BCI College - Why Invest in the Philippines?

The Philippines is known as the third largest English speaking country in the globe.  The country is also known for its unique edge over neighboring countries with regard to labor quality.  Its workforce is simply trainable and well skilled.  Flanked by the South China Sea and the Pacific Ocean, the strategic location of the country makes it a critical portal to some 500 million people in the Association of South East Asian Nations (ASEAN) market.  The Philippines offers vast trade opportunities and serves as an ideal base for business.  The Philippines is also the best Asian country in terms of overall quality of émigré life, considering its high cultural compatibility with emigrants, housing, recreational and sporting facilities, quality healthcare, and high standard educational institutions.  

The Philippines is an archipelago abundant in natural resources.  With over more than 7,100 islands, this Pearl of the Orient boasts wondrous white and black sand beaches, making it eminently enticing to vacationers and tourists.  The country's astounding marine biodiversity holds refuge to a wide array of flora and fauna.  The Philippines is also one of the biggest producers of gold and copper in the world.  

Considering the Philippine's strategic location, adept workforce, and abundance in natural resources, the cost of doing business in the country is surprisingly low, with wages reduced to less than one-fifth of that in the U.S. Communication.  Housing and electricity costs can go as low as half of the costs in the U.S. Foreign companies currently outsourcing programming and business processes to the Philippines earn 30 to 40 percent business cost savings, 15 to 30 percent call center services, and 35 to 50 percent application systems and software development.  However, infrastructures in the Philippines trail behind those of comparable countries.  Furthermore, weather conditions place a common threat on those infrastructures due to frequent typhoons.  Business policies of the Philippine government tend to be investor friendly.  However, the government had been plagued with severe corruption in the past, which is being addressed by the new administration at this time.  Despite such, investors can eclipse this dilemma by having the right representative in the public and private network such as a foreign investor liaison (FIL).  

The Philippine government has allowed more private sectors to participate in the development of infrastructure and services through privatization.  The innovative Build-Operate-Transfer approach has been approved by the government.  Foreign ownership of up to 100 percent is also permitted in almost all economic areas, except for the banking industry where a foreign company can only own up to 60 percent.  Attractive incentives are provided in many Special Economic Zones and Industrial Estates, which are being promoted as industrial, agricultural, and recreational hubs.  

Private consumption is the primary driver of the Philippine economy as it embodies more than 70 percent of GDP, which is basically of high level compared to regional peers.  This private consumption is also powered by high levels of remittances from Overseas Filipino Workers (OFWs).  Remittances represented 10 percent of the GDP in 2008 with over $16 billion.  The Philippines holds strong export sectors in electronics and computers, which represent two-thirds of the total exports.  Imports generally concern electronic parts that are assembled and then exported, foods, commodities, and oil. 

Many have considered the Philippines as the new big investment center in Asia.  In 2010, the Japan External Trade Organization (JETRO) reported that the Philippines has a lower average labor cost at $130 than in China at $141 and $139.  The country also entertains special tax for foreign investors for special industries.  

It is highly advised that average to large scale foreign investors have a private foreign investor liaison (FIL) to be able to properly network with the perfect professional and transparent business individuals, government representatives and services.  A good private foreign investor liaison is often a person who has excellent business connections and industry reputation.  These individuals are high appreciated by high net-worth investors when dealing with the Philippine government; business services such as accounting and law firms; as well as other business because they know the best people to trust business investments to.  

A private foreign investor liaison is usually paid by the hour from around $200 above per hour consultancy or can be contracted for a specific time period for a certain contract salary.  They are also entitled to obtain buyer and seller commissions from Philippine prime real estate, business services, commercial property sale, business/investment brokerage sales, manufacturing and trade fees of 5-35 percent depending on the principal amount.