Bautista, Jonathan D.

TI001

VERTSOL

5|31|16

ASSIGNMENT NO 3 The Advantages and disadvantages of ASEAN Integration in the

BPO (Business Process Outsourcing) Industry in the Philippines.

Business process outsourcing (BPO) is the contracting of a specific business task,

such as payroll, human resources (HR) or accounting, to a third-party service provider.
Usually, BPO is implemented as a cost-saving measure for tasks that a company
requires but does not depend upon to maintain their position in the marketplace.

Two categories BPO services is often divided into are back office outsourcing, which
includes internal business functions such as billing or purchasing, and front office
outsourcing, which includes customer-related services such as marketing or tech
support.

Economic integration by the Association of Southeast Asian Nations (ASEAN)

could boost Philippine exports five-fold over the next 35 years, banking giant
HSBC said, making the economy one of the largest in the world.

More trade and investment opportunities for Philippines with the integration of
ASEAN.

ASEAN building and improving regional connectivity opening up opportunities to

companies we work with here in Philippines, in the region and around the globe.

HSBC said that with export figures conservatively expected to surge five-fold to
$329 billion in 2050, the Philippines remains one of the fastest-growing
economies in Asia.

The fast growing business process outsourcing (BPO) industry will remain a
particular strength of the Philippines.

It noted that the country was continuing a positive growth trajectory that started in
the first quarter of 1999. The bank reiterated that HSBC Global Research
forecasts placed the Philippines as rising to become the worlds 16th largest
economy by 2050 given its demographics and rising education standards.

Philippines is one of the top BPO sites and growth in this sector remains to be
strong. This is fueled by the demographics, as Filipinos are one of the youngest
in this part of the globe, and this is coupled with improving literacy.

This will also enable companies setting up global in-house centers or captives in
the Philippines to develop multilingual skills and tap a rich pool of resources.

Companies which maintain global centers in Singapore or in Japan may

eliminate the need to maintain multiple centers in Asia by consolidating them in
Manila since bulk of their operations are in the country's capital.

According to the Institute for Development and Econometric Analysis, Inc., the ASEAN
financial integration will be accomplished through the following initiatives:

(a.) Financial Services Liberalization, including Banking Integration. Restrictions on

ASEAN banks, insurance companies or investment companies will be gradually
removed.

(b.) Capital Account Liberalization. Restrictions on foreign exchange transactions such

as those in the current account, foreign direct investments, portfolio investments and
other flows will be gradually removed to achieve freer flow of capital.

(c.) Capital Market Development. Aimed at developing the regions capital market,
domestic laws and regulations will be harmonized, and market infrastructure will be
linked.

(d.) Harmonized Payments & Settlement Systems.

The integration will improve the health of the Philippine financial sector and hence lead
to more jobs. Increased competition and technology transfer will increase efficiency.
Integration will also open up microfinance and insurance to a larger consumer base,
including the poor. Nevertheless, interdependence raises the risk of contagion. Sound
and consistent macroeconomic policies are necessary to keep financial contagions and
crises at bay, according to IDEA.

Only the amount of financial assets in relation to GDP of Malaysia and Singapore
compare favorably to the OECD average. Thailand, the Philippines and Indonesia fall
within the range of their peers of similar per capita income level. In contrast, Brunei,
which has a high income per capita, has a low level of financial assets compared to its
peers. Cambodia, Laos and Myanmars financial sectors are undeveloped given the
very low amount of financial assets in these countries. All ASEAN members except for
Singapore and Malaysia have a long way to go in deepening the financial sector and
developing capital markets in order to reach the status of high-income OECD countries.

With the exception of Singapore and Malaysia, ASEANs domestic financial systems
largely remain bank-based. However, well-developed capital markets do exist in the
other ASEAN members. Reforms were introduced after the 1997 financial crisis. In
contrast, the low-income member countries have much less developed capital markets,
if at all. ASEAN capital markets are small by the standards of capital markets in the
advanced countries outside the region. The long-run solution may be to create a
consolidated region-wide market for all securities issued within the region.

The Philippines, Indonesia, and Viet Nam rank low in the global financial development
ranking of World Economic Forums Financial Development Report, but Singapore and
Malaysia rank high. The ranking includes fifty-seven countries from 2008 to 2011 and
consists of several components. Broken down by components, ASEAN has a relatively
good score for financial stability. The Philippines lags in business environment and
financial access.

The ASEAN national agenda is clear. Strong banking sectors and first shoots of capital
markets have to be developed in Brunei, Cambodia, Lao and Myanmar. The quality of
capital markets in Indonesia, the Philippines, Thailand and Viet Nam have to be raised
closer to a level seen in Malaysia and Singapore. Financial access, stability and
business environment in these countries also have to be improved according to the
researchers of IDEA.
Resources:
http://www.manilatimes.net/asean-integration-to-benefit-ph-economy/231210/
http://www.philstar.com/cebu-business/2014/06/04/1330882/asean-financial-integration-pros-and-cons
http://www.rappler.com/business/industries/174-outsourcing/108204-asean-integration-ph-it-bpo-sector-growth