Doing business in the Philippines Seizing opportunities Issue 2, January 2014 淘宝店铺 “Vivian研报” 收集整理 获取最新报告及后续更新服务请淘宝搜索“Vivian研报”The Philippines Why do business in the Philippines Country snapshot Selected key investment sectors Foreign investments in the Philippines Investor incentives Enterprises registered with the Board of Investments Enterprises registered with the Philippine Export Zone Authority Enterprises registered with Subic Bay Metropolitan Authority and Clark Development Corporation Regional Headquarters and Regional Operating Headquarters Setting up and operating a business Forms of business organization Organizing a corporation Rules on mergers and acquisition Accounting and reporting requirements Listing on the Philippine Stock Exchange Taxation Business taxation Withholding taxes Indirect taxes Labor Employee rights and remuneration Termination of employment Labor-management relations Employment of foreigners Cost of doing business Registration, application and fling fees Costs in PEZA Ecozones Costs in Subic Bay Freeport Costs in Clark Freeport Zone Contents34911131416171821 22 22 24 24 24 27 27 28 29 31 Doing business in the Philippines Seizing opportunities 3 Why do business in the Philippines Uncertainty continues to weigh down the global economy outlook. The International Monetary Fund (IMF) notes that global growth will still be weak in 2014, and that while advanced economies are showing signs of pick up, emerging market economies, which still account for most global growth, are losing more momentum than previously thought. Despite the grim prognosis, the Philippine economy remains a standout. Nine months into 2013, the country’s Gross Domestic Product (GDP) has grown by 7.4%, faster than the 6.7% expansion in the same period a year ago and among the fastest across Asia. The country’s economic managers remain optimistic that the 7% growth projection for 2013 can still be achieved, notwithstanding the damage caused by natural calamities in the fourth quarter. The government is forecasting GDP growth to be between 6.5% and 7.5% in 2014, with some analysts even projecting a sustained annual expansion of as much as 10% until the end of the decade provided fscal and economic roadblocks are taken care of. The strong performance of the Philippine economy is largely driven by the industry and services group, with construction; manufacturing; fnancial intermediation; real estate, renting, and business activity; and other services as the primary growth drivers.On the demand side, increased household and government spending, together with an upsurge in capital formation, contributed to the economy’s solid showing. Business confdence in the Philippines remains bullish according to the latest Business Expectations Survey conducted by the Bangko Sentral ng Pilipinas (Central Bank of the Philippines). Although the overall confdence index (CI) slightly dipped in the third quarter relative to the second quarter, the Central Bank expects the country’s business outlook to hit an all-time high by the last quarter of 2013. Expectations have been buoyed by the anticipated brisker business during the Christmas season, the continued increase in orders and projects resulting in higher production volumes, and the expansion of businesses and new product lines. Favorable macroeconomic fundamentals and the country’s investment-grade rating have further boosted business confdence. Moody’s Investor Service’s recent upgrading of the Philippine’s credit rating to Baa3 completes its climb to investment rank, underpinning the positive investment outlook in doing business in the country. Earlier this year, three major credit raters, namely, Fitch Ratings, Standard & Poor’s Rating Services (S&P), and the Japan Credit Rating Agency Ltd. (JCRA), gave the country investment- grade status. The global business community is also taking notice of the Philippines’s robust growth outlook. According to the World Economic Forum (WEF), the country is ranked 59th out of 148 economies in the 2013-2014 global competitiveness index, jumping six places from the previous year’s ranking. This follows two consecutive years of 10-notch jumps, which is among the largest ranking gains posted by any country. The Philippines also offers generous incentives to qualifed enterprises. These include income tax holidays of up to six years, tax and duty free importation of raw materials and equipment subject to certain conditions, and simplifcation of customs procedures, among others. Robust growth supported by sound economic fundamentals, rising business confdence, improved competitiveness outlook, and a multitude of business incentives have made the Philippines both an ideal and leading investment destination. The country offers unique and sustainable opportunities for growth in a global environment struggling with volatility and diminished economic prospects. The PhilippinesCountry snapshot Geography The Philippines is located in Southeast Asia, around 800 kilometers from the Asia mainland. It is one of the largest archipelagos in the world, with over 7,100 islands and a total land area of approximately 300,000 square kilometers.The country is divided into three main geographic areas:Luzon, where Metro Manila is located, Visayas and Mindanao. Climate The Philippines has a tropical climate with three seasons: summer, or the hot dry season, from March to May, the rainy season from June to November, and the cool dry season from December to February.Temperatures usually range from 21°C to 32°C, with the yearly temperature averaging 26.6°C in Metro Manila. The driest month is February, with 13 mm average rainfall, while the wettest month is July, with 432 mm average rainfall. Population The population of the Philippines in 2013 is estimated at 98.7 million. Outside Metro Manila, the most populous cities are Metro Cebu, Metro Davao, Zamboanga, Cagayan de Oro and General Santos. Language Filipino is constitutionally designated as the national language of the Philippines and, along with English, as one of two offcial languages. Many other languages and dialects are spoken all over the country. Currency Philippine Peso (PHP); PHP1 = 100 centavos The average exchange rate between January and November 2013 was PHP42.28:USD1 Time 8 hours ahead of Greenwich Mean Time (GMT) Public holidays New Year’s Day (January 1), Maundy Thursday and Good Friday (varies), Araw ng Kagitingan or Valor Day (April 9), Labor Day (May 1), Independence Day (June 12), Ninoy Aquino Day (August 21), National Heroes Day (August 27), All Saints Day, (November 1), Bonifacio Day (November 30), Eid ul-Adha (varies), Eid ul-Fitr (varies) Christmas Day (December 25), Rizal Day (December 30), Last Day of the Year (December 31). Political structure The Philippines has a presidential system of government, the president being limited to a single six-year term. Congress is modeled on the United States system and comprises two directly elected bodies: the Senate and the House of Representatives. The judicial power is vested in the Supreme Court which can rule on the constitutionality of government actions. Foreign trade The Philippines has opened its economy to foreign markets and established a network of free trade agreements with several countries.Its main merchandise exports are electronic products (primarily semiconductors), woodcraft and furniture, metal co