Key Factors to Consider When Setting Up a Business in the Philippines
Blogs
July 17, 2023
The Philippines has emerged as one of the most promising investment destinations in the world, attracting foreign businesses seeking growth opportunities in Southeast Asia. However, before venturing into the Philippine market, it is crucial to carefully consider various factors to ensure a successful and smooth business setup. This article will highlight the important considerations foreign businesses have to take into account when looking to establish their presence in the Philippines.
Market Research and Adaptation
Conducting thorough market research is crucial to understanding the local consumer base and identifying market opportunities in the Philippines. The country’s diverse cultural and demographic factors necessitate adapting products or services to cater to local preferences. This includes understanding consumer behaviors, preferences, and purchasing power. Adapting marketing strategies to resonate with the target market and localizing product packaging and messaging can significantly enhance market penetration. As such, it is advisable to engage with local marketing agencies or to conduct focus groups and surveys to gain valuable insights into consumer preferences and to allow your business to tailor its offerings accordingly.
Regulatory and Legal Considerations
Navigating the regulatory and legal landscape is essential for a successful business setup in the Philippines. After all, businesses must complete registration and licensing processes to operate legally. The Securities and Exchange Commission (SEC) handles the registration of corporations, while the Department of Trade and Industry (DTI) manages registration for sole proprietorships and partnerships.
Understanding tax obligations is also vital for effective financial management. Corporate income tax and value-added tax (VAT) are among the key taxes businesses should consider. Engaging with reputable tax advisors can provide guidance on compliance and potential tax incentives. As mentioned earlier, your business may be entitled to certain benefits if you choose to set up shop in a PEZA zone facility.
Protecting intellectual property rights is equally important for businesses entering the Philippine market. Engaging with the Intellectual Property Office of the Philippines (IPOPHL) can provide businesses with guidance on trademark registration, patent applications, and copyright protection. Take note that seeking appropriate legal counsel is crucial to ensure compliance with intellectual property laws and safeguarding the business’s intangible assets.
PEZA Zone Benefits
The Philippine Economic Zone Authority (PEZA) plays a vital role in promoting investments and supporting economic growth in the country. PEZA provides attractive incentives for businesses that choose to locate within its zones. These incentives include fiscal benefits such as tax exemptions, reduced customs duties, and streamlined import and export procedures. By operating within a PEZA zone, businesses can enjoy a business-friendly environment with modern infrastructure, reliable utilities, and essential support services.
Foreign businesses also have the option to choose locations that are not only PEZA zones but are also full-service, master-planned communities. Examples of these developments are the LIMA Estate in Batangas and the Mactan Economic Zone 2 Estate and the West Cebu Estate in Cebu. These communities, developed by Aboitiz InfraCapital, combine industrial, commercial, retail, residential, and institutional spaces to serve the multifaceted needs of locators and residents.
Successful examples of businesses operating within these economic estates and other PEZA zones include manufacturing companies, information technology firms, and business process outsourcing providers. The West Cebu Estate, in particular, has become known for being the shipbuilding capital of the Philippines, hosting 11 locators from medium to heavy industries.
Capital Acquisition
Acquiring sufficient capital is crucial for establishing a business in the Philippines. Foreign businesses have several options to explore. One common option is to seek funding from international banks or financial institutions that specialize in providing loans or lines of credit to international ventures. Another option is to explore the possibility of acquiring funds from venture capital firms and angel investors with a focus on companies that seek international expansion. Crowdfunding platforms can also be utilized to raise capital from global pools of investors, which are usually composed of a large number of people who contribute certain amounts of funds—as donations or in exchange for rewards or shares of equity. Finally, partnerships with local investors or businesses in the target country can also provide access to financing and valuable market knowledge. This last one can be especially valuable in the Philippines, where some foreign businesses are typically required by law to share equity with Filipino-owned companies.
Hiring Personnel
The Philippine labor market offers a skilled and dynamic workforce that can contribute to the growth of businesses seeking to expand in Southeast Asia. When hiring local employees, businesses need to familiarize themselves with national labor laws and regulations to ensure compliance. The Labor Code of the Philippines, in particular, governs various aspects of employment, including wages, benefits, and working conditions.
Developing effective recruitment strategies and partnering with reputable local recruitment agencies can help in securing the right talent for specific roles. Furthermore, for foreign employees, obtaining work permits and visas is essential. Engaging with the Bureau of Immigration simplifies the process and ensures compliance with immigration requirements, enabling businesses to bring in skilled professionals from abroad if necessary.
Overhead and Non-Overhead Expenses
Managing overhead and non-overhead expenses are crucial to maintaining cost efficiency when doing business in the Philippines. Overhead expenses include office rent, utilities, and administrative costs. Exploring cost-effective options, such as locating in areas with lower rental rates or considering shared office spaces, can help reduce these expenses. The rise of co-working spaces provides flexible and affordable solutions for businesses of all sizes.
