalization strategies in the Philippines in the form of consultative
selling. Though the traditional market approach is still effective, the level of
competition has evolved over time. Each industry has a different set of needs and
priorities in terms of IT spending. Therefore, vendors must be able to leverage
products and services to meet the requirements of each industry.
8. End users will proactively seek "Bang-For-the-Buck" alternatives
In 2010, end users will be actively looking for products with the expected
functionalities and specifications but at relatively cheaper prices. In line with the main
aim of reducing total IT cost in the long term. The recovery theme that will hover in

6. 2010 will drive end users to actively seek out products and solutions that would
provide "bang-for-the-buck" benefits.
Trade Statistics of ICT products
Exports of ICT Products from Philippines
HS 2009 2010 CHANGE
CODE DESCRIPTIONS
VALUE (USD) VALUE (USD) %
TOTAL 3,869,651,085.00 5,018,610,474.00 29.69
847170 Storage units 1,105,990,954.00 1,765,880,703.00 59.67
Portable digital automatic data processing machines, weighing
not more than 10kg, consisting of at least a central processing
847130 unit, a keyboard and a display 1,397,239,414.00 1,756,307,117.00 25.70
Transmission apparatus for radio-telephony, radio-telegraphy,
852510 radio-broadcasting or television 500,020,541.00 #DIV/0!
Input or output units, whether or not containing storage units in
847160 the same housing 598,241,102.00 483,780,723.00 -19.13
Other parts suitable for use solely or principally with the
852990 apparatus of headings No. 85.25 to 85.28 363,178,992.00 407,215,817.00 12.13
Other parts and accessories suitable for use solely of principally
852290 with the apparatus of headings Nos. 85.19 to 85.21 32,991,938.00 #DIV/0!
Aerials and aerial reflectors of all kinds, parts suitable for use
852910 therewith 21,315,346.00 24,784,266.00 16.27
852692 Radio remote control apparatus 13,831,062.00 14,955,803.00 8.13
852610 Radar apparatus 7,609,579.00 8,987,585.00 18.11
Other parts and accessories suitable for use solely of principally
852290 with the apparatus of headings Nos. 85.19 to 85.21 18,551,102.00 7,446,258.00 -59.86
851721 Facsimile machines 3,915,277.00 4,434,397.00 13.26
Parts of electrical apparatus for line telephony or line telegraphy,
including line telephone sets with cordless handsets and
851790 telecommunication apparatus for carrier-current line systems 6,114,687.00 4,222,632.00 -30.94
851810 Microphones and stands thereof 2,673,397.00 3,395,841.00 27.02
847180 Other units of automatic data processing machines 6,230.00 2,044,927.00 32,723.87
851829 Other loudspeakers, whether or not mounted in their enclosures 1,226,412.00 1,110,324.00 -9.47
851719 Other telephone sets; videophones 233,381.00 #DIV/0!
851780 Other electrical apparatus for line telephony or line telegraphy 196,164.00 #DIV/0!
847190 Other data processing equipments, n.e.s. 2,264,004.00 193,319.00 -91.46
852540 Still image video cameras and other video camera recorders 76,562.00 143,196.00 87.03
851711 Line telephone sets with cordless handsets 59,328,368.00 133,265.00 -99.78
851830 Headphones, earphones and combined microphone/speaker sets 281,022.00 63,633.00 -77.36
Other digital automatic data processing machines, comprising in
the same housing at least a central processing unit and an input
847141 and output unit, whether or not combined 10,203.00 20,694.00 102.82

