The following are the advantages to setting up in the Philippines:
- The English Speaking Population
- Highly Skilled Population
- Strong Banking Laws (Particularly Concerning Foreign Currencies)
Given the foregoing, the Philippines is a good candidate for:
- Business Process Outsourcing
- High-Value, Low-Volume Manufacturing for Export
- Software and Information Technology Development
- Retirement Homes/Communities
As a lawyer, I am often approached about the nitty-gritty of the law. Minimum paid-up capital requirements, tax implications of a transaction, permissible foreign participation. I get very little opportunity to sit back in my chair, in the presence of a client, and talk about the notable opportunities that the Philippine legal landscape presents to the enterprising businessman. I guess it’s a good thing I have the website then.
The Philippine Advantages
There are three advantages to selecting the Philippines as the country to set up shop and four industries that I believe would benefit the most from these advantages.
1. English Speaking Population
This requires little elaboration. Any English speaking person who comes to the Philippines is going to discover immediately that they will not have any difficulty being understood. The Philippines is so notable as an English speaking nation in Asia that an entire industry has cropped up around teaching Japanese and Korean students to speak and be immersed in English. They also adjust well to western sensibilities as a consequence of speaking English fluently.
2. Highly Skilled Population
The Philippines has a good public educational system and a robust system of private education that cranks out a steady stream of highly-skilled and capable workers. A notable caveat in this statement though is that the Philippines does not have the most robust technical vocational system. The skills are therefore abundant in the technical, supervisory and managerial levels but not so much in the line worker role. This is why the common trope of Filipinos in the Middle East are Domestic Helpers or Engineers. There is scarcely a middle ground because we don’t really train for it.
3. Strong Banking Laws
The banking laws protect to a very high degree the secrecy of bank deposits. Especially those denominated in a foreign currency. It is a rather complicated legal issue, but for your purposes it is sufficient to know that the government coming to snoop on foreign currency kept in a bank in the Philippines is not legally possible without your consent.
There are advantages that are not stated in the foregoing because these are the ones that I know are peculiar to the Philippines. There are others like tax Incentives or cheap labor that exist in varying or greater degrees in other countries in South East Asia and so I consciously omit them.
A lot of the Filipino Business people I talk to are quick to make blanket statement about how we are losing out to our ASEAN Neighbors in terms of competitiveness. There is truth to that statement, I wont deny that. It doesn’t mean though that there aren’t a few areas which can present notable opportunities.
1. Business Process Outsourcing
This is perhaps the worst kept secret in the Philippines. All manner of multi-national and service provider is taking pains to set up in the Philippines because they know the pool of talent here for setting up a BPO. They need English Speakers to man the facilities. They need skilled HR Professionals and Executives to run the company. They earn exclusively in foreign currencies. BPOs are the most obvious of the ways to profitably bring the foregoing advantages together.
2. High Value, Low-Volume Manufacturing for Export
Filipinos are comparatively more expensive in terms of labor cost than surrounding countries. This is not as much of an issue for product categories where cost to produce is not as sensitive of a factor. The abundance of highly skilled labor that speaks English makes a manufacturing outfit in the Philippines an ideal candidate for an enterprise looking to set up a flexible manufacturing system. These will likely be luxury or artisanal goods for select group of end users. The government entities to get involved are PEZA or the BOI.
3. Software and Information Technology Development
The Philippines lags behind in information technology infrastructure but it doesn’t take much bandwidth to participate in a virtual team meeting or to turn in a piece of code. The Philippines has great untapped potential in this area. Software development in other countries is constrained by communication barriers. The Filipino’s English proficiency mitigates this problem. The highly skilled population means that there is a large talent pool to draw upon. The fact that all of the transactions will likely be denominated in foreign currency is also a way to take advantage of the strong banking laws that exist in the country.
4. Retirement Homes/Communities
This is perhaps the most capitally intensive of the foregoing suggestions. It is the one that I feel has the greatest potential though. The fast approaching demographic shift that is set to occur in western countries makes it a near certainty. The Philippines is lauded for its beautiful environment. It is only natural that a company step in to try and make it home for people looking to retire from their countries. Filipinos speak English so they would be ideal as caregivers for elderly retirees. There is a population of highly skilled workers who could make and manage a large endeavor such as this. The bank secrecy laws assures that retirees and the profits of the enterprise are out of the reach of scrutiny of regulators.
The only caveat to this last suggestion though is that it would likely need the collaboration of a Filipino and Foreign entity. First, this is because of the legal limitation placed on foreigners that they cannot own land. Second, an entity would need to exist in another country that could market the service to retirees. There are government offices in the Philippines like TIEZA or the BOI that exist to make these kinds of large projects doable.
Thank you for making it to the end of my article! I typically end my articles by saying “I hope you never need my advice” but in this case I will just say I hope you invest in my country!
Atty. Hourani practices law in Cebu City, Philippines. If you would like to set an appointment with him, you may reach him here.