Services has taken over the role of agriculture as the Philippine economy's engine of growth. Not only does it contribute significantly to GDP, it also creates millions of jobs and attracts substantial amounts of foreign direct investments. But the sector's prospects and potentials are not clearly understood. It is highly heterogeneous which makes international trade negotiations in services difficult to carry out and to communicate to ultimate stakeholders. There is an urgent need, therefore, to study the services sector in detail so that the country can nurture it properly and build its capacity to compete more effectively in the global market, and, at the same time, better position itself in international trade in services negotiations. This joint PIDS and GTZ publication can be seen as a first step to increase appreciation and understanding of the services sector. It provides a comprehensive analysis of selected subsectors within the services sector, such as education, health services, audiovisual services, business process outsourcing, and information and communication technology. The potentials these subsectors have created for the country are highlighted, along with the issues and challenges ahead. Issues in the international negotiating arena that the Philippines could advance are also tackled in this volume.