Doing Business in the

International Investments Promotion Service Board of Investments

As of April 2021 THE PHILIPPINE BOARD OF INVESTMENTS Your Window to Infinite Opportunities in the Philippines

Due diligence assistance • Information support • Visit program development & investment briefing • Business matching

Business registration facilitation • Networking with IPUs and other government agencies on pre-operational business requirements • Fast tracking with registration procedures • Assistance with local government requirements

Aftercare service • Presence of government network to quickly respond to concerns • Regular supervision & monitoring 1. Demographic Sweet Sport and Rich Talent Pool 2. Competitive Salary and Steady Wage Increase THE PHILIPPINE 3. Low Labor Attrition/Turnover Rates 4. Industrial Peace ADVANTAGE 5. Access to Key Markets 6. Predictable Trading Environment 7. Unrestricted Movement of Critical Products and People are younger compared PH in Demographic Sweet Spot to the rest of the world The median age in the Philippines is 25.7 and Rich Talent Pool years old. This is equivalent to the age of someone who recently graduated from college. 110M Population Japan 48.4

We produced over 790,000 college EU-28 42.5 graduates in AY 2018-2019 across Thailand 40.1 a wide range of disciplines including engineering an technology China 38.4

Our workforce is: USA 38.3

• Highly educated and English Proficient Australia 37.9 • Strongly customer-oriented • Multi-skilled UAE 32.6

• Highly trainable with fast learning curve Vietnam 32.5 • Adaptable to universal cultures • High level of commitment and loyalty Philippines 25.7 Sources: UNDP, CHED, Country Sources

SECTION 2 / THE PHILIPPINE ADVANTAGE / 1. Demographic Sweet Spot and Rich Talent Pool Competitive Salary & Steady Wage Increase

Monthly Base Salary (in US$)

867 851

840 2018 2019 2020

798

791

728

512

511

480

469

447

439

446

432

431

413 413

414

409

381

360

352

348

296

272

250

236 236

227 220

MY TH ID VN PH MY TH ID VN PH MY TH ID VN PH YoY Wage Increase Rate (%) Engineer Worker

10

5

0 2017-2018 2018-2019 2019-2020 2020-2021 (f) Thailand Malaysia Indonesia Philippines Vietnam

SECTION 2 / THE PHILIPPINE ADVANTAGE / 2. Competitive Salary and Steady Wage Increase Source: JETRO Surveys Labor Attrition/Turnover Rates

2020

PH VN TH ID MY KH SG

1.9% 24% 12.8% 7% 6.5% 6.2% 1.6%

Sources: Philippines: Philippine Statistics Authority (4th Quarter of 2019) Vietnam: Viet Nam News (24% = Labor Attrition Rate in VN as of October 2019) Thailand: Bangkok Post (12.8 = total voluntary turnover rate in TH, 2019) Indonesia: Mercer (7% = total voluntary attrition rate in ID, 2019) Malaysia: Mercer (6.5 = total voluntary attrition rate in MY for Semester 1, 2019) Cambodia: National Employment Agency of Cambodia (6.2% = expected turnover of KH; as of May 2018) Singapore: Ministry of Manpower (1.6% = total value of resignation and recruitment rate in SG; as of Q3 of 2020)

SECTION 2 / THE PHILIPPINE ADVANTAGE / 3. Low Attrition/Turnover Rates Number of Strikes/Lockouts

Country 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

CHINA 185 382 656 1379 2,775 2,664 1,257 1,704 1,385 800

no no no INDONESIA 196 51 239 233 available 206 284 187 available available data data data

PHILIPPINES 2 2 1 2 5 15 15 14 18 11

no no no no no THAILAND 14 12 11 8 6 available available available available available data data data data data no no no no no no VIETNAM 981 468 327 available 626 available available available available available data data data data data data

Sources: China: China Labour Bulletin (Strikes Map, from January to December 2020) Indonesia: Ministry of Manpower and Transmigration; Police Headquarters of the Republic of Indonesia (MABES POLRI) – provided by PTIC-Jakarta Philippines: National Conciliation and Mediation Board, PEZA, Philippine Statistics Authority and DOLE (No. of Actual Strikes/Lockouts as of Sept. 2020) Thailand: Department of Labour Protection and Welfare Vietnam: Vietnam General Confederation of Labor SECTION 2 / THE PHILIPPINE ADVANTAGE / 4. Industrial Peace Strategic Access to Key Markets

EU Duty-free access for 6,274 tariff lines under GSP+ Program

PH is the only ASEAN country with GSP+

US – 70% of PH Exports enter the US duty-free (GSP & MFN)

SECTION 2 / THE PHILIPPINE ADVANTAGE / 5. Access to Key Markets Strategic Access to Key Markets 29.7% of the world’s population Regional Comprehensive Economic Partnership: A Seamless Production Network

