Doing Business in RP

2006 Edition
Ye a r s
Doing Business in the

Philippines
!SGV & Co
A MEMBER PRACTICE OF ERNST & YOUNG GLOBAL
Quality In Everything We Do
©2006 SGV & Co. All rights reserved.
Doing Business in the

Philippines
MALACAÑAN PALACE
MANILA
Despite enormous challenges in 2004, the Philippine economy had

posted a year-on-year growth of 6.2% exceeding our target of 5.8%.
We began 2005 with greater promise, with our sovereign currency

and stock market soaring to record highs. The drop in nonperforming
loans in the private sector from 19% to 13% as a result of the Special
Purpose Vehicle Act of 2002 has helped in mitigating the fiscal deficit.
Meanwhile, we continue to improve our fiscal situation and enhance our
revenue performance with the encouraging support and vital participa-
tion of Congress.
The rebirth of the Philippine mining industry continues to attract foreign

investors. As we anticipate more activities in this sector, proper steps
are being taken to ensure sustainable development as we explore the
mining prospects in such locations as Benguet, Albay, Palawan, Surigao,
Zomboanga del Norte, and Davao.
Apart from these developments, the Philippine accounting industry

targets its full transition to International Financial Reporting Standards
(IFRS) in 2005. This will bring about greater transparency and compa-
rability in financial reporting and push forward the adoption of uniform
financial reporting standards not only across the region, but throughout
the world.
All these developments and more are featured in this latest edition of
Doing Business in the Philippines, published by SGV & Co. This pub-
lication is a credible and up-to-date source of information on our fiscal
reform agenda and accelerated growth. With the turnaround of our econ-
omy, coupled with our fiscal reforms and revitalized revenue program,
we believe we have set up the environment for more jobs and better lives
for our people. We invite the international community to move forward
with us as we strengthen our presence in the Asian and global market.
MABUHAY!

GLORIA MACAPAGAL-ARROYO
MANILA
Recent developments present vibrant To enhance the investment climate, we
prospects for the Philippine economy in are working closely with Congress to
2005. For one, mining has become an rationalize the fiscal incentives. We aim to
attractive prospect after the Philippine make the country’s perks for industries at
Supreme Court ruled that foreign inves- par with those of our Asian neighbors to
tors can now fully own a mining business. capture a considerable amount of invest-
More call centers are emerging all over ments that developed countries have allot-
the country as demand for information ted for their expansion projects.
technology services continue to grow.
Critical infrastructure projects are being The export targets, on the other hand,
fast-tracked, enabling businesses to oper- can be realized through stronger market
ate more efficiently. These developments, penetration and promotion strategies, di-
coupled with the country’s impressive versification and expansion of the exports
investments and exports performance, beyond traditional products, promotion
make the Philippines an even more attrac- of dollar-earning services, and inflow of
tive investment location in the heart of the export-oriented investments. We will seek
ASEAN region. to develop a compendium of industries,
particularly SMEs which can widen the
Combined investments registered with the export base or serve as suppliers of inputs
Board of Investments and the Philippine required by big companies. We will also
Economic Zone Authority grew 286% in focus on special culture-based markets
2004, reaching PhP183.88 billion. This such as those for halal and kosher foods—
amount is more than a three-fold increase which when tapped will offer billions of
from PhP64 billion in 2003. Notably, the dollars in potential income.
PhP151.05 billion foreign component
(accounting for 82% of the total) reflects We invite you to come to the Philippines
strong foreign investor confidence in the and see what we have to offer in terms
economy. of investment and trade opportunities
that can expand your business interests.
Merchandise export earnings for the Together, let us embark on a host of
whole of 2004 grew by 9.3%, reaching mutually beneficial collaborative endeav-
US$39.6 billion from only US$36.2 bil- ors towards sustained economic growth,
lion in 2003. This performance is higher progress, and prosperity.
than the Asian Development Bank’s
projection of 8.5%, and a significant im- Mabuhay!
provement over the actual growth of 2.9%
recorded in 2003. Philippine merchandise

and services exports this year are expected
to reach US$43.84 billion. PETER B. FAVILA
Secretary
Department of Trade and Industry
!SGV & Co
In 2005, the Philippines continues to courses on English as a second language,

strengthen its emerging industries and are relatively lower in the Philippines,
enhance the quality of its business and many of its Asian neighbors come
environment. Rich in skilled human to the country for these courses. Medical
resources, the Philippines is a preferred tourism has also taken off in the country.
site for foreign direct investments in busi- With technology transference and a pool
ness process outsourcing (BPO) services of experienced and efficient health pro-
such as contact centers, medical tran- fessionals, hospitals such as St. Luke’s
scription, research and development, and Medical Center, Asian Hospital, and
information technology services. This Medical City are able to offer cost-effec-
is affirmed in the IMD Competitiveness tive medical treatment for patients need-
Yearbook 2005, which cites the ing surgical and other forms of specialized
Philippines as one of the top 10 countries treatment.
with competent senior managers and
skilled workers. Further, the Philippines Aside from increasing opportunities in David L. Balangue
is the third largest English-speaking coun- BPO services, perhaps the most excit- Chairman and Managing Partner
try in the world. Philippine government ing growth area for the Philippines is the SGV & Co.
has shown its strong support for offshore mining industry. The country has esti-
services by enhancing the incentives for mated mineral resources valued at US$1
investors. trillion. It is the fifth largest mineralized
country in the world. The Philippines is
As a result, the Philippines has experi- in a strong position to offer viable busi-
enced the continuous growth of informa- ness opportunities in response to renewed As the premier professional services
tion and communication technology (ICT) investment interest in this industry caused firm in the country, we at SGV & Co. are
companies that are locating in several by the Supreme Court ruling on the committed to assist investors in setting
parts of the country. There are currently Philippine Mining Act of 1995. up, operating, and cultivating their busi-
over 70 contact centers in the Philippines; ness. Our partners and principals have the
most are subsidiaries of US-based com- To complement its rich pool of quali- expertise and experience to provide infor-
panies. This number is expected to double fied workers and the sunrise industries, mation to address investors’ needs and
in the next year. Competitive operating the Philippines’ strategic location offers concerns. You can learn more about SGV
costs, the Filipinos’ excellent grasp of the investors a window for trading with the by visiting our website: www.sgv.com.ph
English language, and satisfactory work 560 million-strong ASEAN market and
relationships with expatriates are distinct just as importantly, a gateway to dynamic Welcome to the Philippines. We are most
advantages in setting up ICT-related ser- China. eager to help your business thrive and
vices in the Philippines. succeed in today’s knowledge economy.
With this issue of Doing Business in the
This rise in BPO-related businesses has Philippines, we invite you to explore the Mabuhay!
opened doors to emerging industries such infinite investment possibilities as our
as educational and medical tourism, and country ushers in a new era of growth and
mining. Cost of education, especially for development.
Table of Contents
Why You Should Invest in the Philippines

Matching Strengths and Opportunities 8
The Country’s Bests 9
At the Right Time and Place 10
Competencies and Skills 10
Executive Caliber 11
Creative Forces 11
Hospitable Lifestyle 12
Unlimited Business Opportunities 15
Partial List of Approved/Proclaimed Ecozones 24
What the Philippines Can Offer Your Business 25
SPECIAL SECTION
Enabling Laws for Investments
Maritime Industry 26
Mining Industry 27
Agriculture and Fisheries Industry 28
Electric Power Industry 29
How to Operate in the Philippines

Investment Policy and Laws 30
General Policy on Investments 30
Omnibus Investments Code of 1987 30
Foreign Investments Act of 1991 32
Special Economic Zone Act of 1995 33
Bases Conversion and Development Act of 1992 35
An Act Providing for the Terms, Conditions, and Licensing
Requirements of RHQs, ROHQs, and RWs 36
Investors’ Lease Act 37
Export Development Act of 1994 37
Amended Build-Operate-Transfer Law 37
Registration Procedures with Government Offices 38
Securities and Exchange Commission 40
Department of Trade and Industry 41
Board of Investments 42
Philippine Economic Zone Authority 43
Subic Bay Metropolitan Authority 44
Clark Development Corporation 45
Bangko Sentral ng Pilipinas 45

Taxation 46
Income Taxation 46
Withholding Tax 50
Value-Added Tax 50
Excise Tax 52
Percentage Tax 53 Charts
Stock Transaction Tax 53 No.
Initial Public Offering Tax 53 1 Growth of Output, % 69
Documentary Stamp Tax 54 2 Growth of Output by Sector 69
Customs Duty 55 3 Consumer Spending 70
Local Taxes 55 4 CPI and Inflation by Commodity Group 70
Labor Requirements 56 5 OFW Remittances 71
Hours of Work 56 6 Key Export Products 72
Work Day 56 7 Key Export Markets 72
Overtime Remuneration 56 8 Key Import Products 73
Night-Shift Differential Pay 56 9 Key Import Suppliers 73
Service Incentive Leave Pay 56 10 Approved Foreign Direct Investments 74
Meal and Rest Periods 56
Minimum Wage 56
Employees’ Compensation Program 57 Tables
National Health Insurance 57 No.
Emergency, Medical, and Dental Services 57 1 Sixth Regular Foreign Investment Negative List 34
Woman and Child Labor 58 2 Some Incentives of RHQs and ROHQs 37
Paternity Leave 58 3 Incentives of Exporters Registered under EDA 37
Termination of Employment 58 4 Income Tax Rates on Passive Income of Domestic/
Unions 59 Resident Foreign Corporations 47
Financial and Monetary Policies 59 5 Preferential Income Tax Rates for Nonresident Corporations 48
Other Business Regulations 59 6 Rates of Income Tax on Citizens, Resident Aliens, and
Immigration and Employment Regulations for Nonresident Aliens Engaged in Trade or Business 49
Foreigners in the Philippines 59 7 Income Tax Rates on Passive Income of Individuals 49
Philippine Environmental Laws 60 8 Payments Subject to CWT 50
Philippine Laws on Intellectual Property Rights 61 9 VAT-Exempt Transactions 51
Costs of Doing Business in Metro Manila 62 10 Zero-Rated Sales of Goods and Services 53
Costs of Doing Business in Clark, Subic, Cebu, and Davao 64 11 Selected Percentage Tax Rates 54
12 Some Documents Requiring Documentary Stamps 55
The Philippines 13 Overtime Rates 57
The People 66 14 Minimum Wage Rates by Region (Nonagricultural Jobs) 57
The Land 67 15 Partial List of National Health Insurance Program Benefits 58
The Resource Base 68 16 Key Features of BSP Circular No. 5 59
Currency 68
The Philippine Economy in 2005 69
The Political System 74
SGV & Co.

Services 77
Partners and Principals 78
Offices 78
Glossary/Abbreviation

Why You Should Invest in the
Philippines
Significant reserves. Substantial finds. Rich deposits. Without doubt, the Philippines is
a resource-rich country. However, all these riches of the land and sea pale against the
country’s most precious resource—its people. Filipinos are friendly, warm, and tolerant,
qualities which make them easy to live and work with.
They are also open to foreign ideas, and flexible and adaptable when faced with
new challenges.1 With their competence and skills, they make excellent workers and
managers.
Fast Facts Matching Strengths and The services sector has become the larg-
Opportunities est productive sector in most economies.
How the Philippines ranks:* In 2001, it accounted for an average of
#2 Skilled Labor The authoritative World Investment Report 72% of gross domestic product (GDP) in
#8 Senior Managers 2004 published by the United Nations developed countries and 52% of GDP in
#12 Language Skills Conference on Trade and Development developing countries. With new technol-
#13 Finance Skills (UNCTAD) 2 gives an optimistic outlook ogy making it easier to digitize informa-
#19 Information Technology Skills for flows of foreign direct investment tion, services can be produced in one
#20 Engineers (FDI) in 2004 and takes note of the “dra- location and consumed elsewhere—they
matic shift” of FDI to the services sector. have become “tradable.”
* IMD World Competitiveness Yearbook 2005
The Philippines stands to gain from this Newly tradable services can be simple,
shift in investment flows. In surveys con- low value-added activities like data entry
ducted by UNCTAD in the first quarter or those with higher value-added like
of 2004 with 335 of the world’s largest architectural designs, financial analysis,
transnational corporations (TNCs) and software programming, and R&D. More
87 international site-selection experts, and more companies—whether large or
the Philippines is identified as one of the small, from both developed and develop-
Asian countries expected to have higher ing countries—are offshoring the produc-
FDI inflows in research and development tion of these services to countries with
(R&D), information and communications the right mix of costs, skills, and infra-
technology (ICT), and corporate services structure. The Philippines is one of these
(such as business processing operations countries.
and call centers).
1
IMD World Competitiveness Yearbook 2005, (Switzerland: IMD); available from http://www.imd.ch/wcy.
2 World Investment Report 2004. (New York : United Nations Conference on Trade and Development);
available from http://www.unctad.org/en/docs/wir2004_en.pdf.

The country’s strengths match the oppor-
tunities opened by the shift to services.
Telecommunications is the infrastructure
that allows services to become tradable
and, with deregulation, the country’s tele-
communications infrastructure has leaped
to world-class standards. Moreover, band-
width costs have dipped by 70% in the
last four years. Filipinos’ inborn artistry
and flexibility have made them naturals in
design and software development, skills
that are highly tradable. Familiarity with
American culture, learned from textbooks,
bestsellers, magazines, television, and
movies, makes it easy for Filipinos to
adopt American accents for back office
services.
The Country’s Bests

The 2005 edition of the IMD World after India, Israel, and Ireland. Philippine are superior to that of India, Ireland, or
Competitiveness Yearbook covers 60 workers were cited for being highly profi- other offshore destinations,” the study
economies, including regional econo- cient in mainframes, minicomputers, and noted.
mies. Back in 2002, only 49 economies microcomputers as well as in technical
were covered. In this expanded list, the and business skills for ICT projects. The study also showed that the Philippine
Philippines comes out with high ratings workforce is technically proficient in
for skilled labor (#2), competent senior A study on the Competitiveness of computer science and programming, and
managers (#8), language skills (#12), the Philippines’ IT sector conducted many can achieve the desired level of
finance skills (#13), information technol- by Gartner Research in March 20023 expertise in US business processes (such
ogy (IT) skills (#19), and qualified engi- confirmed the competitiveness of the as accounting and human resources) and
neers (#20). Philippines in world-class English lan- knowledge specific to an industry (for
guage proficiency. “…verbal skills in example, medical terms for transcrip-
In the 2002 Global New Economy Index
the Philippines with regard to clarity and tions).

(GNEI) of the META Group, a US-based understandability to a United States buyer
research firm, the Philippines was given
the highest rating in Southeast Asia for 3
The study was initiated by the Philippine Department of Trade and Industry (DTI) with funding from the
the “excellent availability” of skilled IT Board of Investments (BOI) and private companies. The researchers visited IT companies and met with IT
workers. The Philippines ranked fourth practitioners from government agencies, private sector groups, IT associations, and IT firms to arrive at an
analysis of the Philippine market’s strengths, weaknesses, opportunities, and threats.

Average Flying Time from Manila
The Organization for Economic Co-opera- Competencies and Skills
tion and Development (OECD) reports
to Selected Foreign Cities:
(in hours) that the Philippines represents “a large Accountancy is the first of the professions
supplier of English-speaking college-edu- in the Philippines to be included under the
Hong Kong 1:40 cated accountants, software writers, archi- World Trade Organization’s (WTO) policy
Taipei 1:40 tects, telemarketers, and graphic artists.” of liberalization of services. Philippine
Shenzhen 2:00 The country is one of the major suppliers accountants can therefore freely compete
Singapore 3:00
of information processing services and in the global playing field with accoun-
Shanghai 3:10
has become a “prominent hub for shared tants from other parts of the world. In the
Kuala Lumpur 3:15
financial and accounting services.”4 Philippines, many capable accountants
Jakarta 3:25
Seoul 3:25 and auditors can produce corporate finan-
Tokyo 3:40
At the Right Time and Place cial statements of internationally compa-
Guangzhou 4:20 rable standards.5 This is the general view
Macau 4:20 The Philippines’ strategic location places cited by a World Bank report in December
Bangkok 4:30 it at the crossroads of international ship- 2001 on the observance of standards and
Beijing 5:15 ping and air lanes. United Parcel Service, codes in the Philippines.
Brisbane 5:35 the world’s largest package delivery com-
Vientiane 6:00 pany operates its intra-Asia hub in the Because of its rich supply of skilled
Yangon 7:00 Clark Special Economic Zone, a mere 1½ accountants, the Philippines is consid-
Sydney 7:30 to 4 hours away from major Asian desti- ered a center of trained manpower in
Melbourne 8:00 nations. accounting work.6 A number of US firms
Auckland 11:30 outsource their accounting work to the
Wellington 13:50 The country’s 12-hour time gap with the Philippines.
US east coast is ideal for 24-hour work-
sharing of projects for this publicly owned Philippine engineers have successfully
engineering, procurement, construction carried out worksharing at the Manila
Conversion to International Financial and maintenance services organization, Global Execution Center of this leading
Reporting Standards (IFRS) is a global one of the world’s largest. Their vice pres- engineering, construction, maintenance
trend which will bring about greater
ident says, “We have been worksharing and diversified services company with
transparency and a higher degree of
with the Manila office (Global Execution more than 50 offices worldwide. About
comparability in financial reporting, both
of which will benefit investors worldwide. Center) for 15 years, and our investment 70% of the multidiscipline workforce in
The Philippines chose a gradual transition and commitment are evident in the quality Manila are skilled in implementing the
approach to IFRS (previously referred to of the work and increased productivity we design system and its related modules.
as International Accounting Standards or are able to provide our projects.” Manila had almost 50 projects involving
IAS) to ensure greater transparency and worksharing with 13 offices, and com-
globally accepted quality in local financial
reporting. The Philippine transition to
IFRS formally started in 2001, ending in
the full adoption of IFRS in 2005. Many
companies have already undergone
intensive training of officers and person-
nel to prepare them for the challenges
ahead. The Philippines’ full adoption of

IFRS makes the country a credible and 4
Julia Nielson and Daria Taglioni, Service Trade Liberalisation: Identifying Opportunities and Gains (Paris:
efficient player in the worldwide capital OECD, 6 February 2004); available from http://www.oecd.org/TD/TC/WP(2003)/FINAL.
5 World Bank, Report on the Observance of Standards and Codes (ROSC) of the Philippines (New York:
market.
World Bank, 17 December 2001); available from http://www. worldbank.org/ifa/Philippinesrosc12_01.pdf.
6 Nirupam Bajpai, Jeffrey Sachs, Rohit Arora, and Harpreet Khurana, Global Services Sourcing: Issues of

