rss feeds: Posts | Comments

Tips for Investors

For those who are planning to invest here in the Philippines, The Board of Investments has provided a some basic information to serve as a guide and help you get more familiar with the system here.

 

I. Opportunities: Privatization and liberalization in the electricity, water and waste sectors are in place. Infrastructure projects are slowly being opened for private sector funding.

Sectors with growing economic and financial trends and/or positive outlook include:

  • Agro-industry
  • BPO/IT Services
  • Electronics/ Semiconductors
  • Energy
  • Logistics (hub)
  • Mining
  • Shipbuilding
  • Tourism

 

II. Growth Challenges:

The government and civil society need to address the following:

  • Tax revenue deficits (seasonal crunch of the tax base)
  • Stalled infrastructure development
  • Differing views on mining investments with reservations among environmentalists
  • Slow phasing of privatization due to legal processes
  • High birth rate owing to strong affinity of religiously prescribed methods
  • Geo-political risks
  • Fluctuations in fuel (net importer) and food prices.

 

III. The Economy:

  • Agriculture/ Agribusiness/ Fishery products include rice, coconut products, sugar, corn, livestock, bananas, pineapple products, aquaculture and mangoes
  • Industrial production are segmented to the following:

–       processing and assembly operations are spread over such items as food, beverages, tobacco, rubber products, textiles, clothing and footwear, paints, plywood and veneer, paper and paper products

–       heavy industries are dominated by production of cement, glass, industrial chemicals, fertilizer, iron and steel and refined petroleum products

–       shipments in semiconductors and electric microcircuit account for a lion’s share of merchandise export revenues

–       BPO (voice and non-voice) is poised to capture 10% of total global addressable market

–       Mining development and utilization activities are viable as the country is endowed with mineral and thermal energy resources

 

IV. Workforce/Labor:

  • Overall, the Philippines has highly competitive English proficient and skilled workers
  • Filipinos are highly trainable, adept at technology, and possess high learning curves
  • The country has one of the highest literacy rates in the world at 94.6% of its population (NSCB)
  • There are about 500,000 graduates yearly across various disciplines, thereby enriching the wide talent pool
  • Labor standards and employment relations are held with utmost regard with stable employment-oriented policies.
  • Labor costs vary throughout the Philippines, depending on location, skills required, supply base, educational attainment, working hours, and other factors

 

V. Telecommunications Landscape:

  • Internet domain: .ph
  • International Dialing Code: +63
  • Emergency telephone number: 166
  • 80 million estimated mobile phone users
  • Internet/Email

–   Use of the internet widespread
–   Most major hotels, shopping malls and specialty shops have wireless  connectivity (either free or subscribed)
–  Proliferations of Internet cafes (with hourly rates as low as US$0.30)

  • Fixed Line Telephony

–    International communications via telephone are easy and efficient
–    Satellite systems support and back-up underwater cables
–    Fixed rate for calls within Metro Manila and some providers offer flat rates for    NDD calls.

 

VI. Transportation Modes:

  • Regular flights to the country’s 80 domestic airports
  • Extensive road and multi-modal systems throughout the Philippines
  • Car rentals (with and without drivers) may be arranged with hotels or independent rent-a-car service providers.
  • Taxis are the most convenient way around and are widely available both on the streets and at hotels in the major cities
  • Hotel taxis tend to be more expensive but are safer and more reliable
  • Rail transit crisscrossing major thoroughfares in Metro Manila only

 

VII. Getting Goods to the Market:

  • The Philippines has ports with modern handling facilities
  • Bonded warehouses are considered to be adequate and generally storefor a maximum of nine months (some non-perishables could extend 12 months in time for customs liquidation)
  • Shipping marks conform to ISO standards
  • Goods should be insured for their cost, insurance and freight (CIF) value
  • Exporters to the Philippines are recommended to conduct business on an irrevocable confirmed letter of credit basis in US dollars.

