"Manufacturing in general will be the toughest field. If you want to survive, you have to move away from areas in which they are strong, like labor-intensive products."
Lorenzo said the Philippines could weather China's increasing dominance in manufacturing by capitalizing on strengths unique in Asia: a highly skilled work force fluent in English.
"Skilled labor is really quite competitive, and the best use for that is in services," Lorenzo said.
Call centers, accounting services or design and testing for information technology are the best options, the ATR Kim Eng Securities analyst said.
Despite stubborn barriers to economic development such as corruption, rampant kidnappings, armed rebel groups and creaking infrastructure, the Philippines has one of Asia's highest literacy rates.
Reasons to invest
In the Philippines, primary primary school students are taught exclusively using English.
Shoemaker Riofrio, herself a former primary school teacher, says she'd like to be optimistic about the future of her business but is reluctant to encourage her two university-aged sons to take on the family business.
"It's OK. I still make enough for three meals everyday. Plus smerienda [snacks]," she said, laughing. "But if [my children] are doing this 10 years from now ? only if it will be changed to mechanization."
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