Cost and Quality, working paper, Center on Globalization and Sustainable Development, The Earth Insti-
tute of Columbia University, New York. 2004.
10
pleted the execution of the largest work- availability of competent senior managers.
share project in the company’s history Companies setting up a business in the
involving more than 550,000 work-hours. country will find an abundance of capable
The company uses this ability to work- executives with the required academic
share engineering services as a competi- degrees, experience, and know-how.
tive advantage.
The following are some of the multina-
The country’s nurses, doctors, physical tionals in the Philippines being run by
therapists, and dentists are magnets for Filipinos: Bank of America NT & SA,
foreign tourists in search of affordable ABN-AMRO Bank, Chase Manhattan
medical services. The Department of Bank, Dresdner Bank AG, ING Bank,
Tourism (DOT) has launched medical Macquarie Bank, Procter & Gamble,
tourism to bring in foreign tourists for Colgate-Palmolive, Texas Instruments,
medical services such as dental and cos- Philips Group of Companies, Fujitsu,
metic surgery. Many people in the US IBM, Compaq, Sun Microsystems, Fuji
and Europe already know the caliber of Xerox, Intel Microelectronics, McCann-
Filipino nurses, physical therapists, and Erickson, Pfizer, GlaxoSmithKline,
doctors who staff their hospitals, and find Reuters, PruLife, Philamlife (AIG),
it easier to deal with English-speaking Sunlife, Monark Equipment Corp., Road to Seventh Avenue - an original animation
American Wire & Cable, Du Pont Far content of NAVEL Productions, has caught the eye of
medical practitioners. some Asian studios for co-production. RSA is a story
East, Heinz UFC, Singer, Hershey about musical instruments with the Ifugao nose flute
International, Wyeth, Jardine Davies, and in the stellar role.
The European Chamber of Commerce of
the Philippines (ECCP) sees bright pros- Hooven.
Animation Council of the Philippines, Inc.
pects for building up the Philippines as a
Creative Forces 3/F Hatchasia Global City
destination of choice for health and medi-
31st St. cor 2nd Ave, e-Square IT Park
cal services outsourcing. ECCP Executive For many Filipinos, looking out for the Bonifacio Global City, Taguig
Vice President Henry J. Schumacher bahay kubo (nipa hut) in the aquarium Metro Manila, Philippines
believes that the some 500,000 Filipino Tel: (632) 818-5019/818-5020/818-5008
added to the fun of watching the Disney/ Fax: (632) 818-5005
doctors and nurses working abroad can Pixar film Finding Nemo. The bahay E-mail: info@animationcouncil.org
be tapped to promote the Philippines as kubo was a tribute to the old homeland by
a health destination. “These are profes- http://www.animationcouncil.org/index.php
Nelson Bohol, one of the movie’s main
sionals who have surely made a lot of background designers. Another Filipino
patients happy in those countries. They artist, Gini Cruz, animated Dory, the blue
would be the best ambassadors who can fish with short-term memory loss, given Filipinos’ creativity spill over to what-
tell Europeans that there are many profes- voice by Ellen DeGeneres. Cruz had ever they do. One area where this talent
sionals like them back home, where ser- also done work for Toy Story 2, A Bug’s comes in handy is software development.
vices are more affordable than in Europe,” Life, and Monsters, Inc. The two artists Filipinos are adept in system software,
Schumacher says.7 were also involved in the production of middleware, and application packages
The Incredibles. Not too many know that for sectors such as banking, financial,
Executive Caliber Filipino animators have helped produce hotel, health, and manufacturing. The
classic TV cartoons like Scooby Doo, Center for International Trade Expositions
In its survey of 60 economies, the IMD The Flintstones, Tom and Jerry, Addams and Missions (CITEM) has reported a
World Competitiveness Yearbook 2005 Family, as well as the more recent G.I. continuing expansion of the Philippines’
gave the Philippines a rating of #8 in Joe, DragonBall Z, and Rugrats. share in the global market for offshore IT
outsourcing, estimated to reach US$140
7 Philippine Department of Trade and Industry, Dataline (Manila: DTI, 25 October 2004); available from
billion in 2008.
http://www.dti.gov.ph/contentment/7/150/906b.jsp#special1.
11
Invention is another outlet for Filipino Schools
Philippine Comparative Advantage
at a Glance creativity and innovation. Diosdado
Banatao, the most well-known Filipino- Most public and private schools and uni-
...located strategically in the Asia-Pacific American entrepreneur in Silicon Valley, versities in the Philippines use English as
region, a natural gateway to the East-Asian holds several patents and is responsible the medium of instruction, so expatriates
economies for several “firsts” such as developing the need not worry that their children will
industry’s first Windows graphical user have to face a language barrier. A number
…offers a highly educated and literate interface (GUI) accelerator chip, pioneer- of international schools in Manila and
workforce with most people having a good ing the local bus concept for the PC, and its suburbs offer primary and secondary
command of English putting the Ethernet controller in a single levels of education. A few international
chip, among others. His contributions schools can also be found in major cities
…ranked in 2000 as the # 1 source of
knowledge workers in the Meta Group's have helped make PCs smaller, more outside Manila, such as in Cebu and
Global New E-Economy Index powerful, and easier to network.8 Davao.
…has opened up its economy by allowing Eduardo San Juan built the first Lunar Brent International School
100% foreign ownership in almost all Rover or moon buggy out of scrap alumi- (www.brent.edu.ph)
sectors of the economy and has established num, an old umbrella, bicycle handlebars, Brent International School has cam-
numerous special economic zones and automobile hubcaps, and batteries. The puses in Manila and Subic, among other
industrial estates all over the country prototype he built was chosen over other places in Luzon. It is a co-educational
designs and became the model for the day school associated with the Episcopal
…has redefined government's role through
Lunar Rover used by Apollo XV astro- Church in the Philippines, accepting
privatization and allowing private sector
participation in developing infrastructure nauts in moving around on the moon. students from Nursery to Grade 12. The
and some services which used to be population includes a mix of students
government's domain through its innovative Hospitable Lifestyle from more than 46 countries and like-
Build-Operate-Transfer scheme, a model wise has an international teaching staff.
now being followed by other countries due Lifestyle may not be at the forefront Brent International School is accredited
to its success of things expatriates think about when as a college preparatory school by the
considering a foreign posting, but this Western Association of Schools and
…has deregulated its banking, energy, becomes an important factor once a Colleges (WASC) and by the Philippine
insurance, telecommunications, shipping, family moves. After all, the lifestyle is Accrediting Association of Schools,
and retail trade sectors, removing most, if what enables foreigners to turn a house Colleges, and Universities (PAASCU).
not all, of the monopoly structures in the into a home—and the Philippines has It is recognized by the Philippine
Philippines' market economy what it takes to do just that. Department of Education (DepEd).
…has granted income tax holiday (ITH)/5%
preferential tax rate based on gross income For expatriates living in the Philippines, The British School Manila
in lieu of all other taxes to companies comfort and convenience spell the differ- (www.britishschoolmanila.org)
located in economic zones/export zones ence. The cost of living is very affordable; Located in Fort Bonifacio Global City, the
the food, shopping, and entertainment are British School Manila currently has over
…offers a dynamic consumer market used very easy on one’s pocket. While there are 500 students representing 33 nationalities.
to an array of product choices created by a many dialects, English is widely spoken, It provides British education following
competitive domestic economy thereby facilitating communication the English National Curriculum from
between foreigners and locals. And while Nursery to Year 13. Students are prepared
…offers expatriates a comfortable lifestyle

— internationally known educational such basic needs can be met in many other for various tests such as the National
institutions, entertainment and leisure countries, the Philippines offers all these Curriculum Tests and the International
facilities, a range of housing choices, and with warmth and hospitality. Baccalaureate. Comparatively, the
luxury of access to household help
8
Francis Huang, “From Cagayan Valley to Silicon Valley: An Interview with Dado Banatao,” SGV Review
2, no. 3 (October 2004): 102-113.
12
school’s students perform well above Reedley International School
national United Kingdom averages. (www.reedleyschool.com) European International School
Eurocampus Manila
Reedley International School is a co- 75 Swaziland St.
Cebu International School educational school with an international Better Living Subdivision
(www.cis.edu.ph) program combining Singaporean and 1711 Parañaque City, Philippines
Cebu International School was first called American curricula. It offers classes for
Faith Academy
the American School of Cebu when it was Grades 1 to 12 and follows the American Manila Campus
established in 1924. The school currently Grading System. The school’s latest Penny Lane off Valley Golf Road
offers education from the Kindergarten innovation is its Personalized Classroom Victoria Valley Subdivision
level to Grade 12. Learning Program which benefits students Cainta, Rizal
Davao Campus
with specific learning difficulties. 7 Jade St., Marfori Heights
Eurocampus Manila Davao City
(www.eurocampus.org.ph) Southville
International School Manila
Eurocampus includes two schools, each (www.southville.edu.ph)
University Parkway, Fort Bonifacio
with a different curriculum: one closely Southville International School and Taguig 1634, Metro Manila
follows the curriculum of France, while Colleges (SISC) is a nonsectarian school
the other follows the curriculum of accredited by the WASC. It offers pre- Reedley International School
Pasig Boulevard corner Rosemarie Lane,
Germany. Both schools employ teachers school, grade school, and high school 1600 Pasig City, Metro Manila
and staff from their homelands. Aside education and has formed linkages with
Southville International School
from normal classes, Eurocampus offers prestigious schools abroad—such as and Colleges
many extra-curricular activities which the London City College in the United Early Childhood Campus (Elizalde)
allow interaction between the students of Kingdom, affiliated with the Schiller 136 Elizalde St., BF Homes, Parañaque City
the two schools. International University in Europe and the Early Childhood to Grade 3
(Lower School) Campus (Munich)
United States—to offer foreign college
Munich St. corner Tropical Avenue,
Faith Academy diplomas. BF Homes International, Las Piñas City
(www.faith.edu.ph) Grade 4 to High School (Lower & Upper School)
Faith Academy is located in Manila, with Campus (Tropical)
The Philippines is also home to the 1281 Tropical Avenue corner
a branch campus in Davao. It is an inter-
Asian Institute of Management (AIM), Luxembourg St., BF Homes International
national Christian School primarily for the Las Piñas City
an institute offering management
children of expatriate Christian workers in College Campus (Luxembourg)
programs geared towards develop-
the Philippines and throughout Asia. Luxembourg St., BF Homes International,
ing professional, entrepreneurial, and Las Piñas City
socially responsible leaders and manag- Foreign Colleges (Yokohama) Southville Foreign
The International School (IS) Manila
ers. The institute attracts professionals Colleges (SFC)
(www.ismanila.com) Yokohama St. corner Luxembourg St.,
from across Asia with its postgraduate
IS Manila offers an American-based BF Homes International, Las Piñas City
degrees in Business Administration,
curriculum from early primary to high Asian Institute of Management
Management, Development Management,
school. It was the first school in the Eugenio Lopez Foundation Building
and Entrepreneurship, as well as with its
Philippines to receive accreditation by Joseph R. McMicking Campus
certificate courses. AIM professors have 123 Paseo de Roxas
the WASC and is accredited until 2007.
doctorate and master’s degrees in manage- MCPO Box 2095
IS Manila has also been recognized and 1260 Makati City
ment and related fields from prestigious
accredited by the DepEd. IS Manila Tel: (632) 892-4011 to 25
universities in Asia, the United States,
students represent 59 different nationali-
Fax: (632) 892-1724

and Europe. They are also experienced E-mail: aimnet@aim.edu.ph
ties. 65% of faculty members come from
managers who have worked in business, http://www.aim.edu.ph
13 other countries while 35% are host
government, and nongovernment organi-
nationals.
zations. Coming from various countries in
Asia, AIM faculty members provide Asian
solutions to Asian management problems.
13
AIM was awarded the European Quality who gather in Donsol every year from
Top Philippine Tourist Spots Label in 2003, the first in the Association February to May. The experience has been
of Southeast Asian Nations (ASEAN) to dubbed the “Best Animal Encounter” in
Beaches receive the accreditation, thus becoming a Asia by Time magazine.9
Boracay (Aklan)
member of the European Foundation for
Pagudpud (Ilocos Norte)
Management Development. In 2002, AIM Over the last few years, surfing has been
Mactan Island (Cebu)
Panglao (Bohol) was selected by the World Bank to be its making a splash in the Philippines. Locals
Dakak (Zamboanga del Norte) strategic partner in Asia with the estab- and foreigners alike troop to surf spots
Honda Bay (Palawan) lishment of the AIM-World Bank Global such as La Union and Siargao. Other
El Nido (Palawan) Distance Learning Center. The institute exciting activities for thrill-seekers are
Pearl Farm (Davao) has also received a number of citations white water rafting, scuba diving, moun-
Siargao (Surigao del Norte) and is the first graduate school of manage- tain climbing, even trekking in Taal—
ment in the world to be awarded the ISO where there is a lake within a volcano
Heritage Tours
Tubbataha Reef Marine Park 14001 Certification for its Environmental within a lake.
(Palawan) Management System.
Ifugao Rice Terraces (Banawe) The nightlife will certainly not disap-
Vigan Heritage Village (Ilocos Sur) Entertainment and Recreation point anyone. Long known as a musi-
St. Paul Subterranean National Park cal people, Filipinos have rediscovered
(Palawan) From day to night, there is something to the many talented performers the local
Philippine Baroque Churches (Manila,
occupy tourists and residents alike in the scene has to offer. New local artists have
Bulacan, Ilocos Norte, Iloilo)
Philippines. reawakened the Philippine music scene in
recent years. Restaurants, bars, and water-
Source: Department of Tourism
Those who are after relaxation have ing holes feature nightly performers who
options. Spas have sprouted all over appeal to varied audiences: acoustic art-
Manila, giving customers a choice ists who tap into the hearts of romantics,
between relatively inexpensive day spas rock bands who get the adrenaline going,
and high-end spas that are all about pop groups who perform danceable tunes.
luxury, ideal for those who wish to With covers of favorite foreign songs and
indulge in a few hours of pampering. local compositions, these music acts bring
Those who have a little more time can “life” to the Philippine nightlife.
spend a weekend at beaches that are just a
few hours’ drive from Manila. The beau- For those who prefer a quiet evening,
tiful beaches in Boracay, Palawan and there are restaurants offering many dif-
other farther parts of Luzon, Visayas, or ferent cuisines. Filipinos love to eat, after
Mindanao are perfect for those who need all. Coffee-lovers can unwind at the many
a few days to rejuvenate. local and franchised coffee outlets scat-
tered all over the country’s major cities.
Adventure-seekers will not be disap-
pointed. The whale sharks in Donsol—a Be it for an afternoon, an evening,
seaside town in Sorsogon, 540 km south- a weekend, or a long vacation, the
east of Manila—are fast becoming a Philippines has something in store for
very popular tourist attraction. Tourists everyone who wants to take a break.
can swim with the world’s largest fish,
9 Alex Perry, “Best of Asia – Best Animal

Encounter,” Time, 22 November 2004, 42-43.
14
Unlimited Business Banking
Fast Facts
Opportunities
As of December 31, 2005, there are 41
Filipino innovations in agriculture and
Agriculture universal and commercial banks, consist-
fisheries
ing of 20 private domestic banks, 3 gov-
Coconets, coconuts for erosion control -
The agriculture sector remains an im- ernment banks, 4 subsidiaries of foreign
Coconets was the overall winner of The
portant and integral part of the economy, banks, and 14 branches of foreign banks.
World Challenge 2005, a competition
contributing about 14% of total gross sponsored by BBC World and Newsweek
domestic product in 2005. It remains the One main banking legislation that has in association with the Shell Group of
primary activity in the rural areas and shaped the banking industry in recent Companies to find entrepreneurs whose
employs almost 40% of the country’s years is the General Banking Law of projects are making a difference in
workers. 2000, which has allowed the Bangko Sen- grassroots communities. Coconets were
tral ng Pilipinas (BSP) to further make the developed by agricultural engineer Dr.
Agriculture grew by 2.2% in 2005 despite banking industry more competitive and Justino Arboleda from waste coconut
the mild El Nino in the first quarter and highly regulated. Aiming to relax the limi- husks. The coconets prevent landslides by
occurrence of typhoons in the third quar- tation of foreign ownerships of banks, the acting as surrogate tree roots. The product
ter. All subsectors grew in output, led by Law authorizes foreign banks to acquire also won the Global 100 eco-Tech Award in
fishery with a 6.5% growth rate. Livestock up to 100% of the voting stock of domes- the 2005 World Exposition in Aichi, Japan.
recovered with 2.0% growth versus last tic banks. Because of this, the 14 foreign
year’s negative growth. The sector’s gross banks that have set up their branches in Waterless transport of live fish - The Buhi
value of production, at current prices, was the Philippines, and the four foreign banks Marine Worldwide Supply Inc. won the prize
estimated at PhP815.5 billion. that have subsidiaries in the country ac- for Best International Business at the 2005
counted for 17% of the total resources in International Business Plan competition
the Philippine banking system as of late held by the University of San Francisco in
Indicative plans for 2006 cover programs
2004. The increasing presence of foreign March 2005. Bonifacio Comandante Jr.,
for rice, corn, high-value cash crops, live-
banks has also heightened competition not a Filipino aquaculture practitioner, has
stock, and fisheries. Mindanao, considered
only in the corporate market, but has also developed a technology for waterless
the “food basket of the country,” is push-
transport of live fish, both marine and
ing for commodity champions that will allowed domestic banks to focus on the
freshwater. The technology is covered by an
become recognized in the global market. commercial middle-market.
application for international patent.
To this end, development roadmaps for
commodities like banana, coffee, mango, To encourage and create stronger and
Substrates for accelerated coral
coconut, rubber, palm oil, seaweeds, and competitive banking systems, the BSP has
restoration - The Philippine team led by
tilapia have been approved, and various been offering various incentive packages
Ronald Roland Cesar Rodriguez won the
Mindanao investment forums are sched- for merging and consolidating banks. Sev- Silver Award in the Asia Pacific Region in
uled in the first part of 2006. eral business combinations have already the 2005 regional competitions held by
taken place, resulting in larger and strong- the Holcim Foundation for Sustainable
Construction. Their project provides a
habitat for marine life by assisting in the
Agriculture Sector in 2005 regeneration of coral reefs. The project
is low-cost, has a positive environmental
Sector/Subsector Growth Rates Gross value of output (in billions)
impact, and increases the quantity and
Overall 2.2% PhP815.5
diversity of fish species for nearby fishing

