Country GuidePhilippines

From Global Connections

According to UNCTAD's World Investment Report 2015, the Philippines is one of the top 10 recipients of foreign direct investment (FDI) in East and Southeast Asia. The Philippines received FDI inflows of USD5.72 billion in 2015.

The Philippines ranked 103rd in the World Bank's 2016 Doing Business rankings, down six places from 97th in the year prior. Despite a fall in its overall position, the rankings recognised reforms that the Philippines had enacted to make doing business easier. This included making starting a business easier by streamlining communications between the Securities and Exchange Commission and the Social Security System and thereby expediting the process of issuing an employer registration number.

Key facts about starting a business in the Philippines:

  • It takes 16 procedures and approximately 29 days to start a new business in the Philippines; this process is detailed in the Doing Business in chapter
  • Obtaining an Alien Employment Permit costs PHP8,000 for one year; employment regulations are discussed in detail in the Labour chapter
  • It takes approximately 21 days and costs PHP43,043 to apply and obtain a building permit and all ancillary permits at the Office of the Building Official
  • Companies operating in the Philippines spend, on average, 183 hours per year 'Paying Taxes'; the tax regime is outlined in the Tax chapter
  • Large or public entities must use Philippine Financial Reporting Standards (PFRS), SMEs are obliged to use PFRS for SMEs; further details can be found in the Audit chapter
  • Companies wishing to list on the first board of the Philippine Stock Exchange must, amongst other requirements, have recorded a profit for the past three fiscal years; this is discussed further in the Finance chapter

The Philippines's attractiveness as an investment location can be attributed to a number of factors, including its skilled workforce and large domestic market. Nevertheless, in order to make an informed decision, it is critical to understand the nuances of any local regime. The manner in which people conduct business in the Philippines may differ from the home countries of investors. Furthermore, variations on these distinctions may exist depending on the region and industry in which a company operates.

The Philippines's official language is Filipino. However, it is only spoken by around 55 per cent of the population. English is generally used for educational and commercial purposes.

Business attire is conservative. Punctuality is expected when doing business in the Philippines. A handshake is the typical business greeting and business cards will usually be exchanged after initial introductions.

Those looking to establish a business in the Philippines may look across Southeast Asia for alternative options. However, the Philippines can be differentiated on the following factors:

  • The Philippines is the 12th largest country in the world in terms of population
  • An open economy that allows 100 per cent foreign ownership in almost all sectors
  • Strategically located as a critical entry point to over 500 million people in the Association of Southeast Asian Nations market; trade policy is discussed further in the Trade chapter
  • The Philippines has a highly educated workforce and a literacy rate of 94.6 per cent, among the highest in Asia
  • The Philippine government has doubled infrastructure spending to five per cent of GDP; an overview of the country's current infrastructure can be found in the Infrastructure chapter

The Philippines's attractiveness as a foreign direct investment location can be attributed to its liberalised economy and access to the ASEAN markets. Nevertheless, businesses operating in the Philippines must remain aware of potential challenges. The government still restricts foreign ownership of companies, land and investment in specific sectors. Moreover, although improving, corruption remains a problem across the country; the Philippines ranked 95th on Transparency International's Corruption Perceptions Index 2015.

This guide has been developed to provide businesses with an overview of the Philippines, its legal regime, start-up and market entry considerations, tax and customs requirements and a general summary of the factors that may affect the decision to do business in the Philippines. However, the information contained in this document is generic in nature and you should not act or rely on it without obtaining specific professional advice.

Please note that the Country Guides may only be available in English.

Useful Links

1 The Philippine Business Registry
2 Bureau of Internal Revenue
3 Department of Finance: Bureau of Customs
4 Bureau of Immigration
5 Intellectual Property Office of the Philippines
6 Invest Philippines
7 Department of Labour and Employment

 

Sources

1 UNCTAD World Investment Report
2 Doing Business Rankings
3 Employment Pass - Used PracticalLaw which is a legal service Grant Thornton subscribes to
4 Filipino Language Stats
5 12th Most Populous country
6 Infrastructure Spend 5% GDP
7 TI Corruption Perceptions Index

 

Download Country Guide - Philippines (3.45MB, PDF)

Disclaimer

This document is issued by by The Hongkong and Shanghai Banking Corporation Limited - Philippine Branch (the Bank).  This guide is a joint project with Grant Thornton. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. It is not intended for distribution to anyone located in or resident in jurisdictions which restrict the distribution of this document. It shall not be copied, reproduced, transmitted or further distributed by any recipient. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining specific professional advice. Whilst every care has been taken in preparing this document, the Bank and Grant Thornton makes no guarantee, representation or warranty (express or implied) as to its accuracy or completeness, and under no circumstances will the Bank or Grant Thornton be liable for any loss caused by reliance on any opinion or statement made in this document. Except as specifically indicated, the expressions of opinion are those of the Bank and are subject to change without notice. The materials contained in this document were assembled in January 2016 and were based on the law enforceable and information available at that time.

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