7. Other apparatus, for carrier-current line systems or for digital line
851750 systems 15,000.00 #DIV/0!
Digital processing units other than those of subheadings 8471.41
and 8471.49, whether or not containing in the same housing one
or two of the following types of unit: storage units, input units,
847150 output units 138,599.00 12,680.00 -90.85
851850 Electric sound amplier sets 530,776.00 9,717.00 -98.17
852691 Radio navigational aid apparatus 4,800.00 #DIV/0!
851840 Audio-frequency electric ampliers 2,500.00 #DIV/0!
851822 Multiple loudspeakers, mounted in the same enclosure 13,053.00 1,305.00 -90.00
852210 Pick-up cartridges 1,300.00 #DIV/0!
852530 Television cameras 498.00 #DIV/0!
847110 Analog or hybrid automatic data processing machines 183,804.00 150.00 -99.92
852790 Other radio telephonic and radio telegraphic receivers 6,026.00 -100.00
852520 Transmission apparatus incorporating reception apparatus 260,933,374.00 -100.00
Parts of microphones and stands therefor; loudspeakers, whether
851890 or not mounted in their enclosures; headphones, earphones, etc. 5,980,017.00 -100.00
851821 Single loudspeakers, mounted in their enclosures 11,723.00 -100.00
Source: National Statistics Office, Philippines
Imports of ICT Products from Philippines
HS
2009 2010 CHANGE
CODE DESCRIPTIONS
VALUE (USD) VALUE (USD) %
TOTAL IMPORTS 1,272,088,749.00 1,252,313,967.00 -1.55
Parts of electrical apparatus for line telephony or line telegraphy,
including line telephone sets with cordless handsets and
851790 telecommunication apparatus for carrier-current line systems 625,449,125.00 509,683,718.00 -18.51
852540 Still image video cameras and other video camera recorders 0.00 164,985,275.00 #DIV/0!
Portable digital automatic data processing machines, weighing not
more than 10kg, consisting of at least a central processing unit, a
847130 keyboard and a display 141,538,313.00 134,355,562.00 -5.07
Other parts suitable for use solely or principally with the apparatus of
852990 headings No. 85.25 to 85.28 101,624,902.00 129,622,590.00 27.55
Input or output units, whether or not containing storage units in the
847160 same housing 46,727,343.00 48,750,548.00 4.33
851730 Telephonic or telegraphic switching apparatus 354,449.00 48,317,289.00 13531.66
Digital processing units other than those of subheadings 8471.41
and 8471.49, whether or not containing in the same housing one or
two of the following types of unit: storage units, input units, output
847150 units 37,645,238.00 33,908,171.00 -9.93
852540 Still image video cameras and other video camera recorders 30,552,106.00 29,709,474.00 -2.76
847190 Other data processing equipments, n.e.s. 15,536,236.00 19,605,623.00 26.19
Other parts and accessories suitable for use solely of principally with
852290 the apparatus of headings Nos. 85.19 to 85.21 19,111,728.00 18,414,343.00 -3.65

8. Aerials and aerial reflectors of all kinds, parts suitable for use
852910 therewith 7,724,527.00 16,460,684.00 113.10
847170 Storage units 11,533,361.00 15,574,859.00 35.04
Other digital automatic data processing machines, comprising in the
same housing at least a central processing unit and an input and
847141 output unit, whether or not combined 7,808,854.00 9,360,677.00 19.87
Transmission apparatus for radio-telephony, radio-telegraphy, radio-
852510 broadcasting or television 119,662,833.00 8,633,075.00 -92.79
847180 Other units of automatic data processing machines 7,770,922.00 8,221,312.00 5.80
851822 Multiple loudspeakers, mounted in the same enclosure 3,970,020.00 7,705,248.00 94.09
851850 Electric sound amplier sets 4,722,789.00 6,630,196.00 40.39
Digital automatic data processing machines, presented in the form of
847149 systems 7,345,613.00 5,488,210.00 -25.29
851719 Other telephone sets; videophones 3,746,751.00 5,037,189.00 34.44
Parts of microphones and stands therefor; loudspeakers, whether or
851890 not mounted in their enclosures; headphones, earphones, etc. 5,719,346.00 5,027,130.00 -12.10
851829 Other loudspeakers, whether or not mounted in their enclosures 4,049,037.00 4,148,493.00 2.46
851830 Headphones, earphones and combined microphone/speaker sets 3,140,350.00 3,498,235.00 11.40
852530 Television cameras 2,091,338.00 2,867,456.00 37.11
851721 Facsimile machines 1,421,468.00 2,589,406.00 82.16
852610 Radar apparatus 734,750.00 2,252,856.00 206.62
851821 Single loudspeakers, mounted in their enclosures 1,669,384.00 2,174,729.00 30.27
852790 Other radio telephonic and radio telegraphic receivers 568,885.00 2,022,983.00 255.60
851840 Audio-frequency electric ampliers 919,092.00 1,725,199.00 87.71
851810 Microphones and stands therefor 1,434,839.00 1,686,065.00 17.51
851711 Line telephone sets with cordless handsets 1,092,040.00 1,491,940.00 36.62
Other apparatus, for carrier-current line systems or for digital line
851750 systems 55,391,285.00 933,897.00 -98.31
852691 Radio navigational aid apparatus 467,405.00 593,980.00 27.08
852692 Radio remote control apparatus 375,254.00 587,884.00 56.66
852210 Pick-up cartridges 186,797.00 180,277.00 -3.49
851722 Teleprinters 2,369.00 69,394.00 2829.25
Source: National Statistics Office, Philippines