Crops 0.5% PhP406.8 communities. The Philippine entry qualifies
Poultry 1.4% PhP107.8 for the global Holcim Award to be given in
Aquaculture 6.5% PhP146.8 2006.
Livestock 2.0% PhP154.2
Source: Bureau of Agricultural Statistics, Department of Agriculture
15
ly capitalized banks. Also revitalizing the of which 72% are foreign-owned and 28%
Universal and Commercial Banks
of the Philippines banking industry is the Special Purpose are Filipino-owned.
Vehicle Act of 2002, which allowed
Private Domestic Banks
banks to dispose of nonperforming assets The Semiconductor and Electronics
Allied Banking Corporation
Asia United Bank Corporation (NPAs) and maintain financial viability. Industries in the Philippines Inc. (SEIPI),
Banco de Oro Universal Bank Disposition of NPAs improved while the the leading and the largest organization of
Bank of Commerce law was in effect. The law expired on foreign and Filipino electronics manu-
Bank of the Philippine Islands
BDO Private Bank, Inc. April 12, 2005, but House Bill 2311 seeks facturers in the Philippines, is working
China Banking Corporation to extend the deadline by two years. If the closely with the government to sustain
East West Banking Corporation law is extended, it is expected that more and further the growth of the industry.
Equitable PCI Bank
banks will liquefy their assets and avail of SEIPI projects a growth rate of 10% for
Export & Industry Bank
International Exchange Bank the tax incentives, among others. 2006 and aims to achieve the target of
Metropolitan Bank and Trust Company US$50 billion in exports in 2010.
Philippine Bank of Communication Reeling off the Arroyo Administration’s
Philippine National Bank
Philippine Trust Company 10-point agenda, the BSP has provided Energy and Utilities
Philippine Veterans Bank opportunities to micro-finance institu-
Rizal Commercial Banking Corporation tions to help expand small and medium Energy production in the Philippines is
Security Bank Corporation
enterprises. This has auspiciously created concentrated in the electricity sector,
Union Bank of the Philippines
United Coconut Planters Bank prospects for entrepreneurship and em- which is facing tremendous opportunities
Government Banks ployment and has encouraged the major with the passage of the Electric Power
Al Amanah Islamic Investment Bank of the players in the banking industry to explore Industry Reform Act (Republic Act [RA]
Philippines
Development Bank of the Philippines this previously untapped sector. No. 9136 or EPIRA) on June 8, 2001.
Land Bank of the Philippines Its passage paves the way for the re-
Subsidiaries of Foreign Banks Electronics structuring of the power industry and the
ABN Amro Bank, Inc.
privatization of the generating assets of
Chinatrust (Phils.) Commercial Bank Corp.
Maybank Philippines, Inc. The electronics industry is the driver of the National Power Corporation and the
United Overseas Bank Philippines* the Philippine economy. transmission assets of the National Trans-
Branches of Foreign Banks mission Corporation (TransCo).10 The law
ING Bank N.V.-Manila Branch
Standard Chartered Bank In 2005, the industry accounted for seeks to dismantle the industry’s monopo-
The Hongkong and Shanghai Banking US$27.3 billion or 71% of the total listic structure and establish a competitive
Corporation, Ltd. Philippine exports of merchandise goods. environment that will ensure the provision
ANZ Banking Group, Ltd.
The industry directly employs more of quality, reliable, and affordable power
Bangkok Bank Public Company, Ltd.-
Manila Branch than 402,000 engineers, technicians, and to all consumers.
Bank of America, N.A. operators and provides the transfer of
Bank of China-Manila Branch best global practices on high-technology Another requirement of EPIRA is the
Bank of Tokyo-Mitsubishi, Ltd.-
Manila Branch manufacturing to Filipino workers. operationalization of the Wholesale Elec-
Citibank, N.A. (Phils.) tricity Spot Market (WESM). WESM is
Deutsche Bank AG After three years of continued decline, the electricity trading mechanism among
International Commercial Bank of China
investments went up from US$443 mil- generators, suppliers, and wholesale
JP Morgan Chase Bank
Korea Exchange Bank lion in 2004 to US$776 million last year. consumers. It will enable industries and
Mizuho Corporate Bank, Limited- These investments were accounted for by consumer groups to benefit from the open
Manila Branch (Fuji Bank) 23 new firms which set up their compa- access scheme in the competitive genera-
* On September 16, 2005, the Monetary Board nies and 72 existing companies which tion market, and to choose their suppliers
approved subject to certain conditions the have expanded their operations in the at the least possible cost. WESM will
conversion of United Overseas Bank Philippines
into a thrift bank. As of December 31, 2005, such Philippines. To date, there are 883 elec- be initially operated by the Philippine
conditions have not been fully complied with. tronics firms operating in the Philippines, Electricity Market Corporation (PEMC),
Source: Bangko Sentral ng Pilipinas
10 Philippine Department of Energy, Philippine Energy Plan 2005 Update (Manila: Philippine DOE,
29 March 2006); available from http://www.doe.gov.ph/PEP/PEP_2005_2014.pdf.
16
which was created in 2003, and will be The Philippines, ranked second in Asia
by the Meta Group as the destination of
Fast Facts
implemented in phases, beginning with
Luzon and Visayas in 2006.11 choice for e-services, is poised to become
EO No. 428 cuts bureaucratic red tape
the next ICT hub in Asia. The country Executive Order (EO) No. 428 signed by
The power generation sector is expected has the potential to lure more investors President Gloria Macapagal-Arroyo in
to register an average annual growth rate with its strategic location, affordable and May 2005 directs departments, bureaus,
of 7.7% in total electricity generation flexible human resource base, expanding agencies, and offices in the Executive
within the 10-year planning period. Total infrastructure, and affinity with Western Branch of the government, including govern-
installed capacity in 2004 was 15,548 culture. ment-owned and controlled corporations
(GOCCs), to simplify their rules and reduce
megawatts (MW), with dependable capac-
reportorial requirements imposed on busi-
ity at 13,792 MW.12 Current contracts There are about 300 software develop-
ness and industry. For many years, potential
provide about half that amount, with the ment firms in the Philippines delivering investors have been turned off by bureau-
remainder expected to be filled once the software solutions to North America, cratic red tape, which causes delays, raises
market deregulates.13 Europe, Japan, and the Asia Pacific. These costs, and encourages corruption. With EO
companies offer such services as system No. 428 in place, local and foreign investors
House Bill No. 4839, an act that further design and analysis; testing and quality may now find it easier to cut through the
promotes the development, utiliza- assurance; software maintenance; and red tape, and ultimately cut the costs of
software project management.16 doing business in the country.
tion, and commercialization of new and
renewable energy (NRE) sources, was
recently approved in the Philippine House The Technical Education and Skills De- outbound services. Most contact centers
of Representatives.14 The bill mandates velopment Authority (TESDA) said in its in the country are located in Metro Manila
power firms to source a certain percent- latest Labor Market Intelligence Report and Cebu, but there are a few in Clark,
age of their requirements from renewable (LMIR) that e-service priority sectors are and new ones in Baguio, Davao, and even
energy. It offers significant incentives for contact centers, medical transcription, and Cagayan de Oro.
developers of renewable energy facili- computer animation.
ties, such as tax and tariff exemptions and According to the LIMR, the Philippines
privileges. It is expected to significantly The Philippines is fast emerging as the aims to serve 50% of the rapidly growing
boost investments not only for micro-hy- location of choice in Asia for global contact center demand in the next four to
dro power, but also for wind and geother- contact centers, which have been bring- five years.
mal power.15 ing in the bulk of the country’s revenues
from outsourced IT and IT-enabled The US is the world’s largest market for
Information & Communications business services for global markets in medical transcription services, a US$25
Technology recent years. Contact centers are customer billion industry dealing with the electronic
service operations manned by customer interpretation and encoding of medical
ICT services offer very exciting business service representatives that interact with procedures and data. The Philippines is
opportunities for investors. customers via voice, e-mail, or live chat. establishing itself as an offshore medical
They often provide a mix of inbound and transcription services provider of choice,
with about 20 firms in the country cur-
11 Ibid.
rently offering such services.17
12 Ibid.
13 Energy and Utilities Overview. In SGV E&U Database. Manila: SyCip Gorres Velayo & Co., 2005. Computer animation, another e-services
14 “Renewable Energy Bill Approved,” BusinessWorld, 1 March 2006, sec. S1, p. 7.
priority, is seen as one of the develop-
15 Philippine Department of Energy, New & Renewable Energy (Manila: Philippine DOE, 29 March 2006);
available from http://www.doe.gov.ph/NRE/default.htm. ing fields in ICT. Based on government
16 Global Sourcing in Asia (Hong Kong: Hewitt Quarterly Asia Pacific, 29 March 2006); available from
forecasts, the industry is expected to
http://was4.hewitt.com/ap/resource/rptspubs/hewittquart/HQ_12/articles/globe_source_asia.html.
17 E-Services Philippines, Medical Transcription (Manila: E-Services Philippines, 31 March 2005); double annually over the next couple of
available from http://www.e-servicesphils.com/mt.htm. years.18 Philippine animation studios
18 http://itmatters.com.ph/news/news_02092004a.html
have been doing subcontracted anima-
17
ports that there are 53 registered business
Ten-Point Agenda to "BEAT THE ODDS" in Six Years process outsourcing (BPO) operators in
Under the Arroyo Administration the Philippines. Moreover, the 2005 Map-
ping Offshore Markets Update, published
What it stands for: by NeoIT, ranks the Philippines as no. 3
B - Balanced budget in terms of top global BPO destinations.20
E - Education for all Indeed, the Philippines is fast becom-
A - Automated elections ing a regional and global hub for shared
T - Transport and digital infrastructure to connect the country
corporate backroom operations, especially
T - Terminate the Moro Islamic Liberation Front (MILF) and New Peoples Army for financial services such as accounting
(NPA) conflicts and bookkeeping, account maintenance,
H - Heal the wounds of EDSA accounts receivable collection, accounts
E - Electricity and water for all barangays payable administration, payroll process-
ing, asset management, financial analysis
O - Opportunities for 10 million jobs and auditing, management consulting,
D - Decongest Metro Manila inventory control and purchasing, expense
Ds - Develop Clark and Subic
and revenue reporting, financial reporting,
tax reporting, and other finance-related
services such as financial leasing, credit
tion work for nearly two decades for such card administration, factoring and stock
huge entertainment companies as Warner brokering as well as logistics manage-
Bros., Hanna-Barberra, and more recently, ment, cargo ship management, engineer-
Cartoon Network.19 At present there are ing design and architectural drawings.21
around 22 animation service providers in
the Philippines. According to the Anima- In recognition of the vital role of commu-
tion Council of the Philippines (ACPI), nication and information in nation build-
Filipino animators are preferred by big ing, President Arroyo issued EO No. 269
entertainment companies due to their creating the Commission on ICT (CICT)
world-class talent, creativity, and lower to oversee ICT matters in the Philippines.
services cost and are recognized for ef- The creation of the commission aims to
ficient and quality output. They provide promote a central regulatory environ-
pre- and post-production services such as ment that will encourage the use of new
layout, cleanup, digital background pro- technology. The CICT is now the primary
duction, special effects creation, and other policy planning, regulating, and adminis-
such services. trative entity that will promote, develop,
and regulate integrated and strategic ICT
Recognizing the great technological systems and reliable and cost-efficient
strides the country has taken over the past communication facilities and services.
years, a considerable number of foreign
multinational companies have located The Business Development Services
their back-office shared services centers group of CICT has drafted blueprints
in the Philippines. Outsourcing Digest re- for flagship projects that are expected
19 Offshore Outsourcing World Staff. 2004. Interview. Tape recording, 20 February.

20 Athena e-services, The Philippines: Your Offshore Outsourcing Destination (Manila: Athena e-services,
29 March 2006); available from http://www.athenaeservices.com/news.php?newsid=7.
21 E-Services Philippines, Business Process Outsourcing (Manila: E-Services Philippines, 29 March 2006);
available from http://www.e-servicesphils.com/bpo.htm.
18
to propel the growth of the Philippines’ bidding out and awarding projects to the Strong Republic Nautical Highway Pro-
IT-enabled services industry. One of the most qualified entities; and the prioritiza- gram of President Arroyo, the government
projects is the development of the Philip- tion of infrastructure projects such as the has implemented 23 major road projects
pine Cyberservices Corridor, which is Roll-on/Roll-off (RORO) ports and the in 2005. The idea is to spur economic
primarily a branding strategy to help sell highways connecting them, roads and rail growth by interconnecting the country’s
the country’s e-services industry in the systems that will decongest Metro Manila, three main islands through the RORO
global market.22 and roads and airports in tourism hubs. System. The RORO provides easy trans-
Planned expressways will be opened for port of commuters, agricultural products,
Infrastructure and Transportation private financing through the BOT or and services from Mindanao to Visayas
other related schemes where investment and Luzon and vice versa.26
The Arroyo administration’s Medium- cost can be recovered by toll fees.24 The
Term Development Plan for 2004-2010 government also plans to increase infra- Based on the highlights of the 2005
provides many potential opportunities for structure spending to 4% of GDP over the DPWH accomplishment report, seven
local government units and the private next two to three years from current 2.2% road improvement works were undertaken
sector to be the government’s partners in of GDP.25 in the Western Nautical Highway, 12 in
the development and implementation of the Central Nautical Highway, and four
infrastructure. With the growth of the ICT sector, the in the Eastern Nautical Highway sectors.
government is also looking into ways of These nautical highways not only further
The administration has a 10-point agenda improving the country’s digital infrastruc- reduce transport cost but also enhance
providing the guiding framework for ture while reducing the cost of connectiv- public access to tourism areas throughout
the Department of Public Works and ity. One of the government’s thrusts is the country and serve as alternate routes
Highways’ medium-term infrastructure to continue to promote investments that for the flow of agricultural products. Upon
program, which focuses on the decen- support the provision of physical infra- its completion, the Nautical Highway will
tralization of development to different structure for high-speed connectivity, high reduce travel time by 10 to 12 hours, and
regions by developing a reliable trans- capacity, and secured network services at decrease transport cost by 37% to 43%
port network, the decongestion of Metro low cost. This will be accelerated through for passengers and 24% to 34% for cargo.
Manila, the development of Clark and the participation of and partnership with Reduced travel time will also mean im-
Subic Ecozones, the provision of clean the private sector. proved delivery of supplies and products
water to all barangays in the country, the for business.27
construction of new school buildings and To capture long-term investors in infra-
classrooms, and the creation of at least six structure, the government also plans to The Batangas Port has become an alter-
million jobs in six years.23 securitize portions of Clark and Subic, native to the Port of Manila. Industrial
creating areas where investors can be estates and tenant companies that have
Among the government’s plans are the comfortable and free from political inter- located in Batangas did so with an eye to
amendment of the Build-Operate-Trans- ference. the convenience of locating near the port.
fer (BOT) Law to promote wider private A new international seaport was recently
participation; the creation of a Philippine Philippine ports are now ready to accom- opened at Balayan Bay in Calaca, Batan-
Infrastructure Corporation (PIC) that modate bigger inter-island cargo vessels. gas, for the exclusive use of locators in
will manage the infrastructure fund by In relation to this and in support of the the Batangas Union Industrial Park.
22 Grace Clavecilla, “CICT Drafts Roadmap for E-Services Growth,” ComputerWorld Philippines The Manila International Airport Author-
(August 2004).
23 Philippine Department of Public Works and Highways. 2005. Presentation presented at Philippine
ity, which now exercises administrative
Infrastructure Conference, at InterContinental Manila. supervision and control over all interna-
24 Ibid. tional airports in the country, is embarking
25“NEDA Pushes Increase in Infrastructure Spending,” BusinessWorld, 9 March 2005.
26 Philippine Department of Public Works and Highways, DPWH Pushes Road Projects to Support Nautical on a two-year, PhP1.25 billion, medium-
Highway (Manila: Philippine DPWH, 29 March 2006); available from http://www.dpwh.gov.ph/News_index. term plan to upgrade the Ninoy Aquino
asp. International Airport’s (NAIA) security
27 Ibid.
19
system in preparation for the planned EO No. 270 directing the Department
Fast Facts transfer to NAIA 3, the modern US$640 of Environment and Natural Resources
million facility set to open in 2006. The (DENR) to take the lead in the prepara-
Abundant Philippine Reserves
security system would be comparable to tion of the Minerals Action Plan, which
Metallic minerals those of other international terminals in provides the strategies and programs, as
Gold, silver, platinum, iron, chromite, Asia, if not in the world.28 well as the rules and regulations for the
nickel, cobalt, manganese, copper, lead, exploration, development, and utilization
zinc, molybdenum, mercury, aluminum
Mining of the country’s mineral resources. In line
Nonmetallic minerals with EO No. 270, the DENR, in coordina-
Phosphate rock, guano, magnesite, sulfur, Data from the Mines and Geosciences Bu- tion with various agencies and sectors,
asbestos, barite, clay bentonite, dolomite, reau (MGB) show that the Philippines has has continuously undertaken measures to
diatomite, feldstar, gypsum, limestone,
established reserves of about 14 metallic further simplify and streamline procedures
marble, perlite, rock aggregates, silica,
sand and gravel, salt, jade, quartz, and 27 nonmetallic minerals. It ranks sec- for granting mining rights and permits.
rhodomite, tektite, opal, obsidian, diorite, ond in the world in terms of gold depos- Government has also pledged to maintain
agate, serpentinite its, third in copper, and fourth in nickel fiscal and nonfiscal incentives for the min-
Source: Mines and Geosciences Bureau, Department
deposits. Considered a highly mineralized ing sector to attract more foreign capital
of Environment and Natural Resources area, the Philippines is estimated to have and accelerate the development of the
mineral resources in high-potential sites country’s mineral resources. At present,
covering nine million hectares, or about holders of mineral agreements, financial
30% of the country’s total land area. So and technical assistance agreements, and
far, only 420,000 of the nine million have exploration permits are entitled to incen-
mining permits,29 leaving almost 8.6 mil- tives from the BOI under the Omnibus
lion hectares unexplored. Investments Code.
Given recent developments, investors are In September 2003, the Department of