 

VIII. Standard of Living:

  • Purchasing power may appear relatively nominally low but actual disposable income is significantly higher due to a larger informal sector and overseas workers’ remittances
  • Educational standards are fairly high with about ninety percent of Filipinos aged 10-64 years being literate.

 

IX. Trade and Industry:

  • The Philippines has close economic relations with Asian neighbors, with whom it is linked through membership in ASEAN, the ASEAN Regional Forum (ARF), and the Asia-Pacific Economic Cooperation (APEC)
  • The Philippines is a member of the United Nations and some if its specialized agencies, and began a 2-year term as a member of the UN Security Council in January 2004, serving as UNSC President in September 2005
  • Major trading partners are United States, Japan, European Union, China, Singapore, Taiwan and Hong Kong.
  • Major investment sources are from the United States, Japan, Hong Kong, Singapore and European Union (Particularly UK, Germany and Netherlands)
  • Main commodity exports are electrical machinery, clothing, food and love animals, chemicals and forest products
  • Services are gaining ground through recent years such as, medical tourism, transport and logistics, BPOs, i.e., in finance and accounting, customer care relations, etc,

 

X. Summary of Investment Regime:

  • Registered enterprises may qualify for an income tax holiday ranging from 4-6 years;
  • Tax credit for taxes and duties on raw materials;
  • Deduction of labor expenses from taxable incomes;
  • Access to bonded manufacturing/trading warehouse schemes;
  • Exemption from taxes and duties on imported supplies and spare parts for consigned equipment; and
  • Exemption from wharfage dues and any export tax, duty free and impost.

 

XI. Important Local Regulations:

  • Foreigners are not allowed to own land in the Philippines as the Philippine Constitution limits ownership of land to Filipino citizens or companies that are at least 60% owned by Filipinos
  • Foreign investors can viably lease commercial lands in the Philippines for a maximum of 75 years (Republic Act No 7652 of 1993)
  • Intellectual property is protected under the Intellectual Property Code of 1997 (RA No 8293)

 

XII. Tip to Investors:

  • Filipinos give high importance to establishing good personal relations with their business contacts
  • Investors are advised to expect friendly and trusting relationships with Philippine contacts

 

 

OTHER INFORMATION

 

Inbound and Outbound Access and Related Information:

  • Most major international airlines fly to the Philippines with the various terminals of the Ninoy Aquino International Airport (NAIA) as main port entry into the country
  • Departure tax is pegged at Php 750 (or about US$15) for international departures from Manila with children below two years of age and transit passengers being exempt from paying said fee
  • Other international airports are located in strategic areas like Mactan (cebu), Clark, Subic and Davao.

 

Airport Transfers:

  • Larger international hotels provide free direct transfers from port ot specific areas around central Manila. Before departing, it is advisable to check with travel agent about hotel courtesy buses or cars
  • Taxis (both metered or contracted/prepaid around airport lounges) are readily available

 

Principal Commercial Centers:

  • Manila is the capital of the Philippines
  • Makati, Ortigas, Fort Bonifacio and Alabang are Metro Manila’s major business and commercial districts
  • Other principal commercial oases are Cebu City in the Visayas and Davao in Mindanao

 

Conventional business hours (with certain flexitime and multi-shifting arrangements):

  • Government: 8am-5pm; Mondays-Fridays
  • Banks: 9am-6pm (with 3 pm cut-off time for certain transactions); Mondays-Fridays
  • Commercial Offices: 8am-5pm; Mondays-Fridays
  • Shops/Malls: 10am-9pm; Mondays-Sundays (with longer shopping hours on Fridays-Sundays)

 

Passports/Visas:

  • Visa free for citizens of ASEAN countries for 21 calendar days
  • Visitors wishing to stay for longer than 21 days require a visa
  • Visas can be obtained from Philippine Embassies and are usually processed within 3 working days

 

Data taken from The Board of Investments website (http://boi.gov.ph/pdf/basicfacts.pdf):