Non-overhead expenses, on the other hand, encompass things like production costs, logistics, and marketing expenses. If you’re doing retail or e-commerce, adopting efficient supply chain management practices, such as optimizing transportation and warehousing, can help streamline costs. It’s a good thing that the Philippines has a fast-growing e-commerce industry that is supported by an equally thriving logistics ecosystem. Additionally, leveraging digital marketing strategies, such as social media advertising and search engine optimization, can optimize marketing expenditures without compromising reach and effectiveness.
Establishing a business in the Philippines offers significant opportunities for foreign investors. By considering key elements of doing business, such as those discussed above, enterprises can position themselves for success. It is important to recognize the potential of the Philippines’ growing economy and tap into its vibrant market to achieve long-term growth and profitability.
Foreign businesses should approach their entry into the Philippines with careful planning, adaptability, and a commitment to building strong relationships within the local business community. By considering these important factors and leveraging available resources and incentives, businesses can thrive in this dynamic and promising market. The Philippines offers a conducive environment for growth, and with the right approach, foreign businesses can establish a strong foothold and reap the rewards of their investment.
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May 17, 2021
To ensure that industrial locators within LIMA Estate will continue to enjoy a reliable and sustainable water supply fo...
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Press Release
Apo Agua, DCWD turn over rainwater catchment and h...
May 6, 2021
Fortifying its commitment to support its host communities, Apo Agua Infrastructura, Inc. (Apo Agua), together with Dava...
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Press Release
Aboitiz InfraCapital, Partners Group team up for c...
April 29, 2021
Aboitiz InfraCapital, Inc. (Aboitiz InfraCapital) has agreed to form a joint venture with leading global private market...
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Press Release
Aboitiz Integrated Economic Centers well-positione...
April 21, 2021
New locators at Aboitiz InfraCapital’s Integrated Economic Centers are well-positioned to avail optimum tax benefits ...
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Press Release
Aboitiz offers commercial lots within LIMA Estate ...
April 16, 2021
LIMA Land, Inc. is launching the next phase of its commercial zone’s transformation, with the introduction of commerc...
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Press Release
Apo Agua achieves 5 million safe man-hours...
April 14, 2021
Apo Agua Infrastructura, Inc. (Apo Agua) through its Engineering, Procurement, and Construction Contractor J.V. Angeles...
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Press Release
GUESS opens its first outlet store in Batangas at ...
March 29, 2021
American clothing retailer GUESS recently opened its first-ever outlet store in Batangas at ‘The Outlets at Lipa’. ...
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Press Release
Davao City Water District, NexCities Project recog...
March 27, 2021
The Davao City Water District (DCWD) and the Newton Prize-winning NexCities Project Team were honored along with 17 oth...
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Press Release
Aboitiz InfraCapital at the forefront of innovativ...
March 16, 2021
The Aboitiz Group, through its infrastructure arm Aboitiz InfraCapital, Inc. (AIC) is championing the country’s capab...
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Press Release
Aboitiz InfraCapital sets P13B CAPEX, allocates P2...
March 12, 2021
Aboitiz InfraCapital, Inc. is earmarking over PhP13 billion in total consolidated capital expenditures (CAPEX) with its...
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Press Release
PH Red Cross partners with ‘The Outlets at Lipa...
March 8, 2021
To further support the country’s mass testing efforts against the COVID-19 pandemic, the Philippine Red Cross (PRC) h...
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Press Release
Aboitiz’s LIMA Land recognizes long-time partner...
March 1, 2021
Shares expansion plans that can generate up to 20,000 jobs LIMA Land, Inc. – operator of LIMA Technology Center in Li...
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Press Release
Handyman opens 177th store in LIMA Exchange, Batan...
February 26, 2021
In line with its goal to have a better, braver and bolder 2021, hardware and improvement store chain Handyman Do-it Bes...
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Press Release
Aboitiz leaders embrace, ‘instill’ innovation ...
February 11, 2021
Aboitiz executives must take a long-term view and further champion innovative strategies to succeed amid and beyon...
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Press Release
Globe partners with Aboitiz InfraCapital to provid...
December 23, 2020
Globe Telecom and Aboitiz InfraCapital (AIC), the infrastructure arm of the Aboitiz Group, join forces in accelerating ...
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Press Release
LIMA Estate poised to be Calabarzon’s next leadi...
December 9, 2020
The Aboitiz Group’s Lima Land, Inc. will expand LIMA Estate in Batangas in response to the increasing demand for ind...
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Press Release
Strict COVID-19 guidelines and open format make Ch...
December 4, 2020
To enjoy shopping and dining with peace of mind this Christmas season, one can go to places that are masterfully design...
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Press Release
Aboitiz businesses optimistic of sustained strateg...
November 4, 2020
Amid the ongoing challenges posed by the Coronavirus Disease 2019 (COVID-19) pandemic, the various business units of th...