eyeing the Philippine mining industry Trade and Industry (DTI) and the DENR
with renewed interest. On December 1, issued a joint memorandum circular creat-
2004, the Supreme Court reversed its ing the Mining Investment Assistance
January 27, 2004 decision that nullified Center, which was tasked to facilitate
the Mining Act of 1995. The Court ruled mining investments by providing in-
there was nothing unconstitutional about formation on mining rights, investment
the mining law’s implementing rules and procedures, fiscal regimes, and business,
regulations, and, in effect, reversed the environmental, and social norms, as well
ban on foreign ownership of large-scale as referrals to other government offices
mining operations. and advisory services.
New policies and existing incentives The DENR has canceled 84 inactive
make the mining industry an even more mining permits and contracts covering
attractive prospect for investors. On Janu- 100,000 hectares as part of its measures
ary 16, 2004, President Arroyo issued to weed out speculators and encourage
28 Patricia Ann Perez and Erik Lorenzana, E-bulletin: Good News About the Philippines (Washington DC:
Embassy of the Republic of the Philippines, 29 March 2006); available from http://www.philippineem-
bassy-usa.org/events/ebulletin_21feb06.htm.
29 Angelo Reyes, Philippine Secretary of Interior and Local Government, The Philippines: A New Oppor-
tunity for Africa in Asia (Manila: Philippine Mines and Geosciences Bureau, 29 March 2006); available
from http://www.mgb.gov.ph/SATR_Philippines_A_New_Opportunity_files/frame.htm.
20
the entry of real investors who have the ing retail market monitoring.33 For the port industry participants in negotiating
financial capacity to venture into the min- natural gas industry, the government plans with natural gas contractors for reasonable
ing industry. New and serious investors to establish a domestic infrastructure fees, terms, and conditions for possible
could take over the canceled agreements network and expand the use of natural gas supply agreements.36
provided they comply with all the require- gas by considering the use of compressed
ments. natural gas (CNG) as district cooling Other government programs include plans
for industrial use and other commercial to enhance energy exploration and devel-
For 2005, the government has succeeded applications. CNG-powered buses will opment through the conduct of the Philip-
in generating interest in 24 new and ex- soon ply the Laguna/Batangas-Manila pine Energy Contracting Round (PECR).
panded flagship mining projects.30 These and vice-versa routes. By 2014, all Metro The PECR in 2005 offered 22 prospect
will require US$8 billion in investments Manila public utility buses are expected to areas for exploration, development and
for the next five to six years.31 A mining run on CNG.34 Refueling stations are cur- production of petroleum, geothermal, and
road show in China alone created US$1.6 rently under construction to pave the way coal.37
billion in investments, and other road for the commercial run of the CNG buses.
shows have been brought to several coun- Under the government’s Natural Gas Among petroleum products, diesel which
tries in Europe, Africa, and Asia.32 With Vehicle Program for Public Transport, the will grow at an annual rate of 4.7% will
various potential onshore and offshore price per diesel liter equivalent for CNG dominate the oil mix. Liquified petroleum
mineral resources, the Philippines may buses is half that of the prevailing price of gas, motor gasoline, and fuel oil follow
become one of the largest mining powers diesel. The promotion and increased use with an average annual growth rate of
in the world. of alternative transport fuels, one of the around 5.0%, 4.5% and 1.8% respectively.
major pillars of the government’s five- Kerosene and jet oil round up the mix
Oil and Gas point energy independence program, will with an average annual growth rate of
thus lessen the country’s dependence on around 1.5% and 3.0% respectively.
The 2005 Philippine Energy Plan lays imported fuel.35
down the government’s plans and pro- The Philippine transport sector depends
grams for the improvement of the oil To attract potential investors to invest heavily on imported oil, but the govern-
and gas industry. For the downstream oil in the processing of natural gas and the ment aims to increase the country’s ener-
industry, the government plans to encour- construction of the necessary infrastruc- gy self-sufficiency level to 60% by 2010.
age private sector participation in industry ture for CNG, the Department of Energy To this end, it has launched the National
activities and at the same time safeguard (DOE) has declared open access to all Bioethanol Program, which encourages
consumer welfare by promoting oil sup- existing and future natural gas resources the use of bioethanol (ethyl alcohol) as an
ply security programs; improving quality in the country. As such, the DOE will sup- alternative fuel to reduce the Philippines’
standards and facilities; and strengthen- dependence on imported oil.38 Ethanol
is seen as one of the most promising
30 Ibid. alternative energy sources. It is produced
31 Ibid. from crops such as corn, wheat, and sugar,
32 Benjamin Philip Romualdez, “Investment Opportunities in the Philippine Mining Sector,”
Industry Bulletin 1, no. 2 (September 2005): 4.
and can be used as a transportation fuel
33 Philippine Department of Energy, Philippine Energy Plan 2005 Update (Manila: Philippine DOE, 29 in three ways: as a blend to gasoline, a
March 2006); available from http://www.doe.gov.ph/PEP/PEP_2005_2014.pdf. component of reformulated gasoline, or a
34 Ibid.
35 Philippine Department of Energy, President Arroyo Welcomes Arrival of CNG Buses for Commercial primary fuel with gasoline as blend. The
Operations (Manila: Philippine DOE, 29 March 2006); available from http://www.doe.gov.ph/press/ DOE has also spearheaded the introduc-
2005-07-01-CNG_Buses.htm.
tion of coco methyl ester (CME) as an

36 “DOE Declares Open Access to RP Gas Resources,” Philippine Daily Inquirer, 11 July 2005, sec. A, p. 7.
37 Philippine Department of Energy, Philippine Energy Contracting Round 2005 Official Announcement alternative transport fuel. The use of etha-
(Manila: Philippine DOE, 31 August 2005); available from http://www.doe.gov.ph/PECR2005/ nol and CME will not only help alleviate
announcement.htm.
the impact of rising oil prices but may
38 Philippine Fuel Ethanol Alliance, About Us (Manila: Philippine Fuel Ethanol Alliance 29 March 2006);
available from http://www. bioethanol.com.ph/about/about.htm. also benefit sugar and coconut farmers
39 Philippine Department of Energy, Lotilla Hails NDC Involvement in Ethanol Program (Manila: Philippine throughout the country.39
DOE, 29 March 2006); available from http://www.doe.gov.ph/press/2005-04-05-NDC_Ethanol.htm.
21
Professional Services Approved investments in the trade sector
Fast Facts reached PhP 303.8 million in the first
The Philippines is a rich source of skilled three quarters of 2005. About PhP 84 mil-
Retail Trade Liberalization Act of 2000
workers and ranks second among offshore lion or 28% of the total approved invest-
allowed foreign investors to sell to the
destination countries. Each year, the ment was foreign direct investments
general public merchandise, commodi-
country produces about 405,000 college (FDI). The approved FDI in the trade
ties, or goods for consumption, subject
graduates specializing in diverse fields. sector was a big jump from the PhP 40
to certain exceptions.
The OECD reports that the Philippines million registered in 2004, reflecting an
• Allows full foreign ownership of retail

enterprises if paid-up capital is at
represents a “large supplier of English-
speaking college-educated accountants,
improvement in the investment climate in
the trade sector.
least US$2.5 million software writers, architects, telemarketers,
and graphic artists.” Stock Market
• Allows full ownership of existing retail
businesses (subject to investment Filipino accountants have recently been Despite increasing world oil prices,
requirement of at least US$830,000 receiving much attention, with a number domestic political controversies, and
per store or branch, Section 3, Rule of US firms outsourcing their accounting weak economic data, the Philippine Stock
V of the Implementing Rules and work to the Philippines. Foreign firms are Exchange (PSE) performed well in 2005.
Regulations) likewise outsourcing engineering services; The PSE Composite Index climbed 15.0%
Filipino engineers, skilled in implement- higher to 2,096.04 from 1,822.83 in 2004.
ing design systems and related modules, The market was buoyed by foreign funds
have successfully carried out worksharing that were attracted to companies that were
Fast Facts in Manila offices. The country’s nurses, able to sustain their earnings in the midst
doctors, physical therapists, and dentists of the oil and political crisis.
Top Tourists by Country of Origin
continue to attract foreigners in search of
1. Korea affordable medical services. Favorable macroeconomic fundamentals
2. USA enabled the PSE to continue its strong
3. Japan Retail Trade performance by starting off 2006 with a
4. Taiwan robust 6.23% rise in January to 2,145.39
Retail trade sustained its growth although from 2,019.56 in 2005. Monthly compara-
5. China
at a moderated pace in 2005. Retail trade, tive change stood at 2.35%. News of the
6. Hong Kong
which accounts for about three-fourths of budget deficit being lower than target,
7. Australia
total trade, rose 5.9% in 2005 compared high economic growth rates, slower infla-
8. United Kingdom
to 6.9% in the previous year. Meanwhile, tion rate, and steady interest rates pro-
9. Canada
wholesale trade slowed down to 5.5% vided positive leads to the market.
10. Singapore and Germany (tie)
in 2005 from 6.3% the year before. The
growth in retail trade came amidst higher The PSE ended February 2006 1.61%
Source: Department of Tourism
oil prices and the subsequent rise in higher at 2,178.99 or 33.60 points more
inflation. Higher sales revenues resulted than in January. Investor sentiment gave
in part from the increased remittances of more weight to economic fundamentals
overseas Filipinos, particularly the OFWs than to political turbulence. Also, the
(see discussion on OFWs on page 71) and market got its boost from credit rating
the expansion of operations of retailers. upgrades from international credit rating
Major retailers and fast food chains have agencies, and buying into selected stocks.
put up new branches and outlets in the
NCR as well as in emerging urban areas
in the regions.
22
Tourism Calabarzon SOCSKSARGEN
Calabarzon is a large-scale multisectoral SOCSKSARGEN is the more popular
With its beautiful beaches and rich marine project complex in a region contiguous to name for the areas of South Cotabato,
life, year-round fiestas, shopping bargains, Metro Manila. Calabarzon is composed of Sultan Kudarat, Sarangani, and Gen-
and hospitable people, the Philippines the Southern Luzon provinces of Cavite, eral Santos City. This economic growth
makes a very attractive tourist destina- Laguna, Batangas, Rizal, Quezon, and corridor contains abundant agriculture
tion. America, Japan, and Korea are the Aurora. The region has been transformed and natural resources, as well as mod-
Philippines’ major tourist markets, and from an agro-base rural economy to a ern physical infrastructure including an
the Chinese market has been cited as the thriving industrial/urban-based economy. international airport. The area also offers
fastest-growing. While other prime tour- Calabarzon is now the site of at least access to nearby ASEAN growth markets.
ist destinations in Asia may have bigger 65 major private industrial estates and The Philippine, US, and Japanese govern-
volume of tourists, the Philippines attracts Ecozones (see pages 33 to 35 of the Chap- ments have allocated US$200 million for
“quality tourists”—family vacationers ter How to Operate in the Philippines for the development of projects in this area.
who spend more and stay longer in the a discussion on Ecozones).
country. Infrastructure and Build-Operate-
Cagayan de Oro-Iligan Corridor Transfer Projects
Tourism-related business recorded a 20% Lying along the northern coast of Mind-
growth in 2005, and tourist arrivals were anao island, the Cagayan-Iligan Corridor Economic reforms have allowed the
estimated to have reached 2.6 million. unites the two cities of Cagayan de Oro private sector, particularly foreign
Given these figures, the DOT is hoping to in Misamis Oriental, an agro-industrial investors, to have wider participation in
attract at least 3 million tourists by 2006. center, and Iligan City in Lanao del Norte, almost every aspect of the economy. In
an industrial hub. The corridor abounds addition to the government’s revitalized
Under the 2005 Investment Priorities in the supply of hydroelectric power and privatization program, the landmark BOT
Plan (IPP) guidelines, hospital services, is the location of several industrial plants. legislation redefined government’s role
medical and dental services, nursing care, It is being promoted as an ideal location by prescribing the legal and administra-
rehabilitation and recuperation services, for investments in metals (engineering tive framework for private investment
retirement villages, and related services and metalworking); construction and in infrastructure and other development
located in identified medical zones or out- infrastructure; oleochemicals and basic projects—areas previously exclusive to
side Metro Manila when catering mainly chemicals; and agriculture/aquaculture public investments.
to foreigners and nonresidents are eligible and agro-forestry.
for registration with the BOI and the Phil- RA No. 7718 or the amended BOT Law
ippine Economic Zone Authority (PEZA). North Quad enables the private sector to participate in
Medical tourism facilities and retirement The Northwestern Luzon Growth Quad- the financing, construction, operation and
villages may qualify for pioneer status. rangle or North Quad integrates the maintenance of infrastructure projects.
The government is promoting the Philip- coastal provinces of Ilocos Norte, Ilocos The Private Sector Participation Program
pines as a major destination for medical Sur, La Union, Pangasinan, and the inland is regarded as one of the success stories
tourists. areas of Abra and Southern Benguet at in infrastructure privatization not only by
the northwestern tip of Luzon. Due to its private companies but also by multilateral
Regional Growth Areas location, it is considered as an ideal gate- agencies and other countries.
way for trade with China, Taiwan, Hong
To promote regional development, the Kong, Korea, Japan, and the ASEAN.
government has identified 11 growth The region is envisioned to be an indus-

networks/corridors scattered around the trial, financial, and tourist haven. Possible
country that are currently under various investment areas include the development
stages of implementation. Four of these and expansion of existing infrastructure,
areas are in the investment promotion agri-industrial estates, and tourism
stage. centers.
23
PHILIPPINE ECONOMIC ZONE AUTHORITY
PARTIAL LIST OF APPROVED/PROCLAIMED
SPECIAL ECONOMIC ZONES
December 31, 2005
Ilocos Norte Toyota Sta. Rosa (Laguna) Special Economic Zone II

Fort Ilocandia Tourism Economic Zone YTMI Realty Special Economic Zone
Abra Batangas
Abra Agro-Industrial Center Cocochem Agro-Industrial Park
Benguet First Batangas Industrial Park
Kelly Special Economic Zone First Philippine Industrial Park
Baguio First Philippine Industrial Park (Expansion I)
Baguio City Economic Zone First Philippine Industrial Park (Expansion II)
Pangasinan Light Industry & Science Park III
Pangasinan Industrial Park II Lima Technology Center (Lipa) Ilocos Norte
Zambales Lima Technology Center (Malvar)
Subic Shipyard Special Economic Zone Philtown Technology Park Abra
Tarlac RLC Special Economic Zone
Central Technopark South Coast Ecozone
Luisita Industrial Park Tabangao Special Economic Zone Benguet
Tarlac Provincial Information Technology Park II Camarines Norte
Baguio
Pampanga Global Industrial/Maritime Complex
Angeles Industrial Park Albay Pangasinan
TECO Special Economic Zone Legaspi City Special Economic Zone
Zambales
Bulacan Rapu-Rapu Ecozone Tarlac
Agus Industrial Estate Palawan
Bataan Rio Tuba Export Processing Zone Pampanga
Bulacan
Bataan Economic Zone Aklan Bataan Rizal
Plastic Processing Center SEZ Boracay Eco-Village Resort Tourism
NCR
PNOC Petrochemical Industrial Estate Economic Zone Cavite Camarines Norte
Laguna
Subic Hermosa Cyber City Negros Occidental
Rizal San Carlos Ecozone Batangas
Camarines Sur
Albay
Eastbay Arts, Recreational and Tourism Zone Cebu
Robinsons Big R Supercenter Cainta Junction Cebu Light Industrial Park
National Capital Region Cebu South Reclamation Project
Amkor Technology Special Economic Zone Mactan Economic Zone
Macroasia Ecozone Mactan Ecozone II
Manila Harbour Center MRI Ecozone
Philippine International Air Terminals Co. SEZ New Cebu Township
Victoria Wave Special Economic Zone Polambato-Bogo Economic Zone
Cavite West Cebu Industrial Park Aklan Leyte
Cavite Economic Zone
Cavite Economic Zone (Annexation)
Cavite Eco-Industrial Estate Negros Cebu
Cavite Productivity Economic Zone Palawan Occidental
Daiichi Industrial Park
EMI Special Economic Zone Surigao del
Negros
Fil-Estate Industrial Park Oriental Norte
Filoil Special Economic Zone
Agusan del
First Cavite Industrial Estate Norte
Gateway Business Park Misamis Oriental
Gateway Business Park I Cagayan de Oro
Island Cove Tourism Economic Zone
Agusan del Sur
People’s Technology Complex
Laguna Lanao del Davao del Norte
Norte
Calamba Premiere International Park Leyte
Carmelray Industrial Park Amihan Woodlands Township Zamboanga
Carmelray Industrial Park II Eastern Visayas Regional Growth Center
South Cotabato
Carmelray International Business Park Leyte Industrial Development Estate
Filinvest Technology Park Calamba Leyte Information Communication Technology Park
Greenfield Automative Park Zamboanga
Laguna International Industrial Park Ayala de Zamboanga Industrial Park