9. Export of ICT Products to Malaysia
HS 2009 2010 CHANGE
CODE DESCRIPTIONS
VALUE (USD) VALUE (USD) %
TOTAL 29,379,602 27,694,933 (5.73)
Portable digital automatic data processing machines, weighing
not more than 10kg, consisting of at least a central processing
847130 unit, a keyboard and a display 4,767,863 #DIV/0!
Digital processing units other than those of subheadings
8471.41 and 8471.49, whether or not containing in the same
housing one or two of the following types of unit: storage units,
847150 input units, output units 13,413 (100.00)
Input or output units, whether or not containing storage units in
847160 the same housing 126,123 1,980 (98.43)
847170 Storage units 28,122,019 18,596,065 (33.87)
847180 Other units of automatic data processing machines 480 32,054 6,577.92
851721 Facsimile machines 46,810 83,525 78.43
Parts of electrical apparatus for line telephony or line
telegraphy, including line telephone sets with cordless handsets
and telecommunication apparatus for carrier-current line
851790 systems 23,933 62,297 160.30
851810 Microphones and stands therefor 33,540 16,906 (49.59)
851829 Other loudspeakers, whether or not mounted in their enclosures 14,504 (100.00)
Parts of microphones and stands therefor; loudspeakers,
whether or not mounted in their enclosures; headphones,
851890 earphones, etc. 391,903 220,670 (43.69)
Other parts and accessories suitable for use solely of principally
852290 with the apparatus of headings Nos. 85.19 to 85.21 21,541 89,999 317.80
852520 Transmission apparatus incorporating reception apparatus 25,555 475,896 1,762.24
852530 Television cameras 498 #DIV/0!
Aerials and aerial reflectors of all kinds, parts suitable for use
852910 therewith 14,524 (100.00)
852692 Radio remote control apparatus 102,885 #DIV/0!
Other parts suitable for use solely or principally with the
852990 apparatus of headings No. 85.25 to 85.28 545,257 3,244,295 495.00
Source: National Statistics Office, Philippines
Imports of ICT Products from Malaysia
HS CODE DESCRIPTIONS 2009 2010 CHANGE
USD USD %
TOTAL 27,273,309 57,165,537 109.60
Portable digital automatic data processing machines, weighing not more than
847130 10kg, consisting of at least a central processing unit, a keyboard and a display 14,480,429 27,591,554 90.54
Other digital automatic data processing machines, comprising in the same
housing at least a central processing unit and an input and output unit, whether or
847141 not combined 337,511 723,411 114.34
847149 Digital automatic data processing machines, presented in the form of systems 238,776 296,890 24.34

