PHL progress noted in diversifying exports

THE Asian Development Bank (ADB) said the Philippines has been successful in diversifying its exports while also increasing the share of domestic value-added in its exports.

In the Asian Development Policy Report 2026, the ADB said that the Philippines was among a group of countries (the others being China, Indonesia, Malaysia, Pakistan, and Sri Lanka) where diversification and increased domestic value-added have been most prominent.

This led to the Philippines being classified as a “cross-chain upgrader,” whose success is being largely driven by leadership in high-tech services.

“The Philippines reports a high share in high-tech services, with its share in high-tech manufacturing also above the average for cross-chain upgraders,” it said.

“While Vietnam also reports a high-tech manufacturing share above the average, Malaysia and China are the only economies to report high-tech manufacturing shares above 15%, with medium-tech manufacturing also contributing significantly in these economies,” it added.

The ADB attributed the Philippines’ progress to its information technology–business process management (IT-BPM) industry, which is among the biggest in the world in terms of staffing and service capacity.

“IT-BPM accounts for about two-thirds of the economy’s services exports, increasingly rivaling merchandise exports in value,” it said. “The sector directly employs nearly 1 million workers and supports several million more indirectly, contributing to regional development through the growth of digital cities beyond Metro Manila.”

It said the country’s competitive advantages include its English-proficient young workforce, cultural affinity with Western markets, and supportive policies such as fiscal incentives, export promotion, and public-private investments in skills.

However, the ADB said that challenges, such as infrastructure costs and talent shortages, undermine competitiveness and the industry’s ability to move up the value chain.

“Sustaining growth will require continued investment in digital and analytical skills, artificial intelligence, and automation integration into training programs, improved business environment conditions, and broader digital infrastructure expansion,” it said.

“Addressing these challenges can ensure IT-BPM continues as a cornerstone of the Philippines’ services-led growth and a resilient source of export income in the digital global economy,” it added.

The report identified the Philippines as among the leading lower middle-income performers in network readiness, along with Vietnam and India.

Despite this, the Philippines was identified with the highest level of services trade restrictiveness among selected Asian economies in 2025.

“Digitalization and the growing tradability of services have substantially reduced coordination costs within global value chains, enabling firms to manage complex cross-border production networks more efficiently,” it said.

“However, regulatory restrictions and policy heterogeneity in key services sectors, such as logistics, communications, finance, professional services, and digital intermediation, can dampen these gains by raising fixed compliance costs and limiting scalability,” it added. — Justine Irish D. Tabile