Laguna Technopark I Misamis Oriental
Laguna Technopark II Jasaan Misamis Oriental Ecozone
Laguna Technopark III Lanao del Norte
Laguna Technopark IV CIIF Agro-Industrial Park
Light Industry & Science Park I Davao del Norte
Light Industry & Science Park II Samal Casino Resort
Toyota Sta. Rosa (Laguna) Special Economic Zone First Oriental Business and Industrial Park
24
What the Philippines Can Offer Your Business
1. Basic rights and guarantees to investors

a. Guarantee against expropriation
b. Guarantee against losses due to:
(1) Nationalization
South Cotabato (2) Damage caused by war
Sarangani Economic Development Zone
SRC Calumpang Economic Development Zone c. Remittance of foreign exchange
Agusan del Norte (1) Earnings, profit, and dividends (on investments)
Nasipit Agusan del Norte Industrial Estate
Tubay Agri-Processing Center
(2) Principal and interest on foreign loans
Agusan del Sur (3) Others
Shannalyne Technological and Environmental Park d. Repatriation of capital
Surigao del Norte
Philnico Industrial Estate
2. Protection schemes and priorities given to investors and aliens
IT PARKS/BUILDINGS a. Employment of aliens
National Capital Region b. Patent protection
6750 Ayala Avenue Building c. Protection against unjust competition
Convergys IT Building
Diliman IT Building (1) Import competition
E-Square IT Park (2) Local competition through imposition of barriers to entry in the industry
Eastwood City CyberPark
EDSA Central IT Center
Eugenio Lopez Jr. Communication Center 3. Exemptions from or reduction of taxes and tariff duties
Exportbank Plaza Building
Gateway Callcenter Office a. Exemption from corporate income taxes
Gateway Office Tower
GT Tower International (1) Tax holiday years and conditions
MSE Center (2) Reduction in income tax rate and preferential tax treatment
Multinational Bancorporation Centre
Northgate Cyber Zone
(3) Applicability to other income
Pacific IT Center b. Exemption from or reduction of taxes on imported capital goods
PBCom Tower c. Exemption from or reduction of taxes on imported raw materials
People Support Center IT Building
Philamlife IT Building d. Exemption from other taxes and fees
PSMT IT Building
RCBC Plaza Information Technology Park
Red Flower Company, Inc. IT Building 4. Deductions from taxable corporate income
Riverbank Center ICT Bldg. 1
Robinsons Cyberpark a. Accelerated depreciation allowance
Robinsons Equitable Tower b. Carryforward of loss
Robinsons Place Novaliches
SM Cyberzone 1 c. Other deductions
SM iCity
Summit One Office Tower
The Enterprise Center 5. Reduction from corporate income taxes
Unionbank Plaza
UP Science and Technology Park (South) a. Tax credit on domestic capital equipment
Laguna b. Other tax credits
Allegis Information Technology Park
Camarines Sur
Camarines Sur Information Technology Park 6. Special incentives
Negros Oriental
Federated IT Park a. To multinational companies
Cebu
Arcenas Estate IT Building b. To exporters
Asia Town Information Technology Park
HDMF-WTCI IT Tower
7. Government assistance to investors
Innove IT Plaza
JY Square IT Center
KRC IT Building a. Joint venture brokerage
Cagayan de Oro b. Processing of application and other forms of assistance
Pueblo de Oro IT Park
25
SPECIAL SECTION
Enabling Laws for Investments
Maritime Industry comply with the age limit requirement

at the time of acquisition counted from
For an archipelagic country of more than the date of the vessel’s original com-
7,000 islands, setting up and maintaining missioning
a viable transport infrastructure and pro- • Exemption from value-added tax on
viding maritime services are difficult to the importation of life-saving equip-
achieve. To address the issue, the government, safety and rescue equipment,
ment is propelling the maritime industry and communication and navigation
as an effective and efficient logistics sup- safety equipment, steel plates and
port and services sector through the enact- other metal plates including marine-
ment of RA No. 9295, otherwise known grade aluminum plates, used for trans-
as the Domestic Shipping Development port operations
Act of 2004 and its complementary law, • Accelerated depreciation for fixed
RA No. 9301, otherwise known as the assets, provided that the domestic
Overseas Shipping Development Act. shipping operator notifies the BIR
at the beginning of the depreciation
RA No. 9295 aims to empower the devel- period.
opment of Philippine domestic shipping,
shipbuilding, ship repair, and shipbreaking RA No. 9301 or the Overseas Shipping
through investment incentives, deregula- Development Act, on the other
tion of the rates/operation, enhancement hand, which amended RA No. 7471,
of safety standards, compulsory insurance the Philippine Overseas Shipping
coverage for passengers and cargoes, Development Act, is expected to
reasonable fines and penalties, and other “stimulate private sector investment in
constructive measures for a strong and Philippine overseas shipping that can
competitive domestic merchant fleet. enhance the competitiveness of the
country’s merchant fleets and give them
Under the said Act, a system of invest- better access to cargoes worldwide.”
ment incentives which shall be uniformly The amendatory law is also expected to
applied in domestic shipping, shipbuild- encourage local ship owners and operators
ing, and ship repair industry includes the to increase their investments by acquiring
following: more vessels that will carry exported and
imported products, and thus result in for-
eign exchange savings.
• Exemption from value-added tax on

the importation and local purchase of
passenger and/or cargo vessels of 150 Foreign investment in a Philippine ship-
tons and above, including engine and ping enterprise is allowed up to 40% of
spare parts of said vessels, provided the capital of such enterprise.
that the vessels to be imported shall
26
Special Section
Mining Industry
The Philippine Mining Act and Its
Affirmation by the Supreme Court
While the 1987 Constitution provided that

the exploration, development, and utiliza-
tion of natural resources shall be under the
full control and supervision of the State, it
also allowed foreign-owned corporations
to provide technical or financial assistance
for large-scale exploration, development,
and utilization of minerals. Congress then
passed RA No. 7942 or the Philippine
Mining Act of 1995 and, together with
Presidential Decree (PD) No. 1586 or
the Philippine Environmental Impact
Statement (EIS) System, the current
Philippine policy framework for mining
was put in place.
RA No. 7942 is considered as the primary 7942 guarantees the mining contractor to • Pollution control devices shall not be
tool to revitalize the mining industry. repatriation of investments, remittance of subject to real property and other tax
The purpose is clear: to provide the posi- its earnings, freedom from expropriation, assessments
tive and competitive climate for mining requisition of investment, and confidenti- • A net operating loss without the ben-
investments with equal considerations for ality of information supplied. efit of incentives incurred in any of
both social and environmental responsi- the first 10 years of operations may
bilities. Under the Act, the government Further, it provides a regulatory structure be carried over as a deduction from
was authorized to enter into three major that offers the following benefits: taxable income for the next five years
modes of mining rights: Exploration immediately following the year of
Permit (EP), Mineral Agreement (MA), • Contractors in mineral agreements such loss
and Financial or Technical Assistance and financial or technical assistance • Income tax accelerated depreciation
Agreements (FTAA).40 agreements shall be entitled to the • Option to deduct exploration and
applicable fiscal and non-fiscal incen- development expenditures accumu-

Apart from the basic rights and guaran- tives as stated under the Omnibus lated as cost for purposes of arriving
tees provided in the Constitution, RA No. Investments Code at the taxable income
40
An FTAA may be entered into for the exploration, development and utilization of gold, copper, nickel, chro-
mite, lead, zinc, and other minerals, provided, that no FTAAs may be granted with respect to cement raw
materials, marble, granite, sand and gravel, and construction aggregates.
27
SPECIAL SECTION
Type of Mining Maximum Area for Term Qualified Person
Right Corporations (has.)
Exploration Onshore, in any one province: 2 years; renewable Filipino citizen
Permit 16,200 for a maximum term
of 6 years In case of corporations,
Onshore, in the entire partnerships, asso-
Philippines: 32,400 ciations, cooperatives, at
least 60% of the capital is
Offshore, in the entire owned by Filipino citizens
Philippines, beyond 500 meters
from the mean low tide: 81,000 Foreign-owned corporation
Mineral Onshore, in any one province: 25 years; renewable Filipino citizen

Agreement 8,100 for another term not
exceeding 25 years In case of corporations,
Onshore, in the entire partnerships, asso-
Philippines: 16,200 ciations, cooperatives, at
least 60% of the capital is
Offshore, in the entire owned by Filipino citizens
Philippines, beyond 500 meters
from the mean low tide: 40,500
Financial or Onshore: 81,000 25 years; renewable Filipino citizen
Technical for another term not
Assistance Offshore: 324,000 exceeding 25 years In case of corporation,
Agreement partnership, association or
Combination of Onshore/ cooperative, at least 60%
Offshore: 405,000 of the capital of which is
owned by Filipino citizens
Foreign-owned corporation
Although initially challenged for being Agriculture and Fisheries

unconstitutional, the Supreme Court has Industry
held that agreements involving either
technical or financial assistance are in In a bid to extend the opportunities of the
fact service contracts where the foreign new economy to the rural countryside, the
contractor provides the capital, techno-
government has made a special effort to
logical and technical know-how, and
cultivate a modern and socially equitable
managerial expertise in the creation and
agriculture and fisheries sector.
operation of the large-scale mining/extrac-
tive enterprise. The government, through
The blueprint for the sector’s advance-
the DENR and Mines and Geosciences
ment is contained in the Agriculture and
Bureau, actively exercises full control
Fisheries Modernization Act (AFMA) of
and supervision over the entire enter-
prise. The Mining Act of 1995 and its 1997. Policy and funding are key issues,
Implementing Rules and Regulations, and the AFMA defines the necessary
which allowed the entry of foreign firms policy environment and pinpoints the
through FTAAs, were thus declared con- public investment stream necessary to
stitutional insofar as they relate to FTAAs push the rural economy forward.
referred to in Section 2 of Article XII of
the Constitution. The AFMA seeks real policy changes
in the areas of public production and
28
Special Section
marketing services, training, education, Electric Power Industry same time, it is flinging the door open
and industrialization. As for funding, the to new industry players and creating a
AFMA confers an initial PhP20 billion- With the enactment of the Electric Power wholesale electricity spot market. The
budget and PhP17 billion annually for the Industry Reform Act (EPIRA) on June 26, resulting market competition is expected
next six years. An added boost comes in 2001, the Philippine electricity industry to deliver quality, reliable, and affordable
the form of trade and fiscal incentives, has shown it can change. The EPIRA, electricity to both industrial and house-
particularly the exemption of all agricul- which came into force after seven years hold consumers and ratchet up demand
tural and fishery enterprises from tariffs of being the subject of much debate in by around 9% per year through the end of
and duties in the importation of specific Congress, set in motion the deregulation the decade. Some 10,000 megawatts of
types of input. of the power industry and the breakup and newly installed electric capacity will be
privatization of state-owned enterprises. needed, only half of which will be sup-
The government has also set out to draw plied by current contracts. The remainder
private sector investments and participa- The EPIRA required the state-owned util- will be filled once the market deregulates.
tion to maximize the AFMA’s potential. ity National Power Corporation (Napocor)
Already, infrastructure developments are to dismantle its vertically integrated assets The government is shunting acknowl-
being shifted from developed mega-cent- into smaller subsectors such as generation, edged geographical difficulties and
ers like Metro Manila, to the designated transmission, distribution, and supply in targeting full electrification of the archi-
regional growth centers, particularly for preparation for eventual privatization. As pelago by 2006. Linking the country’s
the identified Strategic Agriculture and of 2004, six power plants had been priva- three major power grids (Luzon, Visayas,
Fisheries Development Zones. Roads tized. and Mindanao) and setting up separate
and highways leading to and from devel- local systems around small generating
oping regions are being constructed, The EPIRA is creating the necessary plants (where it is not economical to link
rehabilitated, or upgraded. Among these conditions for the fulfillment of its three small islands’ grids into the national grid)
projects are the Pan-Philippine Highway main objectives of developing indigenous is an elaborate venture. Opportunities for
in several parts of Cagayan Valley and resources, slashing electricity costs, and growth abound in this front.
the Camarines provinces, the Sto. Tomas- encouraging foreign investment. At the
Lipa Expressway, the Pan-Philippine
Highway from Camarines to Sorsogon
and from Agusan del Norte to Compostela
Valley, arterial roads in Negros, North
Cebu, Samar, the Zamboanga peninsula,
and the General Santos-Davao-Bukidnon
corridor, inter-urban expressways such
as the North Luzon Expressway and the
South Expressway, the Southern Tagalog
Arterial Road (STAR) or Batangas
Expressway (Lipa-Batangas City), and the
Subic-Clark-Tarlac Expressway.
Opportunities for growth and diversifica-

tion are expected to be tied in with the

implementation of the AFMA, and it is
hoped that the agriculture sector will
chalk up real and important gains in the
immediate future.
29
How to Operate in the Philippines
Investment Policy and Laws Omnibus Investments Code of 1987

(EO No. 226), as amended by RA
General Policy on Investments No. 7918
Investments are most welcome in the Implemented by the BOI, the Omnibus
Philippines. In general, anyone, regard- Investments Code of 1987 provides
less of nationality, is welcome to invest a comprehensive set of incentives for
in the country. For most economic activi- local and foreign enterprises engaged in
ties, restriction on foreign investments is activities considered by government as
on the extent of ownership allowed for a high priority for national development.
particular activity.
To qualify for BOI incentives, an
Philippine laws and regulations guarantee enterprise must engage in an area of
the basic rights of all investors and enter- activity listed in the current Investment
prises, including the following: Priorities Plan (IPP).
• Freedom from expropriation without If not listed in the IPP, an enterprise is

just compensation also entitled to incentives if either of the
• Right to remit profits, capital gains, and following criteria is met:
dividends within the guidelines of the
BSP, the country’s monetary authority • At least 50% of production is for
• Right to remit the proceeds of the liqui- export (for Filipino-owned enterprises)
dation of investments • At least 70% of production is for
• Right to obtain foreign exchange to export (for enterprises with more than
meet principal and interest payments 40% foreign equity)
on foreign obligations
Investment Activities under the 2005
There are several important laws gov- IPP
erning investments in the Philippines.
Presently, there are moves to consolidate The IPP form, formulated annually by the
all the incentive laws into one law to BOI and approved by the President, lists
rationalize the grant and administration of the priority activities for investment.
fiscal and nonfiscal incentives given by
The 2005 IPP is focused on the sectors
various incentive bodies.

identified in the 2004-2010 Medium-Term
The major investment laws are discussed Philippine Development Plan (MTPDP)
as follows. of the President. The 2005 IPP sup-
30
ports government objectives to promote
globally competitive economic activities,
build up the capabilities of small and me-
dium enterprises (SME), generate jobs,
provide food, deliver basic services, and
spur countryside development.
The 2005 IPP identifies 11 preferred

activities for investment, namely: health-
care and wellness products and services;
various electronics services; production
and/or manufacture of motor vehicle
parts; exploration, development, and/or
utilization of energy sources; shipbuild-
ing and shipping operations; manufacture by the Autonomous Region of Muslim Newly registered pioneer and
of fine jewelry and costume jewelry; pro- Mindanao (ARMM). nonpioneer enterprises may avail of
duction of fashion garments as endorsed a bonus year in each of the following
by the DTI; and expansion of infrastruc- Investments in these areas are classified cases if:
ture activities to include business parks, as either pioneer or nonpioneer activities.
mass housing, mass transport involving • Indigenous raw materials used are
railway system, among others. The 2005 at least 50% of the total cost of raw
IPP also retained the following activities: Incentives Available to BOI-Registered materials for the preceding years
commercial production and commercial Enterprises • The ratio of total imported and
processing of agricultural and fishery domestic capital equipment to
products; ICT; and tourism. Fiscal incentives number of workers does not exceed
US$10,000 to one worker
Other preferred activities include other • Income tax holiday. From the start • The net foreign exchange savings
export activities not identified above, of commercial operations, newly or earnings amount to at least
industry clusters supporting the preferred registered pioneer projects are exempt US$500,000 annually during the first
and other preferred activities and manda- from income taxes for six years, three years of operation
tory inclusions in the IPP under special nonpioneer firms for four years,
laws, and modernization activities. expansion or modernization projects • Additional deduction of labor
for three years (for incremental expenses from taxable income
There is also a special listing of econom- sales revenue/volume), and new or • Tax credit for taxes and duties on raw
ic activities determined for promotion expansion projects in less developed materials used in the manufacture,
and eligible for investment incentives areas for six years. processing, or production of export
products
31
• Additional deduction of necessary association, it must be organized under
and major infrastructure expenses Philippine laws and at least 60% of
The key features of the Foreign
from taxable income its capital is owned and controlled by
Investments Act (FIA) are the following:
• Exemption from taxes and duties on Philippine citizens.
• No restriction on 100% foreign
imported supplies and spare parts 3. If a corporation, it must be organized
ownership of export enterprises
for consigned or imported equipment under Philippine laws and at least
• No restriction on foreign ownership of
(Until June 6, 2006 per EO No. 313) 60% of the capital stock outstanding
domestic enterprises unless in areas
• Exemption from wharfage dues and and entitled to vote is owned and held
included in the Foreign Investments any export tax, duty, impost, and fee by Philippine nationals, and at least
Negative List (FINL) or when paid-up • Exemption from local business taxes 60% of the members of the Board
capital is less than US$200,000 or its for four or six years from date of BOI of Directors are Philippine citizens.
equivalent registration. If the corporation does not possess
• Waiver of FINL restriction if 60% output the required degree of ownership by
is exported Nonfiscal incentives Philippine nationals, the following
circumstances must be satisfactorily
• Simplification of customs procedures. established:
Customs procedures are simplified for
the importation of equipment, spare • It proposes to engage in a pioneer
parts, raw materials, and supplies, project which cannot be readily
and the export of products of BOI- and adequately filled by Philippine
registered firms. nationals as determined by BOI, or
• Unrestricted use of consigned the applicant will export at least 70%
equipment. BOI-registered enterprises’ of its total production.
use of consigned equipment is • It obligates itself to attain the status
unrestricted provided a re-export bond of a Philippine national within 30
is posted. years from date of registration, but a
• Access to bonded manufacturing and registered enterprise which exports
warehouse system 100% of its total production need not
• Employment of foreign nationals. comply with this requirement.
Foreign nationals may be employed • The pioneer area it will engage in
in supervisory, technical, or advisory is not within the activities reserved
positions for five years from a by the Constitution or other laws to
registered project's registration, Philippine citizens or corporations
extendible for limited periods to be owned and controlled by citizens.
determined by the BOI. The positions
of president, general manager, and Foreign Investments Act (FIA) of
treasurer, or their equivalents, of 1991 (or Republic Act No. 7042 as
foreign-owned registered firms may amended by RA No. 8179)
be retained by foreign nationals for a
longer period. The Foreign Investments Act (FIA) of
1991 liberalized the entry of foreign
Qualifications for BOI-Registered investments into the Philippines. Its
Enterprises passage marked the end of decades of

