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Manila Bulletin devider Business devider Trade & Industry devider OECD flags Philippines as most restrictive services market, warns of competitiveness risks

OECD flags Philippines as most restrictive services market, warns of competitiveness risks

Published Feb 25, 2026 06:15 pm

For more than a decade, the Philippines has ranked among the world’s most restrictive markets for trade in services, putting it at risk of losing competitiveness and investments in an increasingly digital global economy, according to the Organization for Economic Cooperation and Development (OECD).

In Paris-based OECD’s Services Trade Restrictiveness Index (STRI) 2026, published Tuesday, Feb. 24, the Philippines obtained a score of 0.43, making it the most stringent regulatory environment for services trade among 51 economies in 2025.

STRI measures barriers affecting trade in services annually on a scale from zero to one, with higher values denoting greater restrictions. The index covers 38 members of OECD and 13 partner states, including the Philippines.

Since its launch in 2014, the Philippines has consistently ranked near the bottom of OECD’s STRI, placing last since 2020.

For 2025, OECD attributed the country’s low ranking to “economy-wide barriers that apply across sectors.”

“These include, for instance, limitations for foreigners to acquire and use real estate, a local presence requirement to provide cross-border services, and performance requirements,” the report read.

OECD cited the continued application of labor market tests on foreign nationals seeking to provide services on a temporary basis as contractual or independent service suppliers as another major barrier.

It also flagged that the country’s procurement market remains “conditional on reciprocity,” with procurement regulations maintaining explicit preferences for local suppliers.

OECD said barriers to foreign investment across key sectors such as professional services, telecommunications, broadcasting, and distribution services also contributed to the low score.

By sector, STRI found that air transportation is the least restricted sector in the Philippines compared with other countries, given limited restrictions on foreign entry.

Logistics customs brokerage was identified as the most restrictive sector, primarily due to the prohibition on foreigners practicing customs brokerage or obtaining a relevant government license, except on reciprocity grounds.

Despite these concerns, OECD said the Philippines has gradually instituted reforms that are helping move the country closer to creating an enabling regulatory framework for services trade.

“Compared to regional partners, the Philippines has a relatively open market for trade in some key transport and logistics services, as well as financial services and some services that underpin the digital economy,” it said.

On the other hand, barriers in professional services remain higher than the regional average, which could represent a key area for reform.

OECD said there should be a concerted effort to pursue reforms in services trade to enable the country to keep pace with the global economy, especially with the surge in adoption of artificial intelligence (AI).
Otherwise, it said that outdated regulatory frameworks risk constraining the Philippines’ competitiveness, innovation, and inclusive growth. 
“Improved market access conditions, more transparent licensing, and lower barriers to the movement of people, supported by efforts to reduce digital trade frictions, will enable economies to harness productivity and competitiveness gains, expand opportunities for cross-border services, and ensure a more level global playing field,” OECD said.
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