The Philippine business environment is highly personalized. A proper introduction by a trusted intermediary is the best way to enter this market.
The Country Commercial Guide (CCG) presents a comprehensive look at the Philippines’ commercial environment. This guide reviews economic and political conditions and trends, identifies commercial opportunities for world to export and investment, and reviews the overall investment climate in the Philippines. CCGs are prepared annually at Embassies and represent the combined efforts of several countries Government agencies. who are interested in the doing business in the Philippines .
Key Economic Indicators and Trade Statistics
1) The Philippines has the twelfth largest population in the world and is the fourth-largest English-speaking country. It also has one of the youngest populations in the world, with more than one-third under the age of 35. The country’s population growth is likely to drive economic growth for the next several years.
2) In 2013, the economy showed resilience despite a number of natural disasters, most notably Typhoon Haiyan and a major earthquake in Bohol, as well as volatile financial markets following U.S. signals and subsequent announcements to reduce Quantitative Easing . The Philippine GDP rose by 7.2 percent in last year, second only to China in the Asia region.
3) Consumer spending and capital formation, led by construction and robust investments in durable equipment and infrastructure, fueled growth on the expenditure side.
4) On the production side, the services sector continued to drive the economy’s growth, although the industrial sector, spurred in part by a more robust expansion in manufacturing output, recently contributed more to GDP growth.
5) Average year-on-year consumer price inflation slowed from 3.2 percent in 2012 to three percent in 2013, which was at the low end of the 3-5 percent range targeted by the Philippine Central Bank.
6) However, inflation accelerated towards the latter part of 2013 due to Typhoon Haiyan-related supply shocks to the heavily-weighted food index. The Monetary Board announced that the future inflation path is likely to stay within the target ranges of 4-5 percent in 2014 and 3-4 percent in 2015.
Political Situation and Other Issues that Affect Trade
The political situation in the Philippines is considered to be stable. Philippine voters elected President Benigno S. Aquino III on May 10, 2010, by a wide margin, to a single six-year term, in the country’s first nationwide automated elections. Mid-term elections were held in 2013 under generally peaceful conditions, with Aquino’s slate of candidates winning nine of the twelve available seats in the Senate.
On March 27, 2014, the Philippine Government and the Moro Islamic Liberation Front signed a comprehensive peace agreement that paves the way for the creation by 2016 of a new, autonomous political entity called “Bangsamoro” for the predominately Muslim areas in the conflict-prone southern Philippines.The Philippines is considering but has not yet signed on for the negotiations of the Trans-Pacific Partnership agreement.
Graft and Corruption: The Aquino Government has made major strides in fighting graft and corruption. Over the last year, however, a major corruption scandal involving the diversion of billions of pesos in development aid from government coffers has resulted in the arrest of three senators and allegedly several other high-profile legislators and their staff. Corruption remains a major constraint to business and outside investment. Despite the country’s recent progress, Transparency International still ranks the Philippines in the lower half of its latest survey (105/179).
Ineffective Judicial System: A severe shortage of judges and prosecutors, corruption, and a weak record of prosecution plague the judicial process. Most cases take many years to reach a final verdict.
Limited Ownership: The Philippines has restricted foreign ownership in selected industries.
Regulatory System: Product registration, product standards, and environmental and labeling requirements place restrictions on certain products.
Value-Added Tax (VAT): The VAT is a 12 percent tax levied on the sale of all goods and services, including the imports of goods into the Philippines.
Best prospects for U.S. companies in the Philippines are information and communication technology , medical, electric power (including renewables), and water resources, respectively.
ICT companies in particular may find opportunities in providing equipment and services to the growing business process outsourcing (BPO) sector, which is growing at a rate of 15 percent a year. U.S. medical technology is widely used in private hospitals in the Philippines.
Energy production, conversation and efficiency are top priorities as the country is presently operating on low reserve margins and at high rates, with many remote areas suffering blackouts.
Many of these sectors are further intertwined in the current Philippine government’s Public-Private Partnership program targeting those projects of priority to the government.
The Government of the Philippines actively seeks foreign investment to promote economic development of these PPP projects. Eight projects have been rolled out so far, covering roads, airports, schools, and an orthopedic hospital.
Other promising sectors include franchising, defense and aviation, and security. • The Philippines ranks in the top 10 markets in the world for U.S. food and beverages and continues to be a promising market for U.S. companies in this sector
Asian Development Bank
The Asian Development Bank, Asia’s premier multilateral development institution, is headquartered in Manila. U.S. firms are advised to explore the lucrative business opportunities that are derived from the US$22 billion that the ADB awards it 45 developing member countries annually. Major sectors financed by ADB include energy, transport, water supply, education, agriculture, and other development-related initiatives. ADB also lends directly to the private sector through its Private Sector Department. U.S. firms are competitive in bidding for ADB projects and have won nearly US$9 billion in ADB contracts since 1966.
Share your ideas and feedback
Please give your comments and advise after reading this article , so we can improve our skill and ideas which we use in this article .