protectionism for local business.
1. If a natural person, he or she must be a
Philippine citizen. Under the FIA, foreign companies are
2. If a partnership or any other generally allowed to conduct business
32
in the Philippines subject to restrictions The types of Ecozones are as follows: by professionals and workers involved in
spelled out in the Foreign Investments IT Enterprises.
Negative List (FINL). The FINL is a Industrial Estates (IEs) are tracts of land
short list of areas of economic activities developed for the use of industries. They Each Ecozone is to be developed as an
where foreign investments are restricted have basic infrastructure, such as roads, independent community with minimum
or limited (see Table 1 on page 34 for the water and sewage systems, pre-built government interference. It shall adminis-
current FINL). It has two components: factory buildings, and residential housing. ter its own economic, financial, industrial,
and tourism development without help
List A contains areas of activities reserved Export Processing Zones (EPZs) are from the national government. It shall
to Philippine nationals by mandate of the special IEs whose locator companies are also provide adequate facilities to estab-
Constitution and other specific laws. mainly export-oriented. EPZ incentives lish linkages with surrounding communi-
include tax- and duty-free importation ties and other entities within the country.
List B contains the areas of activity and of capital equipment, raw materials, and
enterprises where foreign ownership is spare parts. Enterprises Qualified to Locate in the
limited pursuant to law. Among these Ecozone
are defense- or law enforcement-related Free Trade Zones are areas in nearby
activities and those with implications ports of entry, such as seaports and The following describes each type of
on public health and morals. This list airports. Imported goods may be Ecozone enterprise.
includes small- and medium-sized unloaded, repacked, sorted, and
domestic market enterprises with paid-in manipulated without being subjected to • Export Enterprise – manufactures,
equity capital less than the equivalent of import duties. However, if these goods assembles, or processes products which
US$200,000 unless they involve advanced are moved into a non-free trade zone, they are 100% exported, unless a lower
technology as certified by the Department will be subjected to customs duties. percentage is approved by PEZA.
of Science and Technology or they • Free Trade Zone Enterprise – im-
employ at least 50 direct employees, in Tourism Ecozone refers to a tourism ports and markets tax- and duty-free
which case a minimum paid-up capital of development zone/tourism estate goods within the free trade area in the
US$100,000 is allowed. declared as a special economic zone Ecozone. Goods brought outside the
suitable for development into an free trade area will be subject to cus-
Special Economic Zone Act of 1995 integrated resort complex with prescribed toms and tariff duties.
(RA No. 7916, as amended by RA carrying capacities of tourist facilities • Service Enterprise – is engaged in any
No. 8748) and activities, such as, but not limited one or a combination of the following
to, sports and recreation centers, activities: customs brokerage, trucking/
This law was passed in 1995 to accomodations, convention and cultural forwarding, janitorial, security, insur-
encourage economic growth through the facilities, food and beverage outlets, ance and/or banking, consulting, or any
development of special economic zones commercial establishments and other such service approved by PEZA.
called Ecozones. PEZA implements this special interest and attraction activities/ • Domestic Market Enterprise – manu-
law and also grants incentives to qualified establishments, and provided with the facturer, assembler, or processor of
enterprises that locate in the Ecozone. necessary infrastructure. goods which continually fails to export
at least 50% of its total output for a
Ecozones are areas earmarked by IT Parks/IT Buildings are special period of three years if majority-owned
the government for development economic zones for IT projects and by Filipinos and at least 70% if major-
into balanced agricultural, industrial, services. An IT Park is an area or an ity-owned by foreign nationals.
commercial, and tourist/recreational IT building whole or part of which • Pioneer Enterprise – falls under any
regions (see pages 24-25of the Chapter has been developed into a complex of the following conditions:
Why You Should Invest in the Philippines capable of providing infrastructures and • Manufactures, processes, or produc-
for a partial list of approved/proclaimed other support facilities required by IT es goods not produced in a commer-
Ecozones). Enterprises including amenities required cial scale in the country
33
Table 1 Sixth Regular Foreign Investments Negative List
Due to limitations set by the Constitution and other specific laws, the following industries are fully or partly nationalized under the
Sixth Foreign Investments Negative List:
LIST A: Foreign Ownership is Limited by Mandate of the Constitution and Specific Laws
No Foreign Equity Up to 20% Foreign Equity 4. Ownership/establishment and administration
1. Mass media except recording (Art. XVI, 1. Private radio communications network (RA No. of educational institutions (Art. XIV, Sec. 4 of
Sec. 11 of the Constitution, Presidential 3846) the Constitution)
Memorandum dated May 4, 1994) 5. Culture, production, milling, processing,
2. Practice of all professions Up to 25% Foreign Equity trading, except retailing, of rice and corn and
a. Engineering 1. Private recruitment, whether for local or over- acquiring, by barter, purchase or otherwise,
b. Medicine and allied professions seas employment (Art. 27 of PD No. 442) rice and corn and the by-products thereof
c. Accountancy 2. Contracts for the construction and repair of (Sec. 5 of PD No. 194; Sec. 15 of RA No. 8762)
d. Architecture locally-funded public works (Sec. 1 of Com- 6. Contracts for the supply of materials, goods
e. Criminology monwealth Act No. 541, Letter of Instruction No. and commodities to a government-owned or
f. Chemistry 630) except: controlled corporation, company, agency, or
g. Customs brokerage a. Infrastructure/development projects cov- municipal corporation (Sec. 1 of RA No. 5183)
h. Environmental planning ered in RA No. 7718 7. Project proponent and facility operator of a
i. Forestry b. Projects which are foreign-funded or-as- BOT Project requiring a public utilities fran-
j. Geology sisted and required to undergo international chise (Art. XII, Sec. 11 of the Constitution; Sec.
k. Interior design competitive bidding (Sec. 2(a) of RA No. 7718) 2(a) of RA No. 7718)
l. Landscape architecture 3. Contracts for the construction of defense-re- 8. Operation of deep sea commercial fishing ves-
m. Law lated structures (Sec. 1 of CA No. 541) sels (Sec. 27 of RA No. 8550)
n. Librarianship 9. Adjustment companies (Sec. 323 of PD No.
o. Marine desk officers Up to 30% Foreign Equity 612 as amended by PD No. 1814)
p. Marine engine officers 1. Advertising (Art. XVI, Sec. 11 of the Constitu- 10. Ownership of condominium units where the
q. Master plumbing tion) common areas in the condominium project are
r. Sugar technology co-owned by the owners of the separate units
s. Social work Up to 40% Foreign Equity or owned by a corporation (Sec. 5 of RA No.
t. Teaching 1. Exploration, development, and utilization of 4726)
u. Agriculture natural resources (Art. XII, Sec. 2 of the Consti-
v. Fisheries tution) Up to 60% Foreign Equity
3. Retail trade enterprises with paid-up capital 2. Ownership of private lands (Art. XII, Sec. 7 of the
of less than US$2,500,000 (Sec. 5 of RA Constitution; Ch. 5, Sec. 22 of CA 141; Sec. 4 of 1. Financing companies regulated by the Securi-
No. 8762) RA No. 9182) ties and Exchange Commission (SEC) (Sec. 6
4. Cooperatives (Ch. III, Art. 26 of RA No. 6938) 3. Operation and management of public utilities of RA No. 5980 as amended by RA No. 8556)
5. Private security agencies (Sec. 4 of RA No. (Art. XII, Sec. 11 of the Constitution; Sec. 16 of 2. Investment houses regulated by the SEC (Sec.
5487) CA No. 146) 5 of PD No. 129 as amended by RA No. 8366)
6. Small-scale mining (Sec. 3 of RA No. 7076)
7. Utilization of marine resources in archipe- LIST B: Foreign Ownership is Limited for Reasons of Security, Defense, Risk to Health and
lagic waters, territorial sea, and exclusive
economic zone as well as small-scale utiliza- Morals and Protection of Small-and-Medium Scale Enterprises
tion of natural resources in rivers, lakes, Up to 40% Foreign Equity 5. All forms of gambling, e.g., race track op-
bays, and lagoons (Art. XII, Sec. 2 of the 1. Manufacture, repair, storage, and/or distribu- eration (RA No. 7042 as amended by RA No.
Constitution)
8. Ownership, operation, and management of tion of products and/or ingredients requiring 8179)
cockpits (Sec. 5 of PD No. 449) Philippine National Police (PNP) clearance 6. Domestic market enterprises with paid-in
9. Manufacture, repair, stockpiling and/or 2. Manufacture, repair, storage, and/or distribution equity capital of less than the equivalent of
distribution of nuclear weapons (Art. II, Sec. of products requiring Department of National US$200,000 (RA No. 7042 as amended by RA
8 of the Constitution) Defense clearance No. 8179)
10. Manufacture, repair, stockpiling, and/or
distribution of biological, chemical and 3. Manufacture and distribution of dangerous 7. Domestic market enterprises which involve
radiological weapons, and anti-person- drugs (RA No. 7042 as amended by RA No. advanced technology or employ at least 50
nel mines (various treaties to which the 8179) direct employees with paid-in-equity capital
Philippines is a signatory and conventions 4. Sauna and steam bathhouse, massage clinics, of less than the equivalent of US$100,000 (RA
supported by the Philippines) and other like activities regulated by law be- No. 7042 as amended by RA No. 8179)
11. Manufacture of firecrackers and other
pyrotechnic devices (Sec. 5 of RA No. 7183) cause of risks posed to public health and morals
(RA No. 7042 as amended by RA No. 8179)
34
• Uses a design, formula, scheme, Incentives Available to Ecozone Bases Agreement between the Philippines
method, or process which is new and Enterprises and the United States of America, and
untried in the Philippines within the territorial jurisdiction of the
• Produces nonconventional fuels or The incentives that are available to Municipalities of Morong and Hermosa,
manufactures equipment that utilizes Ecozone enterprises, depending on the Province of Bataan.
nonconventional sources of energy nature of their activities, are:
• Develops areas for agri-export The SSEFZ is a former US military facil-
processing development • Tax- and duty-free importation of ity converted into civilian use. The vision
• Given such a status under the annual capital equipment, raw materials, spare for the 67,000-hectare Subic Bay Freeport
IPP approved by the President. parts, supplies, breeding stocks, and (SBF) is to create a self-sustaining indus-
• Utilities Enterprise – contracted to genetic materials trial, commercial, financial, and invest-
provide light and power, water supply • ITH of four years for nonpioneer ment center in addition to its international
and distribution, communications, and projects or six years for pioneer seaport, which can anchor 600 ships.
transportation systems in the Ecozone. projects
• Facilities Enterprise – contracted • A special tax rate of 5% of modified Registered enterprises in the SSEFZ enjoy
to build and maintain necessary gross income in lieu of all national and various investment incentives including
infrastructure such as warehouses, local taxes after the ITH access to first-class commercial, residen-
buildings, road networks, ports, • Tax credit for import substitution tial, and tourist facilities. A registered
sewerage and drainage systems, and • Exemption from wharfage dues, export SBF enterprise is a business enterprise
other facilities considered as necessary tax, and import fees organized and existing under Philippine or
by PEZA in the development and • Tax credit on domestic capital foreign laws, registered with the SBMA,
operations of the Ecozone. equipment, breeding stocks, and and located within the SBF Zone.
• Tourism Enterprise – operates sports genetic materials
and recreation centers, accomodations, • Additional deduction for incremental Incentives to entities registered with the
convention and cultural facilities, and labor expenses and training expenses SSEFZ include:
other special interest and attraction • Unrestricted use of consigned
activities/establishments with foreign equipment • Tax- and duty-free importation of raw
tourists as primary clientele. • Permanent resident status for foreign materials for manufacture and actually
• Ecozone Developer/Operator – investors and immediate family manufactured into finished products,
develops, operates, and maintains • Employment of foreign nationals and on capital goods and equipment
the Ecozone, all component sectors • Remittance of earnings without prior needed for the business operation
(i.e., IEs, EPZs, Free Trade Zones, approval from the BSP within the zone.
and Tourist Ecozones) and all related • Exemption from local business taxes. • Exemption from national and local
infrastructure (roads, light and power taxes. In lieu thereof, SBF enterprises
systems, drainage facilities, etc.). Bases Conversion and Development pay a tax of 5% of gross income
• IT Enterprise – provides or Act of 1992 (RA No. 7227) earned, which refers to gross sales or
operates IT services. IT is the revenues derived from any business
collective term for the various Passed in 1992, this law created the Bases activity within the zone, less cost of
technologies involved in processing Conversion Development Authority, production or direct cost of services as
and transmitting information, which the Subic Bay Metropolitan Authority well as other costs specifically deter-
include computing, multimedia, (SBMA), and the Subic Special Economic mined in regulations to be material in
telecommunications, microelectronics, and Freeport Zone (SSEFZ) consisting of the operation of the business.
and their interdependences. Also the City of Olongapo and the Municipality
called “informatics” or “telematics,” of Subic, Province of Zambales, the lands Aside from the aforementioned enact-
the term now more often refers to the occupied by the Subic Naval Base and ments, several laws further encourage or
convergence of various information- its contiguous extensions as embraced, enhance investments in specific sectors.
based, broadcast, and mass-media covered, and defined by the 1974 Military Some of these laws are discussed in the
communication technologies. succeeding pages.
35
An Act Providing for the Terms, RWs may engage in the following
Conditions, and Licensing activities:
Kalookan City
Requirements of RHQs, ROHQs, • Serving as a supply depot for the
and RWs (RA No. 8756) storage, deposit, safekeeping of spare
parts, components, semi-finished
Valenzuela
RA No. 8756, signed into law on products, and raw materials including
Navotas
Malabon
Quezon City November 23, 1999, provides, among the packing, covering, putting up,
Kalookan City others, the rules and guidelines on marking, labeling, and cutting or
(South)
the establishment and maintenance of altering to customer's specification,
City of
multinational companies' Regional or mounting and/or packaging into kits or
San Juan
Manila Area Headquarters (RHQs), Regional marketable lots
Mandaluyong Pasig City
City Operating Headquarters (ROHQs), and • Filling up transactions and sales
Makati City
Regional Warehouses (RWs). made by their head offices or parent
Taguig companies
Pasay City
ROHQs are branches established in the • Serving as a storage or warehouse of
Philippines by multinational companies goods purchased locally by the home
Parañaque
that are allowed to derive income by office for export abroad.
Las Piñas providing services to their affiliates in the
region. Tax Treatment and Incentives of RHQs
Muntinlupa and ROHQs
RHQs are branches established in the
Philippines by multinational companies RA No. 8756 provides favorable tax
and whose headquarters do not earn or treatment and other nonfiscal incentives
Metro Manila covers the 12 cities of Manila, Kalookan,
Las Piñas, Makati, Mandaluyong, Marikina, Muntinlupa, derive income from the Philippines. for both the RHQs/ROHQs and their non-
Parañaque, Pasay, Pasig, Quezon, and Valenzuela, and the Filipino and Filipino employees. Some of
5 municipalities of Malabon, Navotas, Pateros, San Juan,
and Taguig.
Authorized Activities of RHQs, these incentives are listed in Table 2.
ROHQs, and RWs
Tax Treatment of Foreign and Filipino
RHQs act as supervisory, communica- Employees of RHQs and ROHQs
tions, and coordinating centers for their
subsidiaries, affiliates, and branches in the Expatriate employees of RHQs and
region. ROHQs will enjoy the following
incentives:
ROHQs, on the other hand, are allowed • Multiple-entry visa
to perform the following functions: • 15% preferential tax on gross
• General administration and planning compensation income
• Business planning and coordination • Tax- and duty-free importation of
• Sourcing/procurement of raw materials personal and household effects
and components • Travel tax exemption
• Corporate finance advisory services
• Marketing control and sales promotion The 15% preferential tax is also available
• Training and personnel management to Filipinos employed in an RHQ/ROHQ
• Logistics services who occupy the same positions as the

• Research and development services, non-Filipino employees. However,
and product development Filipino employees have the option to be
• Technical support and maintenance taxed at either 15% or the normal rates of
• Data processing and communication 0% to 32%, depending on their net taxable
• Business development. income.
36
Licensing of RHQs, ROHQs, and RWs
Table 2 Some Incentives of RHQs and ROHQs
The RHQ license and the ROHQ
RHQ ROHQ
license of nonbanking and nonfinancial
institutions are secured from the SEC, Exemption from income tax Subject to preferential income tax rate of
10% on taxable income
upon the favorable recommendation of
the BOI. Banks and financial institutions Exemption from branch profits remittance tax Subject to applicable BPRT (generally 15%)
secure the ROHQ license from the (BPRT)