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Press Release
Aboitiz unveils expansion plans for West Cebu Indu...
November 3, 2020
New development expected to generate 5,000 new jobs by end of 2022 Cebu Industrial Park Developers, Inc. (CIPDI)—a jo...
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Press Release
Globe, Dito partner with Aboitiz InfraCapital for ...
October 30, 2020
Telecommunications companies Globe Telecom, Inc. and Dito Telecommunity Corporation have partnered with Aboitiz InfraCa...
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Press Release
Aboitiz InfraCapital ready to deploy small cell ne...
October 7, 2020
Aboitiz Group’s infrastructure arm Aboitiz InfraCapital, Inc. is venturing into the small cells business to supplemen...
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Press Release
Lima Water ensures adequate, clean water supply am...
September 18, 2020
Aboitiz InfraCapital’s wholly owned subsidiary Lima Water Corporation (LWC) assured it will continuously provide adeq...
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Press Release
Lima Water laboratory gets DENR accreditation...
July 30, 2020
The laboratory services unit of Lima Water Corporation (LWC) was recently accredited as an environmental testing labora...
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Press Release
Apo Agua ramps up construction for bulk water proj...
July 21, 2020
In line with its commitment to fast track the delivery of safe and sustainable water to Davaoeños, Apo Agua Infrastruc...
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Press Release
Aboitiz underscores long-term sustainability goals...
July 20, 2020
The Aboitiz Group reaffirms its commitment to operate its businesses with a sustainability mindset that upholds best pr...
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Press Release
Lima Water extends support in Batangas to help fig...
June 8, 2020
Lima Water Corporation, the exclusive water and wastewater services provider of Lima Technology Center in Batangas, has...
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Our Businesses
Apo Agua...
May 14, 2020
Apo Agua Infrastructura, Inc. is building one of the Philippines’ largest private bulk water supply facilities throug...
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Our Businesses
LIMA Water...
May 14, 2020
Lima Water Corporation provides end-to-end water and wastewater services for multinational companies based in Lima Tech...
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Press Release
Aboitiz supports BBB anew; heeds call for private ...
May 13, 2020
Aboitiz Group infrastructure unit Aboitiz InfraCapital Inc. welcomes the government’s renewed commitment to pursue ke...
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Sustainability & CSR
Our CSR efforts...
True to our brand promise to Advance Business and Communities, Aboitiz InfraCapital and its business units are committe...
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Sustainability & CSR
Our Sustainability Framework...
Framework To drive sustainability throughout its business, Aboitiz focuses on three key areas based on the triple botto...
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Sustainability & CSR
Sustainability at Aboitiz...
Over the years, sustainability has been our ubiquitous term in covering our environmental management, labor practices, ...
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Press Release
Aboitiz taps Ireland-based daa International for r...
March 27, 2019
Aboitiz infrastructure business unit Aboitiz InfraCapital, Inc. has teamed up with Irish airport operations company daa...
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Press Release
CAAP grants Aboitiz ‘original proponent status...
March 4, 2019
Aboitiz InfraCapital, Inc. (AIC), the infrastructure business unit of the Aboitiz Group, was granted Original Proponent...
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Press Release
Aboitiz InfraCapital, DICT sign MOU for telecommun...
February 8, 2019
Aboitiz InfraCapital, the infrastructure business unit of the Aboitiz Group, is seeking to build, operate, and maintain...
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Press Release
Aboitiz debuts water business at the 2019 IWA conf...
January 22, 2019
Aboitiz InfraCapital, Inc., the fifth leg and newest business venture of the Aboitiz Group, is optimistic on the opport...
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Press Release
Aboitiz bullish on regional airport projects...
January 8, 2019
Aboitiz InfraCapital, Inc. (AIC), the Aboitiz infrastructure unit, is optimistic that its regional airport projects wil...
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Press Release
Apo Agua holds bulk water supply project construct...
November 26, 2018
Apo Agua Infrastructura, Inc. (Apo Agua), a joint venture company between Aboitiz Equity Ventures, Inc. (AEV) and J.V. ...
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Press Release
Aboitiz secures ‘original proponent status’ fo...
September 28, 2018
Aboitiz InfraCapital, Inc. (AIC), the infrastructure business unit of the Aboitiz Group, has been granted “Original P...
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Press Release
Aboitiz InfraCapital submits unsolicited proposal ...
March 7, 2018
Aboitiz InfraCapital, the infrastructure business unit of the Aboitiz Group, submitted today an unsolicited proposal to...
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Press Release
‘Superconsortium’ eyes NAIA transformation int...
February 13, 2018
Share on Facebook Share on Twitter Share on Google+ Share on Linkedin Share on Pinterest Following the submission of it...
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Press Release
Aboitiz InfraCapital consolidates water investment...
August 3, 2017
The Aboitiz Group has consolidated all its water investments under its infrastructure unit Aboitiz InfraCapital, Inc., ...
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