BUSINESS IN
THE PHILIPPINES

The Philippine economy has made a phenomenal recovery that has caught the eye of the international business world. The government is completely committed to free enterprise and its liberalised business laws have opened more investment areas to 100% foreign equity, have granted incentives to foreign investors at par with other ASEAN countries and have simplified investment procedures.

 

Aside from these, its been its strategic location for global exports, the continuous improvement of its infrastructure and the existence of quality manpower made up of educated, adaptable, hard-working, English-speaking, computer-literate persons that have all contributed to making the Philippines an attractive business location which assures foreign investors and business-goers a profitable return on their investments.

 

 

THE BENEFITS

 

THE WORKFORCE

The Filipino workforce is considered to be one of the most compelling assets the Philippines has to offer.

  • With higher education priority, the literacy rate in the Philippines currently stands at 94.6%.

  • English is taught in every school across the nation and is one of the country's official languages, making the Philippines the world's third largest English-speaking country.

  • An estimated 360,000 students graduate from university per year.

    • Approximately 50% of graduates have degrees in business administration, marketing and administration.

    • Approximately 14% of graduates have degrees in computer science and programming.

 

THE LOCATION

  • The Philippines is located in the heart of Asia, the fastest growing region.

  • It is located within 4 hours flying time from major capitals of Asia and just 7.5 hours from Sydney, Australia.

  • It is a critical entry point to over 500 million people in the Association of Southeast Asian Nations (ASEAN) market.

  • It is a gateway of international shipping and air lanes suited for European and American businesses.

 

THE FIRST-CLASS LIFESTYLE

  • With 7,107 islands, the Philippines boasts world-renown beaches and breathtaking sceneries that offer soothing leisure and relaxation spots for tourists and residents alike.

  • A second home to expatriates and an increasingly popular tourist destination for international visitors, the Philippines offers accessible and affordable business centers, housing, education, hospitals, shopping malls, hotels and restaurants, beach resorts and recreation centers.

  • The Philippines is widely commended for its warm people, openness to varied cultures and global outlook.

 

THE RESOURCES

  • The Philippines offers diverse natural resources, from land to marine to mineral resources.

  • It is the largest copper producer in Southeast Asia and among the top ten producers of gold in the world.

  • The oceans of the Philippines are home to over 2,145 fish species - four times more than those found in the Bahamas.


 

THE FISCAL INCENTIVES

Board of Investments (BOI) registered enterprises are exempt from:

  • Upon expiry of the Income Tax Holiday, a tax of 5% on gross income earned is paid by the enterprise in lieu of all local and national taxes.The payment of income tax for 4-6 years, dependent on the status and project type (Income Tax Holiday or ITH)

  • Tax and duty on importation of raw materials, capital equipment, machineries and spare parts.

  • Wharfage dues and export tax, duty, impost and fees.

  • Value-added tax subject to compliance with BIR and PEZA requirements.

  • Payment of any and all local government imposts, fees, licenses or taxes. However, while under Income Tax Holiday, exemption from real estate tax is not offered. Machineries installed and operated in the economic zone for manufacturing, processing or for industrial purposes are exempt from real estate taxes for the first 3 years of operation. Production equipment that is not attached to real estate shall be exempt from real property taxes.

 

NON-FISCAL INCENTIVES

Board of Investment (BOI) registered enterprises are offered:

  • Simplified customs procedures for importation of equipment, spare parts, raw materials, supplies and exports of processed products.

  • Non-resident Foreign Nationals may be employed by PEZA-registered Economic Zone Enterprises in supervisory, technical or advisory positions.

  • Special Non-Immigrant Visas with multiple entry privileges for the following non-resident Foreign Nationals in a PEZA-registered Economic Zone Enterprise:

    • ​Investor(s)

    • Officer(s)

    • Supervisory positions

    • Technical positions

    • ​​Advisory positions

    • The spouses and unmarried children (under 21 years of age) of said foreign nationals are extended the same visa as the employee.

    • PEZA extends Visa Facilitation Assistance to  foreign nationals, their spouses and dependents.

 

Find out more about investment and business incentives here.

 

 

BUSINESS GUIDES

 

EXPORT OPPORTUNITIES

 

The Philippines is one of the more dynamic markets in the global economy. Its general macroeconomic outlook improved significantly in recent years and the country has made promising headway towards more sustainable and equitable economic development. 

 

Australia and the Philippines are both parties to the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) – the most comprehensive trade agreement that ASEAN has negotiated. This free trade agreement sees extensive tariff reduction and elimination commitments, the promotion of greater certainty for Australian service suppliers and investors, the development of a platform for ongoing economic engagement with ASEAN through a range of built-in agendas, economic cooperation projects and business outreach activities as well as regional rules of origin which will provide new opportunities for Australian exporters to tap into international supply chains in the region.