SEC and the BSP, upon the favorable Exemption from VAT; Subject to 10% VAT
recommendation of the BOI. The sale or lease of goods and property, and
primary implementing agency for the services to the RHQ is subject to 0% VAT
establishment and supervision of RWs Exemption from all kinds of local taxes, fees, or charges imposed by a local government unit,
outside the ecozones is the BOI. except real property tax on land improvements and equipment
Tax- and duty-free importation of equipment and materials for training and conferences
Investors' Lease Act (RA No. 7652) needed and solely used for the RHQ/ROHQ functions, and which are not locally available, sub-
ject to prior BOI approval
RA No. 7652 allows foreign investors to
lease commercial lands in the Philippines
for a maximum of 75 years (previously 50
Incentives of Exporters
Table 3
Features of the Export Development Registered under EDA
years). Act (EDA)
• Exemption from PD No. 1853, or
Under this law, any foreign investor The following are the key features of Advanced Payment of Customs Duties
infusing capital into the country can lease EDA: • Tax credit for increase in current year's
private lands, in observance of Philippine export revenues, computed as follows:
laws and the following: Increase in Annual Export Revenue
• Institutionalization of the Export
Tax Credit (in %)
Development Council (EDC) to direct
First 5% 2.5
1. Lease contract shall first be for 50 the export offensive Next 5% 5.0
years, renewable only once for another • Privatization of export promotion Next 5% 7.5
25 years. functions that can be undertaken by the In excess of 15% 10.0
2. Leased area will be used solely for private sector, including the
• Tax credit for use or import-substitution of
investment. establishment of world-class Philippine nontraditional products
3. Lease contract will conform with the Trade Centers
Comprehensive Agrarian Reform Law • Setup of a privately led export financing
and the Local Government Code. institution whose services shall be
devoted to supporting the financing agencies such as the BOI and PEZA. EDA
Export Development Act of 1994 needs of the export sector incentives are shown on Table 3.
(RA No. 7844) • Granting to exporters of much needed
fiscal incentives, most of them patterned Amended Build-Operate-Transfer
This law provides incentives to exporters after, but not as extensive as those in Law (RA No. 7718)
to encourage investments in the export newly industrializing economies.
sector. Exporters are generally defined The BOT Law spells out the policy and
as earning at least 50% of their normal
Incentives Available to Exporters regulatory framework for the participation

operating revenue from the sale of Registered under EDA of private sector entities in the
products or services abroad. development of infrastructure projects and
EDA incentives are granted in addition to the provision of services that are normally
existing incentives from other government the responsibility of the government.
37
Registration Procedures with Investment Houses Law (PD No. 129)
Government Offices PD No. 129, otherwise known as the In-
vestment Houses Law, has been amended
An investor who will do business in the by RA No. 8366 to liberalize the Philip-
Philippines will have to register with a pine Investment House industry. Under
number of government offices. These RA No. 8366, foreign equity participation
include the SEC, the DTI, the BIR, and in an Investment Housing company has
the local government. been increased to as much as 60% and
foreign nationals are allowed to become
Securities and Exchange members of the board of directors to the
Commission extent of their participation in the equity
of said enterprise.
The SEC is the government agency
responsible for registering, licensing, Investment Company Act (RA No. 2629)
regulating, and supervising all When the mutual funds industry was ini-
corporations and partnerships organized tially introduced in 1957, it attracted both
in the Philippines, including foreign legitimate and fly-by-night transactions.
corporations licensed to engage in After a short four-year boom, the industry
business or to establish branch offices in failed due to improper dissemination of
the Philippines. information, nonexistence of government
rules and regulations, and lack of plan-
The SEC is mandated to implement the ning in terms of investments. As a result,
following Philippine laws: the Investment Company Act was enacted
on June 18, 1969 to protect the public and
PD No. 902-A and the Securities impose penalties on unscrupulous fund
Regulation Code (SRC) managers.
PD No. 902-A dealt with the reorganiza-
tion of the SEC and conferred upon it Financing Company Act (RA No. 5980,
the power to hear and decide on cases as amended by RA No. 8556)
involving corporate fraud, intra-corporate In recognition of the critical role of
disputes, election cases involving officers medium-and long-term credit for invest-
and directors, suspension of payments ments in capital goods and equipment, es-
proceedings, and rehabilitation proceed- pecially in the countryside, the Financing
ings. Company Act of 1998 (RA No. 8556) was
enacted to amend RA No. 5980. The new
With the enactment of the Securities Reg- law regulates and promotes the activities
ulation Code, however, Sec. 5.2, Chapter of financing and leasing companies in
Securities and Exchange such a way as to place their operations on
II thereof removed all jurisdiction of the
Commission a sound, competitive basis as other finan-
SEC over all cases enumerated above and
transferred jurisdiction to hear and decide cial institutions. Foreign equity owner-
SEC Building ship is allowed up to 60% of the voting
EDSA, Greenhills these cases to the regular courts. With
stock of the corporation as long as the
Mandaluyong City, Philippines the realignment of its powers, the SEC

Tel: (632) 726-0931 to 39 then shifted its focus to the promotion of country of which the prospective investor
http://www.sec.gov.ph capital market development, in accor- is a national accords the same reciprocal
dance with the mandate of the Securities rights to Filipinos in the ownership of
Regulation Code. financing companies or their counterpart
entities in such country.
38
Corporation Code of the Philippines Express Registration Bureau of Internal Revenue
(Batas Pambansa Blg. 68) To facilitate registering new corporations,
The Corporation Code or BP Blg. 68 be- the SEC operates an “express lane,” with The BIR is tasked to administer the
came effective on May 1, 1980. It adopted application forms specially prepared collection of internal revenue taxes
various corporate doctrines previously for specific types of business. Filing pursuant to the Tax Code.
enunciated by the Supreme Court under normally takes one day, provided all
the old Corporation Law and clarified the necessary documents and prior clearances All taxpayers are required to secure from
obligations of corporate directors and of- from other agencies are submitted in the the BIR a unique Taxpayer Identification
ficers. The Code was enacted to establish morning. Number (TIN) which will be indicated on
a new concept for business corporations all tax returns filed with the BIR.
so that these are not merely entities Department of Trade and Industry
established for private gain but effective Taxpayers will also have to register with
partners of the National Government in After registration with the SEC, all the BIR Revenue District Office (RDO)
spreading the benefits of capitalism for corporations organized under the having jurisdiction over the place of
the social and economic development of Corporation Code are encouraged to business of the taxpayer. The book of
the nation. register their business name with the DTI. accounts, invoices, and receipts of a
taxpayer will have to be registered with
The DTI-National Capital Region (DTI- the RDO before these are used.
Procedures for Forming a Domestic NCR) is one of the primary government
Corporation or Local Subsidiary agencies tasked with the promotion as
• At least five persons, majority of them well as the registration of the trade and
Philippine residents, subscribe to the industry sector in Metro Manila area.
proposed articles of incorporation and
file with the SEC documents specifying Among the services of the DTI-NCR
the company name and purpose, is the registration of business names as
principal office, capital distribution, and provided under RA No. 3883. Business
so forth. name registration involves the submission
• The treasurer certifies that at least of copies of the corporation's articles
25% of the proposed capitalization has of incorporation, by-laws, and SEC
been subscribed and that 25% of the certificate of registration to the DTI and
subscription has been paid up. the payment of a registration processing
• The incorporators meet to elect a fee. A business name registration is valid
board of directors, numbering at least for five years.
five but not more than 15. Majority of
the directors must be residents of the
Philippines.
• The board of directors appoints
management.
Department of Trade and Bureau of Internal Revenue
Industry
385 Industry and Investments

Building BIR National Office Building
Sen. Gil Puyat Avenue, Makati City Agham Road, Diliman
1200 Philippines Quezon City, Philippines
Tel: (632) 895-3611 Tel: (632) 981-7000
http://business.gov.ph http://www.bir.gov.ph
39
Registration Procedures
Estimated processing time:
Registration with the Securities and Exchange Commission 3 to 7 days
This is reckoned from the date of
submission and compliance with
requirements.
START

Company representative submits necessary documents to
Company Registration and Monitoring Department (CRMD),
which checks documents for completeness

1
Representative pays SEC cashier a filing fee of —
5 of 1%
of authorized capital stock of proposed corporation (Basic
fee) plus legal research fee of 1% basic fee

Documents are forwarded to Financial Analysis & Audit
Division (FAAD) of the CRMD for review of financial and 
accounting aspects

Are documents No Applicant makes necessary changes
in order?  and/or submits additional documents
to the SEC
Yes

Documents are forwarded to the Corporate and
Partnership Registration Division of the CRMD, which
ensures compliance with Philippine laws

Documents are forwarded to the Assistant Director of the
CRMD for approval and to the Director of the CRMD for
final signature on the Certificate of Registration

Approved papers are brought to Releasing Department
for pickup

END
40
Registration of Business Name with the Department of Trade and Industry

2 to 3 days
requirements.
START

Single proprietorships are required to register a business name with the DTI. Registration with the
DTI is optional for partnerships and corporations. However, all three are required to
register their business names with the SEC

Pay registration processing fee

Obtain registration form (registration valid for five years)

Fill out registration form as required

 
For Single Proprietorships For Corporations & Partnerships
A. Applicant must be at least 18 years old

B. Applicant must submit two passport-size
pictures taken not more than one year
preceding the filing of the application

C. Non-Filipinos must submit the following: If the corporation or Submit certified true In case there is an
1. Alien Certificate of Registration if any partnership is fully copy of the Articles of increase of capital,
2. Accomplished DTI Form No 17 under RA owned by an alien or Incorporation (AOI) submit certificate is-
No. 7042 its capital is more than or Partnership or sued by the SEC
3. A written appointment of Filipino Resident 40% owned by aliens, photocopy of bylaws
Agent the SEC certificate and the Registration
4. Authority to verify bank accounts/bank must specify that it is Certificate duly ap-
certificate of deposit in accordance with the proved by the SEC.
5. Proof of inward remittance of foreign Foreign Investment If AOI states “Metro
currency for nonresident alien and bank Act of 1991 Manila” as principal
certificate of deposit for resident alien place of business,
6. Copy of valuation report from BSP if submit a letter duly
investment includes assets other than stamped “Received”
foreign exchange by the SEC, informing
7. Clearance from other involved agencies such the latter of the pres-
as Department of Science and Technology, ent exact business ad-
Philippine National Police, etc. dress of the applicant
8. In case of alien retailer, latest permit to
engage in retail business per RA No. 1180
without the need to submit the requirements  
under letter C except Alien Certificate of Submit duly accomplished registration form to DTI and Industry Provincial
Registration Office of business location of applicant

END
41
START
Registration with the
Board of Investments  Estimated processing time:
Applicant files duly accomplished BOI Form
501 with supporting documents
2 to 4 weeks
 requirements.
Project Evaluation & Registration Department
Board Of (PERD) checks the application for registration
Investments including its qualification for registration &
completeness of the documents PERD issues formal notice
Board of Investments to complete information/
Industry and Investments Building
 No documentary requirements
Are documents complete? 
385 Sen. Gil Puyat Avenue, Existing companies
Yes 
Makati City with penalties go to the
1200 Philippines Applicant pays filing fee at the cashier Supervision & Monitoring
Tel: (632) 890-1332 Department for clearance.
(632) 895-8322  Applications are not
PERD issues letter of acceptance with advice accepted unless penalties
http://www.boi.gov.ph/ to publish the notice of filing in at least one are paid
newspaper of general circulation

PERD prepares technical, financial highlights of the project, market aspect
(for export producers) including the legal aspect. Executive summary out-
lining major highlights of the project is also prepared for presentation. 
 
Plant visit, consultations with the private sector are conducted during this
stage. The Industry Group determines the pioneer status

PERD presents application to Management
 Committee (ManCom) for approval/denial
 Deferred
 ManCom Approval
 Yes
PERD prepares for presentation to the Board executive summary
 including the ManCom highlights and recommendation for the Board’s
final approval
 No PERD prepares disapproval

 Board Approval  letter to be sent to the Firm
 Yes
PERD prepares approval letter containing preregistration
requirements, to be sent to the Firm

Applicant requests waiver of
preregistration requirements
If 30 days have lapsed,
PERD sends follow-up letter.  
No Applicant submits, within 30 days, preregistration PERD prepares memorandum
Applicant may request requirements to the PERD. Request for waiver
extension to file  does not toll running of 30-day period to submit No 
preregistration requirements preregistration requirements  Board approval
 
Yes
Applicant submits Yes

preregistration requirements  PERDby
prepares certificate of registration for signing
the managing head/presiding officer
within period of extension
granted
Yes 
No  Applicant receives Certificate of Registration

PERD prepares disapproval 
letter addressed to applicant  END
42
Registration with the Philippine Economic Zone Authority Estimated processing time:
2 to 4 weeks
requirements.
START Attachments:
• Project Brief
 • ITR and F/S (if existing) for past 3
Proponent prepares/submits years
Application to PEZA-ERD • Biodata of Project Officers
Submission of additional No
requirements per Board  Board Approval

Yes
 
PEZA-ERD evaluates Application.
ERD submits report to the PEZA Board

PEZA Corporate Secretary issues
Board Resolution regarding
Proponent’s Approved Application for
registration
Standard Pre-registration requirements for
submission to PEZA-Legal Department:

• SEC Registration Proponent completes
• Acceptance letter or reservation for the preregistration requirements
location of the proposed project
• Notarized undertaking that proponent will 
not engage in child labor Proponent and PEZA sign
• Payment of registration fee Registration Agreement
• Copy of environmental compliance
certificate (ECC) application received by
the PEZA Environment Safety Group

End of Registration Process

PEZA-ERD issues VAT zero-rating
certificate at request of Enterprise

START OF
COMMERCIAL
OPERATIONS
Philippine Economic
Zone Authority
LEGEND:
ERD - Enterprise Regulation Department
SEC - Securities and Exchange Commission Enterprise Regulation Department
DENR - Department of Environment and Natural Resources 4F Almeda Building
ITR - Income Tax Return San Luis corner Roxas Boulevard,
F/S - Financial Statements Pasay City, Philippines
Tel: (632) 551-3457

(632) 661-9586
E-mail:
erd@peza.gov.ph
www.peza.gov.ph
43
Registration with Subic Bay Metropolitan Authority

4 to 8 weeks
requirements.
Applicant submits Letter of Intent and application

for Subic Bay Freeport registration

SBMA Department (Investment Processing,
Ecology, and others) evaluates application

Evaluation Requirements
• Company profile
• Articles of incorporation and bylaws
• Product brochures
• Annual reports or audited financial
Statements for the previous three years
• SEC registration of sponsoring entity
• Client/supplier list, with contact information
• Credit references (including name and
address of creditor, size and description of
loan facility, past repayment record and
credit rating)

SBMA Department presents application for
registration to SBMA Chairman and Board of
Directors for approval

SBF Enterprise registers with:
• SEC
• SBMA
• BIR
Subic Bay Metropolitan Authority

Building 229, Waterfront Road
Subic Bay Freeport Zone
2222 Philippines
Tel: (63 47) 252-7262
(63 47) 252-4004
E-Mail: webmaster@sbma.com
http://www.sbma.com
44
Registration with Clark Development Corporation
To address concerns of investors and

exporters conducting business inside Estimated processing time:
the zone, the Clark Development
Corporation, in coordination with
4 to 6 weeks
various government agencies, submission and compliance with
established a One-Stop-Action-Center requirements.
(OSAC).
The OSAC facilitates the prompt evaluation and approval of Clark Development
proposed investment projects for CSEZ within a 30-day period. Corporation
Aside from this, the OSAC also facilitates the immediate
processing of permits, licenses, and other pertinent documents Building 2122
needed by existing locators in their operations by housing agency
desks of government agencies concerned like the Bureau of
Elpidio Quirino St.
Customs, BIR, SSS, DoH, and DOLE. One of its special features Clark Special Economic Zone
is the One-Stop-Export Documentation Center (OSEDC), which Clark Field, Pampanga, Philippines
is an on-line processing center to ensure expeditious processing Tel: (63 45) 599-9000
of export documents. At OSEDC, all agencies concerned are E-Mail: info@clark.com.ph
housed under one roof to facilitate prompt processing of exports.
http://www.clark.com.ph
Registration with Bangko Sentral ng Pilipinas
Foreign loans and foreign

investments may be registered with Estimated processing time:
the BSP. Only loans which have
been duly registered with the BSP
2 to 4 weeks
shall be eligible for servicing using submission and compliance with
foreign exchange purchased from requirements.
the banking system. Applications
for registration shall be filed by the
borrower with the BSP within 3 banking days from drawdown Bangko Sentral ng Pilipinas
date for short-term loans, and 15 banking days for medium- and
long-term loans using the prescribed forms. The registration of
a foreign investment with the BSP is required only if the foreign A. Mabini St. cor. P. Ocampo St.
exchange needed to service the repatriation of capital and the 1004 Malate, Manila, Philippines
remittance of dividends, profits, and earnings which accrue Tel: (632) 524-7011
thereon shall be sourced from the banking system. E-Mail: bspmail@bsp.gov.ph
http://www.bsp.gov.ph
45
Taxation Income Tax Rates for Domestic and
Resident Foreign Corporations
The Philippine Constitution mandates that
the rule of taxation shall be uniform, equi- The previous regular corporate income
table, and progressive. In 1997, the Tax tax rate of 32% of net taxable income has
Reform Act of 1997 (RA No. 8424) was been adjusted by RA No. 9337 to 35%.
passed to promote sustainable economic The new tax rate shall be effective begin-
growth by rationalizing the Philippine ning November 1, 2005 until December
internal revenue system, including tax 31, 2008. It shall, however, be reduced to
administration. Various issuances have 30% beginning January 1, 2009.
amended the Tax Reform Act of 1997,
the most recent of which is RA No. 9337, A 2% minimum corporate income tax
which was approved by President Gloria (MCIT) on annual gross income may be
Macapagal-Arroyo on May 24, 2005 and imposed on a corporation beginning on
implemented on November 1, 2005. its fourth year of business operation, if it
has zero or negative taxable income or the
Income Taxation MCIT is greater than its regular corporate
income tax liability.
Corporations
Royalties, interest, dividends, and other
Classification passive income of domestic and resident
foreign corporations are subject to differ-
For income tax purposes, corporations are ent rates (see Table 4).
classified as domestic or foreign depend-
ing on the place of incorporation or orga- Special Income Tax Rates for Certain
nization. Domestic and Resident Foreign
Corporations
A domestic corporation is a corpora-
tion organized under Philippine laws. It Proprietary educational institutions and
is taxed on the basis of net worldwide nonprofit hospitals are subject to 10%
income. A foreign corporation is a corpo- tax on net taxable income. Foreign cur-
ration organized under the laws of another rency deposit units (FCDUs) and offshore
country and is further classified as a resi- banking units (OBUs) are exempt from
dent or nonresident. It is considered a res- all taxes on income from foreign currency
ident of the Philippines if it is engaged in transactions with nonresidents and other
trade or business in the Philippines (e.g., FCDUs and OBUs in the Philippines.
through a branch). A resident foreign cor- However, FCDUs and OBUs are subject
poration is taxed on net Philippine-source to a final tax of 10% on interest income
income, while a nonresident foreign from foreign currency loans granted to
corporation is taxed on gross Philippine- residents other than FCDUs and OBUs.
source income. International carriers are subject to 2.5%
final tax on gross Philippine billings.
46
Tax incentives for enterprises in
Table 4 Income Tax Rates on Passive Income of Domestic/Resident
Ecozones, the Subic Bay Freeport and
Foreign Corporations
Special Economic Zone, and the Clark
Special and Economic Zone are shown on Dividends received from domestic corporations Not subject to tax

page 35. Interest on any currency bank deposit and 20% final tax
yield or other monetary benefit from deposit
Branch Profit Remittance Tax
substitutes and from trust fund and similar
arrangements
Remittances by branches of foreign cor-
1
porations in the Philippines (except those Interest from foreign currency deposits with 7—2 % final tax
activities registered with PEZA) to its foreign currency deposit units (FCDUs)
head office are subject to 15% tax. The
Gains from sale or exchange of shares of stock 5% capital gains tax (CGT) on net
15% tax may be further reduced to 10%
not listed and traded in the local stock exchange gains not exceeding PhP100,000
depending on the double taxation treaty
and 10% on the excess
with certain countries (e.g., RP-Japan
Tax Treaty). The tax is based on the total Gains from sale or exchange of land or buildings 6% CGT on gross selling price or
profits applied or earmarked for remit- not actually used in business and treated as fair market value, whichever is
tance without any deduction for the tax capital asset higher
component thereof.
Royalties 20% final tax
Other Taxes Imposed on Corporations
Corporations are also liable for the MCIT,