28.2% of the global GDP $25.84 T RCEP

27.8% of the world’s trade

$24.37 T SECTION 2 / THE PHILIPPINE ADVANTAGE / 3. Access to Key Markets 23.6% of global inward FDI US-Mexico- Canada Agreement

33.5% of global outward FDI $18.85 T European PH’s tariff commitment stands at Economic 98.1% on average Area

Source: JETRO Survey SECTION 2 / THE PHILIPPINE ADVANTAGE / 5. Access to Key Markets “Last Touch” Trade Strategy’s 2 Pillars

1. REGIONAL PRODUCTION 2. ACCESS TO MARKETS Final PH has the best access to major markets value- outside of the Regional Value Chain adding PH’ seamless integration in US: Generalized System of Regional Value Chain will favor Preferences (GSP), possible FTA production networks country EU: GSP+ with best Regional Comprehensive European Free Trade Association Economic Partnership access to (EFTA), UK (post-Brexit) (RCEP) outside JECs the Region

SECTION 2 / THE PHILIPPINE ADVANTAGE / 5. Access to Key Markets Predictable Trading Environment Measures Affecting Selected ASEAN Member States

36 Vietnam 425 The Philippines is less affected 29 Thailand 733 by the increasing number of trade 0 Philippines 145 measures being imposed Malaysia 34 compared to 607 other ASEAN 49 Member States. Indonesia 684

0 100 200 300 400 500 600 700 800 Oct 2019 - May 2020 Since 2008

SECTION 2 / THE PHILIPPINE ADVANTAGE / 5. Predictable Trading Environment Source: WTO Trade Monitoring Database Unrestricted Import/Export of Critical Products As most countries adopted temporary export restrictions on certain categories of critical medical supplies in response to COVID-19

NO export restrictions on critical products during the pandemic period in the PHILIPPINES

In terms of imports, under the BAYANIHAN ACT

• Exemption from duties, taxes, and fees on importation of health equipment and supplies deemed critical or needed to address the COVID-19 • Streamlined import requirements, application and registration process of needed medical supplies, equipment and protective equipment as COVID-19-critical commodities

SECTION 2 / THE PHILIPPINE ADVANTAGE / 6. Unrestricted Movement of Critical Products and People Availability of Suitable Locations As of December 2020 Capas Property Hermosa Ecozone Industrial Park Capas, Tarlac Hermosa, • Area: 300,449 sqm (semi-developed) • Area: 221,723 sqm TECO Industrial Park Mabalacat, Freeport Area of Bataan • Area: 903,168 sqm , Bataan • Two (2) 1,584 SFBs • Area: 10,800 sqm Laguna Technopark Biñan, Laguna

CENTRAL LUZONCENTRAL Cavite Economic Zones 1 & 2 Rosario & Noveleta, Cavite • Area: 154,700 sqm (Phase 1); 221,000 sqm (Phase 2) • Area: 3,470,000 sqm Lima Technology Center First Philippine Industrial Park Lipa/Malvar, Batangas Sto. Tomas, Batangas • Area: 31,880 sqm (resale); 17,000 • Area: 150,000 sqm (expansion); 14,683 sqm (on-going • Building (SFB) Area: 25,000 sqm construction)

First Industrial Township Light Industry & Science Park IV

Sto. Tomas, Batangas Malvar, Batangas CALABARZON • Area: 180,000 sqm • Area: 12,000 sqm

SECTION 2 / THE PHILIPPINE ADVANTAGE / 7. Availability of Suitable Locations INVESTMENT 1. 2020 Investment Priorities Plan 2. Sectoral Highlights: Capabilities and OPPORTUNITIES Opportunities 2020 Investment Priorities Plan

A. Preferred Activities

1. ALL QUALIFIED ACTIVITIES RELATING TO THE FIGHT AGAINST 6. HEALTHCARE SERVICES INCLUDING DRUG THE COVID-19 PANDEMIC (Essential goods and service) REHABILITATION CENTERS 2. INVESTMENTS IN ACTIVITIES SUPPORTIVE OF PROGRAMS TO 7. MASS HOUSING GENERATE OPPORTUNITIES OUTSIDE OF CONGESTED URBAN AREAS 8. INFRASTRUCTURE & LOGISTICS INCLUDING LGU-PPPs 3. ALL QUALIFIED MANUFACTURING ACTIVITIES INCLUDING AGRO- PROCESSING 9. INNOVATION DRIVERS 10.INCLUSIVE BUSINESS MODELS 4. AGRICULTURE, FISHERY AND FORESTRY 11.ENVIRONMENT OR CLIMATE CHANGE- 5. STRATEGIC SERVICES RELATED PROJECTS a. IC Design 12.ENERGY b. Creative Industries/Knowledge-Based Services c. Maintenance, Repair, and Overhaul (MRO) of aircraft d. Charging/Refueling Stations for Alternative Energy Vehicles e. Industrial Waste Treatment f. Telecommunications g. State-of-the-art Engineering, Procurement and Construction