 

Export opportunities include:

 

 

 

 

 

 

WINE

In 2012, wine sales to the Philippines grew by eight per cent in volume, equating to approximately 14 million litres, with the Philippines ranking as Australia’s ninth emerging market for wine. The popularity of red wine has surged. This is particularly true for Australian wines, where reds make up 83 per cent of wine exports to the Philippines. The climate also accomodates a strong market for chilled white wines.

 

TRENDS AND OPPORTUNITIES

  • The Philippines does not produce any grape wine, which means competition comes from international suppliers.

  • The majority of wine in the Philippines is sold through supermarkets and other outlets, while around a third of sales come from restaurants, hotels and other establishments.

  • Wine is usually sold in higher-end venues in areas frequented by expatriates and tourists, such as Metro Manila, Cebu and Boracay.
     

TARIFFS

  • As a result of the ASEAN Australia New Zealand Free Trade Agreement, tariffs on Australian red and white wines will be phased out by 2015, bringing them into line with sparkling wines, which are already free of tariffs.

  • The Philippine Government currently levies an expanded Value Added Tax (VAT) of 12 per cent and excise duties at various rates on all alcoholic beverages.

 

INDUSTRY STANDARDS

  • Wines must be registered with the Philippines' Foods and Drug Administration (FDA) before it can be imported.

  • The FDA requires that a Certificate of Free Sale be submitted at the time of registration.

    • This can be obtained from Wine Australia or the local Chamber of Commerce 

 

MARKET ENTRY

Australian companies interested in exporting wine to the Philippines should consider:

  • Appointing a distribution partner to handle importing and customer liaison; 

  • Setting up a representative office in the Philippines;

  • Contract manufacturing and packing in Australia;

  • Working with an Australian consolidator to share distribution with other Australian companies that have a synergistic product range.

 

AGRIBUSINESS

As a market, the Philippines remains a net importer of agri-food products, with wheat and dairy accounting for one fifth of all agricultural imports. Of this, Australia supplies 41 per cent of wheat and meslin. Australian agribusiness exporters represent a growing percentage of the market and are seen as a reliable source of major commodities and products. Increasingly, Australia is also seen as a provider of innovative agricultural technologies and services that help to enhance productivity; and as a strategic partner in helping the Philippines to improve food security and strengthen supply chains across the archipelago.

 

TRENDS AND OPPORTUNITIES

  • Australia’s counter-seasonality to the northern hemisphere provides an opportunity for exporters to supply the Philippines market; along with the growing demand for Australian grains, flour, temperate-climate fruits and vegetables, stockfeed, feed ingredients and animal genetics for cattle, horses, goats and sheep.

  • Fresh produce: A decision by the Philippine Government to revise the ‘Specific Commodity of Understanding 2 (Conditions for Export of Fruit Fly Host Fruits from Australia to the Philippines)’ has provided an opportunity for Australian producers to increase export volumes, because they can now undertake the cold disinfestation treatment of fruit either in transit or before shipment.

  • Grains: opportunities exist for Australian suppliers of milled wheat. Australian wheat growers may also find opportunities in providing downgraded wheat to feed the Philippines’ expanding livestock market.

 

TARIFFS

  • The implementation of the AANZFTA is helping to strengthen Australia’s commercial ties with the Philippines. In particular, the reduction or elimination of existing tariffs has resulted in substantial new markets for Australian producers. As a result of the agreement, 75 per cent of all agricultural lines are now eligible for zero tariffs.

    • ​Significant gains include:

      • ​The elimination of 10 per cent tariff for citrus and seven per cent for grapes and citrus

      • The elimination of 7 per cent tariff for most stone fruits and apples

      • The elimination of a 3 per cent tariff of wheat exports to the Philippines

      • The elimination of a 3 per cent tariff of rolled or flaked oat grain

 

MARKET ENTRY

  • While some companies are beginning to import directly, most still rely on traders and agents to supply their produce.

  • Australian livestock exporters will often deal with a trader or breeder who sells to other farms, or purchases on behalf of the Government. Co-load or co-shipment arrangements are also happening for larger shipments of cattle.

  • Air-freight shipment of thoroughbred horses and small ruminants like goats and sheep is also becoming more common.

 

MEAT AND MEAT PRODUCTS

The Philippines is the world's thirteenth most populous country, with an annual growth rate of nearly two per cent. This combined with a burgeoning middle class means the demand for meat and meat products is expected to grow significantly over the next 20 years. Like most other South-East Asian nations, Filipinos prefer chicken and pork. Families will spend around 14 per cent of their budget on meat, which is a higher proportion of household income than other countries in the region.
 

