23 June 2017
A Practical Guide to Doing Business in the Philippines
Strong export and consumption demand, coupled with growing remittances and low employment, has underlined the outstanding performance of the Philippine economy over the past few years, with the country acceded to investment-grade sovereign ratings. The IMF’s World Economic Outlook, April 2017 projects the Philippines to be the fastest growing economy over the next two years. Cashing in on its demographic dividends plus a highly educated workforce, the Philippines is emerging to be an attractive place to do business, which will be helped further by an expected surge in Chinese investment with the Philippines seeking stronger ties with China.
There are a number of different industries to invest in the Philippines, such as manufacturing, construction, etc. This business guide provides practical information for Hong Kong companies on investing and doing business in the Philippines. Among the key elements of the Philippine government’s Investment Priorities Plan (IPP) for 2017-2019 are a renewed focus on the manufacturing sector and a push towards shifting investments to rural areas. In the wake of the 2016 presidential elections, the Philippine government has moved to fast-track the approval of development projects as a bid to boost investor confidence, in addition to the attempt to streamline the country’s investment environment.
There is a greater commitment from the government to improve infrastructure with public-private partnerships (PPP) being increasingly adopted. Yet, PPP projects are to favour a hybrid model, with the Philippine government inclined to undertaking construction of many infrastructure projects, and private investors then operating and maintaining the facilities. Besides, larger PPP contracted companies are given the greenlight for public listings.
The Philippines is ranked 57th out of 138 economies in the World Economic Forum’s Global Competitiveness Report 2016-17 and 99th out of 190 economies in the World Bank’s Doing Business 2017 report. Aside from improving economic fundamentals and stronger attempts of government reforms, both reports highlight many areas of challenge, including the following:
- Starting a business – a large number of procedures need to be followed and restrictions of foreign ownership in certain industries remain
- Infrastructure – major improvements are needed to improve the transport infrastructure in light of significant congestion problems
- Law enforcement and implementation, despite good laws being in place
- Corruption and bureaucracy
- Regulatory Environment
- Establishing a Presence
- Intellectual Property Protection
- Staff Recruitment
- Tax Considerations
- Import/Export Procedures
- Further information