SECTION 3 / GOVERNMENT SUPPORT/ 1. 2020 Investment Priorities Plan 2020 Investment Priorities Plan

B. Export Activities

. Manufacture of export products . Services exports . Activities in support of exporters

C. Special Laws

. Industrial Tree Plantation (PD 705) . Mining (RA 7942) (limited to capital equipment incentive) . Publication or Printing of Books/Textbooks (RA 8047) . Refining, Storage, Marketing and Distribution of Petroleum Products (RA 8479) . Rehabilitation, Self-Development and Self-Reliance of Persons with Disability (RA 7277) . Renewable Energy (RA 9513) . Tourism (RA 9593) . Energy Efficiency and Conservation (RA 11285)

SECTION 3 / GOVERNMENT SUPPORT/ 1. 2020 Investment Priorities Plan Philippines as a Hub for Manufacturing and Product Design

MANUFACTURING PRODUCT DESIGN

• Presence of Support Industries for • Philippine Institute for Integrated Circuit Manufacturing • Presence for Support Industries for Research •Department of Science and Technology and Design (R&D) facilities on Additive Manufacturing, Die and Mould Solution Center, and Electronics • Incentives for R&D, training activities and Product Development Center innovation drivers

•Die and Mould Design and Manufacturing • Advantage of IT players with global Trainings, Aerospace Quality Management engineering services outsourcing (ESO) Systems Trainings and Consultancy experience

• Incentives for Manufacturing • Philippines has been excluded in the USTR Special 301 Watch List for 5 consecutive years Opportunities and Strengths in the Philippine Construction Industry Industry Highlights • Strong labor force, employing 2.8 million 104 flagship PhP5 Trillion workers of the total 65 million working infrastructure investment on projects transportation for population. amounting to the next decade. PhP4.2 Trillion (NEDA Board • Tech-savvy population with median age of Infrastructure 24. Committee) PhP700 billion investment • Diverse market players with 15,322 6.8 million requirement for licensed contractors as of 16 March housing logistics in the next backlog by 10 years. 2020. 2022 • Strong linkages as the key client to over 60 20 new power industry sectors such as non-metallic 640,000 sq. m plants need to of office space supply 20 GW by mineral products and the manufacturing of annual 2030 iron, steel, rubber and plastics and supplier requirement Source: of immediate inputs to over 20 key Philippine Construction Industry Roadmap 2020-2030 industry sectors involving real estate, Increase in establishment of education, mining, public utilities, transport, hospitals and quarantine manufacturing and communication. facilities for COVID-19 patients (based on consultation with CIAP) DOING BUSINESS IN 1. Entry Options THE PHILIPPINES 2. Business Registration Process Business Structures / Options for Entry

Domestic Domestic Corporation with 0% Foreign Equity Corporation (All Filipino)

• A business entity that has its own Domestic Corporation with 0.01% to 40% juridical personality separate from its Foreign Equity stockholders • Can either be stock or non-stock • Maximum of 15 incorporators Foreign Owned Domestic Corporation with • No minimum capital stock required for 40.01% to 100% Foreign Equity (FIA applies) Filipino-owned corporations, except as otherwise specifically provided by special laws One Person Corporation • Minimum of USD200,000 capital for Foreign-owned enterprises Business Structures / Options for Entry

Subsidiary Branch Office Representative • Extension of the legal and Office • Deemed a domestic juridical personality of the • Undertakes activities such as corporation even if foreign head office and but not limited to information majority of its capital carries out the business and dissemination & promotion of stock is foreign-owned. activities of the head office. the company’s products as • Has a legal and juridical • Deals directly with clients of well as quality control of personality separate and the parent company and products for export distinct from its parent derives income from the • Deals directly with the clients company host country of the parent company but does not derive income from Minimum paid up capital of USD200,000 if engaged in domestic the host country enterprise which may be reduced to USD100,000 if the activity • One-time minimum inward involves advanced technology or if company employs 50 direct remittance of USD30,000. employees Business Registration Process

Other Optional Firm Name Mandatory Licenses and Registration Business Registration Registration Permits* for Incentives Permit

SSS BOI Proper LTFRB Visa SEC

O START R HDMF END LGU PEZA ( DOLE and City Hall) BIR DTI

Other BSP PHIC IPAs

*Depending on the type of business Thank you!

MS. LANIE O. DORMIENDO OIC-Director International Investments Promotion Service (IIPS) Board of Investments

Email: [email protected]

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