10. Digital processing units other than those of subheadings 8471.41 and 8471.49,
whether or not containing in the same housing one or two of the following types of
847150 unit: storage units, input units, output units 402,541 904,795 124.77
847160 Input or output units, whether or not containing storage units in the same housing 724,560 1,573,064 117.11
847170 Storage units 62,215 65,215 4.82
847180 Other units of automatic data processing machines 622,182 483,701 (22.26)
847190 Other data processing equipments, n.e.s. 2,268,002 2,133,968 (5.91)
851711 Line telephone sets with cordless handsets 3,079 34,244 1,012.18
851719 Other telephone sets; videophones 24,890 209,427 741.41
851721 Facsimile machines 210,067 1,841,506 776.63
851730 Telephonic or telegraphic switching apparatus 11,147 4,521 (59.44)
851750 Other apparatus, for carrier-current line systems or for digital line systems 124 16,611 13,295.97
851780 Other electrical apparatus for line telephony or line telegraphy 3,684 27,356 642.56
Parts of electrical apparatus for line telephony or line telegraphy, including line
telephone sets with cordless handsets and telecommunication apparatus for
851790 carrier-current line systems 4,802,597 9,983,633 107.88
851810 Microphones and stands therefor 1,105 985 (10.86)
851821 Single loudspeakers, mounted in their enclosures 88,976 121,568 36.63
851822 Multiple loudspeakers, mounted in the same enclosure 210,426 89,168 (57.63)
851829 Other loudspeakers, whether or not mounted in their enclosures 333,740 250,907 (24.82)
851830 Headphones, earphones and combined microphone/speaker sets 39,841 26,980 (32.28)
851840 Audio-frequency electric ampliers 10,644 11,488 7.93
851850 Electric sound amplier sets 38,480 117,967 206.57
Parts of microphones and stands therefor; loudspeakers, whether or not mounted
851890 in their enclosures; headphones, earphones, etc. 60,776 18,558 (69.46)
852210 Pick-up cartridges 7,117 25,471 257.89
Other parts and accessories suitable for use solely of principally with the
852290 apparatus of headings Nos. 85.19 to 85.21 125,951 780,921 520.02
852520 Transmission apparatus incorporating reception apparatus 31,408 19,503 (37.90)
852530 Television cameras 38,659 2,983,562 7,617.64
852540 Still image video cameras and other video camera recorders 114,882 1,973 (98.28)
852610 Radar apparatus 470 969,900 206,261.70
852691 Radio navigational aid apparatus 3,624 3,433 (5.27)
852692 Radio remote control apparatus 35,302 66,017 87.01
852790 Other radio telephonic and radio telegraphic receivers 59,076 235,745 299.05
852910 Aerials and aerial reflectors of all kinds, parts suitable for use therewith 17,734 39,701 123.87
Other parts suitable for use solely or principally with the apparatus of headings
852990 No. 85.25 to 85.28 1,863,294 5,511,794 195.81
Source: National Statistics Office, Philippines

11. Current Situation
The three leading telecommunications companies in the Philippines are: Philippine
Long Distance Telephone Company, Inc. (PLDT); Globe Telecom Inc (Globe) and
Digital Telecommunications Philippines Inc (Digitel) with PLDT being the market leader.
These three companies are involved in mobile, fixed line and Internet services.
The fourth telecommunications company, Bayan Telecommunications Inc, entered the
market in 1993 by pioneering the wireless landline service. It has since expanded into
broadband Internet and DSL services.
The latest entrant into the Philippine telecommunications market is Liberty Broadcasting
Network Inc (LBNI), a subsidiary of San Miguel Corporation and the Qatar Telecom
Group (Qtel) which launched Wi-Tribe, its 4G broadband technology in February 2010.
The mobile business is dominated by three major operators, Smart Communications
Inc (which is owned by PLDT), Globe Telecoms and Digital Telecommunications which
runs Sun Cellular. Current mobile penetration rate is 77 per cent with an estimated 70
million subscribers, led by Smart with a hold of 54 per cent of the market, followed by
Globe with 30 per cent. Mobile penetration is expected to rise especially in less-
developed market segments to reach an estimated penetration level of 147 per cent by
2013.
The mobile market is 95 per cent pre-paid. There is an increasing business for wireless
because mobile handsets are cheap. A mobile handset costs as low as US$30 and a
SIM card is free or priced at around US$1.00.
The Philippines is the SMS capital of the world responsible for sending 1B SMS daily
accounting for 20 per cent of the world’s SMS traffic. This is due to the affordability of

12. sending an SMS which is approximately AU$0.02 per text versus AU$0.20 per minute
for voice calls.
The industry technology is on state-of-the-art digital network providing modern
communication means such as broadband Internet access and wireless connection.
In 2009, leading landline operator PLDT and its mobile subsidiary, Smart
Communication, had an estimated broadband subscriber base of 1.2 million while Globe
Telecom had approximately 370,000 broadband subscribers. Sun Celllular and Bayantel
have also rolled out their fixed and wireless broadband service but their subscriber base
is nowhere near the numbers of Smart and Globe. These three companies continue to
allocate a significant amount of capital expenditures to increase their footprint in the
wireless and broadband network business.
Internet subscription accounted for an estimated 24 per cent of the Philippine population
(2009) or roughly around 24 million. By 2013, Internet and broadband penetration rates
are expected to be 31 per cent and five per cent, respectively, driven by the falling
prices of PCs and Internet subscription rates.
The National Telecommunications Commission (NTC) has given 3G licences to four
major domestic carriers, namely, Globe, Smart, Digitel, and Connectivity Unlimited
Resources Enterprises (CURE). However, there is evidence of consolidation occurring
in the 3G market after Smart bought out CURE in 2008 and launched its 3G service,
Red Mobile, in late 2008. A fifth and final 3G licensed is still to be auctioned.
VoIP has been accepted as a value-added service for both ISPs and telecommunication
companies. Connectivity options available are WCDMA, WLAN, Bluetooth wireless
technology, and WiMAX for ‘last mile’ connectivity.
In terms of broadcasting, the NTC had drafted the rules and regulations for digital radio
broadcast in the Philippines. Digital audio broadcast signals are transmitted in-band, on-
channel or the Iboc technology. This means that several stations can be carried within