TRENDS AND OPPORTUNITIES

  • There are opportunities in the Philippines for Australian suppliers to capture a greater share of meat imports. The Philippines’ expanding economy is resulting in increased consumer purchasing power, which is fostering a growing restaurant and fast-food industry, and an expanding small-goods manufacturing sector.

  • Australian meat exporters are also well placed from a food safety point of view. They are seen as a reliable alternative to producers in Europe and the Americas, which have experienced outbreaks of ‘mad cow’, ‘foot and mouth’ and other diseases which affect food quality.

  • Australia’s reliability provides an opportunity to further bolster its export opportunities, by providing for niche markets such as the supply of Halal meat products. There are more than eight million Muslims in the Philippines.

 

TARIFFS

  • The implementation of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) has resulted in significantly lower tariffs on meat and meat products.

  • There are no longer tariffs on the importation of beef or sheep (mutton and lamb).

  • Tariffs on goat meat and offal are currently being phased down, as are tariffs on meat preparations.

  • In addition, fresh meat is exempt from the payment of a 12 per cent Value Added Tax (VAT).

  • A minimum-access volume (MAV) restriction for pork and poultry continues to be implemented.

  • Producers sending meat and meat products to the Philippines need to ensure they have a Security and Phytosanitary (SPS) Clearance from National Veterinary Quarantine Services, which is part of the Bureau of Animal Industry. The clearance is valid for two months and must be secured prior to the ship-out date from the products’ port of origin.

 

MARKET ENTRY

  • ​The market for imported meat and meat products in the Philippines is clearly segmented. The two distinct sectors are:

  • ​Supermarkets, deluxe hotels and first-class restaurants for prime cuts

  • Fast food chains and smallgoods processing companies who use manufacturing grade meat

  • A high level of bureaucracy associated with the importation of meat products means that Philippine manufacturers do not necessarily buy directly from the producer. Therefore, Australian exporters may consider the following strategies:

    • ​engaging a distribution partner to handle importation and customer liason;

    • bringing in a fulfilment company to manage storage and shipping to customers (with key customer accounts handled from Australia);

    • working with an Australian consolidator to share the distribution of shipping with other Australian companies.

 

BUILDING AND CONSTRUCTION MATERIALS

The Philippines’ building and construction industry posted a robust year-on-year growth of 86 per cent in 2013, while more than A$22 billion in projects commenced in 2014. Aggressive growth in Business Process Outsourcing (BPO) to the Philippines is driving the need for new office space while tourism is also driving demand for new construction projects, with estimates that more than 10,000 new hotels will be built by 2016. It is estimated that more than three million homes are currently needed across the mass-housing, middle income and high-end markets. This demand is likely to rise to more than six million units by 2030.

 

TRENDS AND OPPORTUNITIES

  • The Philippines is heavily dependent on imported building and construction materials, with high demand across the sector.

  • Basic materials such as cement, aggregates, reinforcing steel bars, galvanised iron sheeting and lumber are imported in large quantities, primarily because of shortfalls in local production and its comparatively high cost.

  • As local developers become more aware of green building practices, demand is growing for sustainable construction products and energy saving materials. 

  • Opportunities exist for Australian companies that are able to supply:

    • green building materials

    • new mass-housing technologies

    • prefabricated housing

    • insulation products

    • steel products

    • pre-fabricated panels

    • aluminium products

    • construction equipment

    • contracting/consulting services

  • Another area of opportunity for Australian companies is by entering into Public Private Partnerships (PPPs) with the Philippine Government. This program is the centrepiece of the Aquino administration’s efforts to implement its infrastructure development agenda.

 

TARIFFS

  • The implementation of the ASEAN Australia New Zealand Free Trade Agreement (AANZFTA) means that most building and construction projects now enjoy zero tariffs. See the AANZFTA Tariff Finder for more information.

  • The Philippine Government imposes a Value Added Tax (VAT) of 12 per cent on all products and services sourced locally.

 

MARKET ENTRY

  • Australia’s proximity to the Philippines and its reputation as a supplier of quality materials are important factors in penetrating the market. This is complemented by the Philippine Government’s support of joint ventures between local and foreign firms, especially in areas where local production is inadequate.

  

 

 
 
 
 

LOCATION

Innovation House, 50 Mawson Lakes Blvd, Mawson Lakes, 5095

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HOURS

Monday: 9.30am - 3.00pm

Tuesday: CLOSED

Wednesday: CLOSED

Thursday: 9.30am-3.00pm

Friday: 9.30am - 3.00pm

Saturday: CLOSED

Sunday: CLOSED

Public Holidays: CLOSED

Visits by appointment only.

Walk-ins cannot be accommodated.