PEZA views India as next global economic powerhouse

PEZA has recently embarked on its first ever investment mission to India. This was a result of the PEZA-HSBC (Phils.) investment promotion partnership through a MOA dated 19 February 2024. No less than HSBC Global Group Chairman Mark Tucker has given his full support to the Philippine government’s efforts for increased FDI, as contained in his letter to Secretary Frederick Go pursuant to OSAPEIA’s priority sectors such as energy, semi-conductors, pharmaceuticals, nickel, and the food-related ones.

In a week-long itinerary covering India’s 4 major cities in New Delhi, Bangalore, Hyderabad and Mumbai, HSBC has arranged for a G2G meeting with the Joint Secretary of the Department for Promotion of Industry and Internal Trade and the Department of Commerce and Industry. Both Joint Secretaries have expressed their aspiration for the immediate signing of the Bilateral Investment Agreement between our two countries, and the strengthening of regional economic cooperation and market access through the ASEAN - India FTA.

The main highlight of the mission was the G2B meetings with the HSBC Global Capability Center (GCC) in Hyderabad, SMBC New Delhi Office, Hyderabad Software Enterprises Association, and the leading Indian companies from the IT-BPM and Pharmaceutical sectors. A total of 27 tech/AI and 9 drug manufacturing companies have participated in the one-on-one business meetings with the PEZA-HSBC delegation.

PEZA also met with existing IT RBEs—Concentrix, Wipro, EXL, Coforge, R1 RCM, WNS and First Source Solutions to discuss their expansion plans in the Philippines and the needed support from government. Moreover, SAEL (an Indian agro-energy and RE developer) is determined to invest initially in an existing ecozone in Bulacan for an embedded power generation facility.

The Philippine Ambassador to India and PTIC Office in New Delhi have shared their own leads on Indian companies wanting to invest in mineral processing, steel manufacturing, infrastructure and transport development—including revival of direct flights from India to the Philippines that will surely enhance two-way tourism, trade and investments.

A decade ago, India was the 10th largest economy in the world. However, today, with a $4.11 trillion GDP, India is aiming to be the 3rd largest by 2030. It ranks no. 4 in world GDP rankings after the US, China, and Germany.

As we set our sights on diversifying our ecozone investments and industries, it is imperative to keep India as top of mind source of FDI, exports and technology. For this mission, we focused on FDI leads from India’s vibrant pharmaceutical industry (drug manufacturing, pharma zone development, R&D) and IT frontier technologies (AI, blockchain, fintech). This will complement our efforts to attract more investments and trade from India as part of our government’s global supply chain de-risking strategy and as we pursue in PEZA our new types of ecozones such as Pharmaceutical Ecozones, E-tech hubs and Knowledge, Innovation, Science and Technology (KIST) Parks to promote innovation and niche product-technologies.

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India is among the global industry leaders in the fields of IT-BPM and Artificial Intelligence. In a recent report by OECD, it cited that India, globally, tops the AI skills penetration and has an AI-ready market valued at $6.4 billion. India has established itself as a global AI research and innovation powerhouse, ranking 4th as largest producer of AI-relevant scholarly papers and 8th in the world regarding AI patents filed in 2020.

Likewise, India has become a leading global destination for Global Capability Centers or GCCs. From the HSBC-GCC presentation, we gathered that “GCCs are established by organizations worldwide to make use of global talent, resources, and expertise. They are typically part of larger corporations and provide a range of services such as research and development, IT services, business process outsourcing, engineering services, and more.”

According to HSBC, the Philippines has about 200 GCCs (out of 1,080 IT RBEs under PEZA alone), while India has 1,600 GCCs. There are over 250,000 registered IT companies in India with Bangalore as its IT capital and worldwide data innovation center. PEZA is proud to host some of the leading IT companies headquartered in India, where some of them are regarded as global industry leaders in AI and as GCCs such as Concentrix (as the country’s leading IT company-employer with 120,000 jobs), Tata Consultancy Services, Infosys, Wipro and HCL Tech.

HSBC offered to help PEZA in attracting more MNCs to locate their GCCs in the Philippines, starting with their big clients in the country and across the region. GCCs are the next big thing in off-shore business services that will provide for higher value-adding activities to host economies including knowledge-based learning, localized innovation and technology transfer, increased pay scale for talents and revenues for government, and over-all social progress.

Other ecozone RBEs that are known GCCs in the Philippines are HSBC, JP Morgan, ING Baring, Dyson, DHL, and APC-Schneider. In accepting IT applications especially from global MNC brands, we will now keep track of GCCs or Global Service Centers (GSCs). It will be good to capture this information to show that the Philippines has transformed the IT-BPM sector from merely a voice center capital to an emerging KPO and GCC destination.

(First of a series)