13. the same frequency spectrum. Digital television should use Digital Terrestrial Television
(DTT) technology, shifting from analogue to digital by 2015.
The BPO of the Philippines is one of the key growth stimulants. It has potential earnings
of US$13 billion by 2010 with a CAGR of 40 per cent from 2005 to 2010. Examples of
BPO services are: customer care, medical transcription, software development,
animation and shared services.
About BPO
 The Philippines` IT-BPO (information technology and business process
outsourcing) industry is eyeing to hit $11 billion in revenues for the year 2011,
increase by 20 per cent from 2010`s estimated revenue of $9 billion. The
Presidents Aquino was pledging a fresh P62 million fund for the industry when he
inaugurated the new IBM facility in Quezon City on 1st Dec 2010 in order to
reach the target. The country`s BPO sector is growing faster than the orther
globally, or around 15 per cent higher than the global rate, said by Malik Parekh,
CEO of Spi Global.
 The CICT is will cooperate with Business Processing Association of the
Philippines (BPAP) to oversee the development of the ICT in the country with
300 corporate members and 4 partner asscoiations, is umbrella association
which represents, in term of employment, a majority of IT, voice and non-voice
BPO, and media outsourcing company in the Philippines.
About the Market
 In terms of telecommunication hardware the market is very price sensitive. Most
of the end users source their supplies from China because of its price.
 Other customers prefer high quality and thus source hardware from North
America, Europe, and also from other country such as Australia.

14.  In terms of software, local companies have their own IT pool that does in-house
programming. Examples of home-grown software programs are payroll system,
inventory and planning software. However, complex softwares with critical
mission applications are sourced from foreign companies. Examples of complex
softwares are network management software and integrated management
software.
ICT Indicators for the Philippines
There are various means to measure the level of ICT capacity and development
according to a country’s context. This can be done by measuring subscription and
access of the population to ICT. Global efforts have developed indices to measure:
 Networked readiness – an international assessment of countries’ capacity to
exploit the opportunities offered by ICTs by looking at the extent of increase in
the use of ICT in a specific country and the factors that enable this (World
Economic Forum*); and
 E-government readiness - a systemic assessment of how governments use
Information and Communication Technology (ICT) to provide access and
inclusion for all (United Nations*).
Key Economic Indicators 2000 2007 ADB (2008)
Population (millions) 76.2 87.9 90.5
GDP (PPP) per capita (int'l $) - 3,383 -
2000 2007 2008
GDP growth rate (%) 6.0 7.2 (7.3) 4.6
Access 2000 2007 Difference

15. Telephone lines (per 100 people) 4.0 4.5 0.5
Mobile cellular subscribers (per 100 people) 8.5 58.9 50.4
Internet subscribers (per 100 people) 0.5 2.8 2.3
Internet users (per 100 people) - 6.0 -
Personal computers (per 100 people) 1.9 7.3 5.4
Households with a television set (%) 53 63 10
2006-07 2007-08 2008-09
ICT Development Indicators
(122) (127) (134)
Networked Readiness Index 69 81 85
2003 2005 2008
(173) (179) (189)
E-Government Readiness Index 33 41 66
Sources: World Bank
The Philippines Issues on ICT
1) E-Government
 Inadequate ICT infrastructure to support interconnectivity and wider public
access to government information and services.
 Weak regulatory and administrative capacity on ICT development.
 Need for improved procurement policy for ICT resources and services
2) E-Commerce / E-Business
 Limited broadband in key cities and identified growth centers and priority areas

16.  Need to address constitutional issues on ownership (e.g, 60-40 and 100%
Filipino ownership for mass media)
 Need to promote internationally competitive Small, Micro and Medium
Enterprises (SMEEs).
 Need to make business more competitive in the global arena and responsive to
local needs.
3) E-Community
 Inadequate communal/collective public access to ICT facilities throughout the
country.
 Limited access to basic information and services.
4) E-Knowledge
 Low quality and standard in basic education
 Inadequate human resource competency in ICT
 Low literacy among broad section of the population
 Wide knowledge gap and uneven distribution of technical know-how
Opportunities
The opportunities in the Philippines ICT industry are:
 Digital value-added services for mobile and wireless
 Innovative wireless broadband technology and services
 ERP and other e-business applications, particularly for SMEs
 Equipment and applications for BPOs and contact centres
List of ICT`s related projects
 Education
 Finance
 Health
 Industry and Trade
 Law, Economic Management and Public Policy

17.  Multi-sector
 Public Sector Management
Tariffs, regulations and customs
 Zero tariff for importation of electrical apparatus for line telephony or line
telegraphy, including line telephone sets with cordless handsets and
telecommunication apparatus for carrier-current line systems or for digital line
systems; videophones (HS Code 85.17). However, this equipment will be subject
to 12 per cent expanded value added tax.
 Telecommunications hardware is type-approved by the National
Telecommunications Commission and/or the Philippine Long Distance
Telephone Company, being the major dominant player for more than 50 years in
the market.
 Computer software to the Philippines is duty-free. However, there are instances
where computer softwares have tariff rates depending on the declaration of the
importer. In this instance, it is best for the importer to seek tariff classification
ruling from the Tariff Commission (HS Code 85.23).
 Importers of all telecommunication hardware must obtain an importation
certification from the National Telecommunications Commission. Hardware used
for government telecommunication projects are tax free.
 Local inspection for standards compliance is required for products subject to
mandatory Philippine national standards, including electrical wires and cables.
Market entry
ICT-specific considerations for Malaysian exporters:
 Prospecting Malaysian exporters must first determine the requirement of the
telecommunication companies and the end users.

18.  A visit to the Philippine ICT market is a requirement as this will allow the
Malaysian exporter to gain first-hand knowledge about the market and the
business potentials of the hardware and software.
 Meetings with local systems integrators, potential local agents are also
productive activities because you will develop good contacts within the industry.
 Test case studies are helpful tools to promote the products and services of
Malaysian exporters.
 The market is price sensitive and Malaysian products and services known to be
high-quality and high-priced.
 It is up to the Malaysian exporter and the appointed local agent to educate the
end users of the benefits of high-quality competitive priced. Product
differentiation against that of low-priced products must be established.
 Participating in local ICT exhibitions as an exhibitor is expensive. In some cases,
the appointed local agent will share the cost of exhibition with the principal
supplier.
 Malaysian exporting companies can time their visit to the Philippine market
during the local ICT exhibition. In this way, they can know the ICT market trends
and be introduced to the industry players and associations in one exhibition hall.
Distribution channels
For telecommunication suppliers of hardware and software it is best to appoint a local
agent to represent the supply company in this market. This will assure the end users
that after-sales support service is available. There are systems integrators that can
bundle products and services to offer a complete package to the customer. In practice,
most local agents prefer a non-exclusive partnership agreement so they will not feel the
pressure to meet sales targets. Commission rates averages between 15 per cent and
30 per cent depending on the product.

19. Link and Industry Contacts
Commission on Information and Communications Technology (CICT)
CICT-NCC Building,
C.P. Garcia Avenue,
1101 Diliman Quezon City,
Philippines.
Tel. No: (632) 920 0101
Email: osec@cict.gov.ph
Website: www.cict.gov.ph
National Computer Center
Commission on Information & Communicaions Technology
CICT-NCC Building,
C.P. Garcia Avenue,
1101 Diliman Quezon City,
Philippines.
Tel. No: (632) 920 0101 Fax No: (632) 920 7414
National Telecommunications Commission
http://portal.ntc.gov.ph
Philippine`s Telecommunications ( Service Providers)
Digitel – www.digitel.ph
Globe Telecom – www.globe.com.ph
Philippine Long Distance Telephone Co. – www.pldt.com.ph
Smart Telecom – http://smart.com.ph