fringe benefits tax, and improperly accu- authorized representative, that the cor- Improperly accumulated earnings tax.
mulated earnings tax. poration sustained substantial losses on A 10% tax is imposed on the improperly
account of a prolonged labor dispute, accumulated earnings of domestic corpo-
Minimum corporate income tax force majeure, or legitimate business rations, except in the case of publicly held
(MCIT). A 2% MCIT on annual gross losses. corporations, banks, and other non-bank
income is imposed on corporations with financial intermediaries and insurance
zero or negative taxable income or whose Fringe benefits tax. Fringe benefits companies. When a corporation allows its
regular corporate income tax liability granted to supervisory and managerial earnings or profits to accumulate beyond
is less than the MCIT beginning on the employees are subject to a 32% tax on the its reasonable needs, it shall be assumed
fourth taxable year following the year grossed up monetary value of the fringe that the purpose is to avoid tax on stock-
they started business operations. Any benefit. Fringe benefits given by OBUs, holders, unless proven to the contrary.
excess of the MCIT over the normal tax regional or area headquarters, regional
shall be carried forward and credited operating headquarters of multinational Tax on Nonresident Corporations
against the normal tax for the three imme- companies, and petroleum contractors
diately succeeding taxable years. and subcontractors to qualified non- Generally, nonresident foreign corpora-
Filipino employees and, in certain cases, tions are taxed at 35% (30% effective
However, the Secretary of Finance may to Filipino employees, are taxed at 15% January 1, 2009) of the gross amount of
suspend the imposition of the MCIT upon of the grossed up monetary value of the Philippine source income such as divi-
submission of proof by the applicant-cor- fringe benefit. dends, rents, royalties, compensation, and
poration, verified by the Commissioner’s remuneration for technical services. This
47
Nonresident citizens. Nonresident
Table 5 Preferential Income Tax Rates for Nonresident Corporations citizens, including those working and
Interest on foreign loans 20% final tax deriving income from abroad such as

overseas contract workers and seamen
Cash and property dividends received In general, 35% (30% effective January 1,
who derive compensation for services
from domestic corporations 2009). This is reduced to 15% if the recipient
foreign corporation is a resident of a country rendered abroad as members of a comple-
which: ment of vessels engaged exclusively in
i) Does not impose any tax on dividends international trade, are taxed only on
received from foreign sources; or income derived from sources within the
ii) Allows a credit against the tax due from Philippines.
the nonresident foreign corporation taxes
deemed to have been paid in the Philippines
Resident aliens. Resident aliens are
equivalent to 20% (15% effective January 1,
taxed only on income derived from
2009 )
sources within the Philippines.
Income derived from any foreign Exempt
currency transaction with FCDUs and
Nonresident aliens engaged in trade or
OBUs
business in the Philippines. Non-resi-
Gains from sale of unlisted shares of 5% CGT on net gains not exceeding PhP100,000 dent aliens engaged in trade or business
stock in a domestic corporation and 10% on the excess in the Philippines are taxed in the same
Rents and other fees paid to non- 7 12 % final tax on gross rentals or fees manner as citizens and resident aliens but
resident corporate lessors of aircraft, only on Philippine-source income.
machinery, and other equipment
Rents or charter fees paid to non-
1
4 2 % final tax on gross rentals or fees Nonresident aliens not engaged in
resident corporate owners of vessels trade or business in the Philippines.
chartered by Philippine nationals Nonresident aliens not engaged in trade

Fees paid to nonresident cinemato- 25% final tax on gross income or business in the Philippines are taxed
graphic film owners or lessors on gross amount of Philippine source
income.
Note: Lower tax rates may be availed of under applicable tax treaties
Income Tax Rates for Individuals
tax is withheld at source. Preferential Citizens, nonresident citizens, resident

income tax rates for nonresident corpora- aliens, and nonresident aliens engaged in
tions are shown in Table 5. trade or business in the Philippines are
subject to graduated tax rates on income
Individuals from 5% to 32% (see Table 6). Non-
resident aliens not engaged in trade or
Classification business in the Philippines are generally
subject to a flat income tax rate of 25%.
For income tax purposes, individuals are
classified as: Generally, an individual is taxed on two
main categories of income: income from
Resident citizens. Resident citizens are employment and income from business or
taxed on their compensation, business, exercise of a profession. Royalties, inter-
and other income derived from sources est, dividends, and other passive income
within and outside of the Philippines. of individuals are subject to different tax
rates (see Table 7).
48
Exemptions
Table 6 Rates of Income Tax on Citizens, Resident Aliens,
Resident citizens and resident aliens are and Nonresident Aliens Engaged in Trade or Business
entitled to personal exemptions as fol-
Amount Subject to Tax Applicable Rate
lows: PhP20,000 for single individuals,
Not over PhP10,000 5%
PhP25,000 for heads of families, and
Over PhP10,000 but not over PhP30,000 PhP500 + 10% of the excess over PhP10,000
PhP32,000 each for married individuals.
Over PhP30,000 but not over PhP70,000 PhP2,500 + 15% of the excess over PhP30,000
A married individual or head of a family
is allowed an additional exemption of
PhP8,000 for each dependent, not to
exceed four dependents. Married individ-
uals are required to compute their individ- Over PhP500,000 PhP125,000 + 32% of the excess over PhP500,000
ual income tax separately. The additional
tax exemption for each dependent shall Table 7 Income Tax Rates on Passive Income of Individuals
be claimed only by the husband unless he
waives the right in favor of his wife. Interest on any currency bank deposit and 20% final tax for citizens, resident aliens,
yield or other monetary benefit from deposit and nonresident aliens engaged in trade
substitutes and from trust fund and similar or business; 25% final tax for nonresident
Nonresident aliens engaged in trade or arrangements aliens not engaged in trade or business
business in the Philippines are entitled to 1
Interest from foreign currency deposits with 7 2 % final tax; exempt for nonresident citi-
personal exemptions (but not to additional FCDUs zens and nonresident aliens
exemptions) only by way of reciprocity.
Interest earned from long-term (five-year) In general, tax-exempt; but if preterminated,
peso deposits or investments subject to 5% to 20% final tax depending
Income of any kind exempted by any on holding period; for nonresident aliens
treaty binding on the Philippine govern- not engaged in trade or business, subject
ment is likewise exempt. Tax treaties with to 25% flat rate
the following countries are currently in Royalties, prizes exceeding PhP10,000, and 10% final tax for citizens, resident aliens,
force. other winnings (except Philippine Charity and nonresident aliens engaged in trade
Sweepstakes and Lotto winnings) or business; 25% final tax for nonresident
aliens not engaged in trade or business
Countries with Tax Treaties Royalties on books, literary works, and musi- 20% final tax for citizens, resident aliens,
with the Philippines: cal compositions and nonresident aliens engaged in trade
or business; 25% final tax for nonresident
aliens not engaged in trade or business
• Australia • Korea
• Austria • Malaysia Cash and property dividends from domestic 10% for citizens and resident aliens; 20%
• Belgium • The Netherlands corporations for nonresident aliens engaged in trade or
• Brazil • New Zealand business; 25% for nonresident aliens not
• Canada • Norway engaged in trade or business
• China • Pakistan
• Denmark • Romania Gains from sale or exchange of shares of 5% CGT on net gains not exceeding
• Finland • Russia stock either listed or unlisted but not traded PhP100,000 and 10% on the excess
• France • Singapore in the local stock exchange
Germany Spain 6% CGT on gross selling price or fair market
• •
• Hungary • Sweden Gains from sale or exchange of land or value, whichever is higher
• Indonesia • Switzerland buildings not actually used in business and
• India • Thailand treated as capital asset
Israel
Tax-exempt
• • United Kingdom
Italy United States Gains from sale of principal residence where
• •
• Japan • Vietnam the proceeds are used in acquiring or build-
ing a new principal residence within 18 cal-
endar months from the date of sale
49
Withholding Tax
Table 8 Payments Subject to Creditable Withholding Tax
Professional fees to lawyers, medical practitioners, and 15% if gross income exceeds PhP720,000; Systems of Withholding Tax
other individuals engaged in the practice of their profession otherwise, 10%
Fees to corporate directors 15% if the gross income for the current Creditable withholding tax (CWT).
year exceeds PhP720,000; otherwise, 10%
Certain income payments made by a
Talent fees to professional entertainers and athletes 15%, if the professional entertainer’s
resident to another resident are subject to
gross income for the current year exceeds
PhP720,000; otherwise, 10% specified withholding tax rates. The tax
Management and technical consultancy fees to domestic 15% if the gross income for the current
withheld is creditable against the income
and resident foreign corporations year exceeds PhP720,000; otherwise, 10% tax liability of the recipient. Table 8
Professional fees, talent fees, and other services of taxable 15% if the income payment to the partner shows some income payments subject to
juridical persons for the current year exceeds PhP720,000; CWT.
otherwise, 10%
Rentals of real property 5% Withholding tax on wages. This is the
Rentals of personal property in excess of or reasonably 5% tax withheld from individuals receiving
expected to exceed PhP10,000 per payment purely compensation income. Employers
Rentals of poles, satellites, and transmission facilities 5% are required to withhold the tax due on
Rentals on billboards and similar structures 5% salaries and wages paid to their employ-
Fees to certain contractors, e.g., general engineering con- 2% ees. Subject to certain conditions,
tractors; general building contractors; advertising agencies; employees may no longer be required to
messengerial, janitorial, or security agencies; and persons file income tax returns at the end of the
engaged in the sale of computer services taxable year.
Commissions and fees of customs, insurance, stock, real 10%
estate, immigration and commercial brokers, and fees of
Final withholding tax (FWT). Under
agents of professional entertainers
the FWT system, the amount of income
Gross selling price on the sale of real property by a person 1.5%, 3%, 5% depending on price
tax withheld by the withholding agent is
habitually engaged in real estate business
constituted as a full and final payment of
Gross selling price on the sale of real property by a person 6%
not habitually engaged in real estate business the income tax due from the payee on the
said income. Tables 4, 5, and 7 list some
On half the amount of gross payments made by credit card 1%
companies income payments subject to FWT.
Commissions of independent and exclusive distributors, 10%
medical/technical and sales representatives, and marketing Value-Added Tax (VAT)
agents of multi level marketing companies
Tolling fees paid to refineries 5% General
Payments to local/resident suppliers of goods and services 1% for goods
by top 10,000 private corporations 2% for services Pursuant to RA No. 9337 and upon the
Payments for purchases of mineral and quarry products 1% recommendation of the Secretary of
Finance, the President raised the VAT rate
to 12% effective February 1, 2006.
Some transactions are exempt from

VAT. The list of exempt transactions has
recently been revised by RA No. 9337.

(See Table 9).
50
Table 9 VAT-Exempt Transactions
a. Sale or importation of agricultural and g. Medical, dental, hospital, and veterinary aggregate capital and net surplus ratably
marine food products in their original services except those rendered by pro- distributed among the members
state, livestock and poultry of a kind fessionals
generally used as, or yielding or producing o. Export sales by persons who are not VAT-
foods for human consumption; and breed- h. Educational services rendered by private registered
ing stock and genetic materials therefor educational institutions, duly accredited
by the Department of Education (DepEd), p. Sale of real properties not primarily held
b. Sale or importation of fertilizers; seeds, the Commission on Higher Education for sale to customers or held for lease
seedlings and fingerlings; fish, prawn, (CHED), the Technical Education and in the ordinary course of business, or
livestock and poultry feeds, including Skills Development Authority (TESDA), real property utilized for low-cost and
ingredients, whether locally produced and those rendered by government edu- socialized housing as defined by RA No.
or imported, used in the manufacture of cational institutions 7279, otherwise known as the Urban
finished feeds (except specialty feeds for Development and Housing Act of 1992,
race horses, fighting cocks, aquarium fish, i. Services rendered by individuals pursuant and other related laws, residential lot
zoo animals, and other animals generally to an employer-employee relationship valued at PhP1,500,000 and below, house
considered as pets) and lot, and other residential dwellings
j. Services rendered by regional or valued at PhP2,500,000 and below
c. Importation of personal and household area headquarters established in the
effects belonging to the residents of the Philippines by multinational corporations q. Lease of a residential unit with a monthly
Philippines returning from abroad and which act as supervisory, communica- rental not exceeding PhP10,000
nonresident citizens coming to resettle tions, and coordinating centers for their
in the Philippines; provided that such affiliates, subsidiaries, or branches in the r. Sale, importation, printing, or publication
goods are exempt from customs duties Asia Pacific Region and do not earn or of books and any newspaper, magazine,
under the Tariff and Customs Code of the derive income from the Philippines review, or bulletin which appears at regu-
Philippines lar intervals with fixed prices for subscrip-
k. Transactions which are exempt under tion and sale and which is not devoted
d. Importation of professional instru- international agreements to which the principally to the publication of paid
ments and implements, wearing apparel, Philippines is a signatory or under special advertisements
domestic animals and personal house- laws except those under PD No. 529
hold effects (except any vehicle, vessel, s. Sale, importation, or lease of passenger
aircraft, machinery, other goods for use l. Sales by agricultural cooperatives or cargo vessels and aircraft, includ-
in the manufacture, and merchandise of duly registered with the Cooperative ing engine, equipment, and spare parts
any kind in commercial quantity) belong- Development Authority to their members thereof for domestic or international
ing to persons coming to settle in the as well as sale of their produce, whether transport operations
Philippines, for their own use and not for in its original state or processed form, to
sale, barter or exchange, accompany- non-members; their importation of direct t. Importation of fuel, goods, and supplies
ing such persons, or arriving within 90 farm inputs, machineries and equipment, by persons engaged in international ship-
days before or after their arrival upon including spare parts thereof, to be used ping or air transport operations
the production of evidence satisfactory directly and exclusively in the production
to the Commissioner, that such persons and/or processing of their produce u. Services of banks, non-bank financial
are actually coming to settle in the intermediaries performing quasi-banking
Philippines and that the change of resi- m. Gross receipts from lending activities functions, and other non-bank financial
dence is bona fide by credit or multi-purpose cooperatives intermediaries
duly registered with the Cooperative
e. Services subject to percentage tax Development Authority v. Sale or lease of goods or properties
or the performance of services other
f. Services by agricultural contract growers n. Sales by non-agricultural, non-electric than the transactions mentioned in the
and milling for others of palay into rice, and non-credit cooperatives duly regis- preceding paragraphs, the gross annual
corn into grits and sugar cane into raw tered with the Cooperative Development sales and/or receipts do not exceed the
sugar Authority; provided that the share capital amount of PhP1,500,000.
contribution of each member does not
exceed PhP15,000 and regardless of the
51
On the other hand, several items are no Some transactions, commonly referred to
VAT-Exempt vs. VAT Zero-Rated longer VAT-exempt, most notable of as zero-rated transactions, are subject to
Transactions which are: the zero percent VAT rate. RA No. 9337
also amends the provisions pertaining to
For both VAT-exempt and VAT zero-rated
a. Sale of non-food agricultural products; zero-rated transactions (See Table 10).
sales of goods and services, the sellers do
not pass on VAT to their customers. How- marine and forest products in their
ever, VAT-registered sellers may apply for the original state by the primary producer Excise Tax
issuance of tax credit certificates or refund or the owner of the land where the
of the input tax (i.e., the VAT passed on to same are produced Excise taxes are imposed on certain goods
the sellers by their suppliers) attributable to b. Sale of cotton and cotton seeds in their (such as cigarettes, liquor, and motor
the zero-rated sale of goods and services. original state, and copra vehicles) manufactured or produced in
This benefit is not available for VAT-exempt c. Sale or importation of coal and natural the Philippines for domestic sale or con-
sale of goods and services. Any VAT passed
gas, in whatever form or state, and sumption or for any other disposition.
on to the sellers by their suppliers, attribut-
able to such VAT-exempt sale of goods and petroleum products (except lubricating Excise taxes are also imposed on certain
services, forms part of the cost. oil, processed gas, grease, wax, and imported goods, in addition to the VAT
petrolatum subject to excise tax) and customs duties.
d. Sale or importation of raw materials
to be used by the buyer or importer On August 29, 2003, RA No. 9224 was
himself in the manufacture of petro- enacted. The Act, which rationalized the
leum products (except lubricating oil, excise tax on automobiles, imposed an ad
processed gas, grease, wax, and petro- valorem tax on automobiles based on the
latum subject to excise tax) manufacturer’s or importer’s selling price,
e. Services rendered by doctors of net of excise and value-added taxes, in
medicine duly registered with the accordance with the following schedule:
Philippine Regulatory Commission
f. Services rendered by lawyers duly reg- Net Manufacturer’s Rate
istered with the Integrated Bar of the Price/Importer’s Selling
Price
Philippines.
Up to PhP600,000 2%
Over PhP600,000 to PhP12,000 + 20%
At the same time, RA No. 9337 expands PhP1.1 million of value in excess of
PhP600 thousand
the list of exemptions to include, among
Over PhP1.1. million to PhP112,000 + 40%
others: PhP2.1 million of value in excess of
PhP1.1 million
Over PhP2.1 million PhP512,000 + 60%
a. Gross receipts from lending activi-
of value in excess of
ties by credit or multi-purpose coop- PhP2.1 million
eratives duly registered with the
Cooperative Development Authority
b. Sale, importation, or lease of pas-
senger or cargo vessels and aircraft,
including engine, equipment, and
spare parts thereof for domestic or
international transport operations
c. Importation of fuel, goods, and sup-

plies by persons engaged in inter-
national shipping or air transport
operations.
52
An indexation of sin taxes was likewise
Table 10 Zero-Rated Sales
undertaken and with the passage of
Revenue Regulations (RR) No. 22-2003, Zero-Rated Sale of Goods
new rates of excise tax on new brands of
1. Export Sales which are:
cigarettes and variants that were intro-
duced in the market after January 1, 1997 a. Sale and actual shipment of goods from the Philippines to a foreign country, irrespec-
were prescribed. On the other hand, RR tive of any shipping arrangement that may be agreed upon which may influence or
determine the transfer of ownership of the goods so exported, paid for in acceptable
No. 23-2003 prescribed new rates of foreign currency or its equivalent in goods or services, and accounted for in accordance
excise tax on new brands of alcohol prod- with the rules and regulations of the BSP
ucts and variants that were introduced in b. Sale of raw materials or packaging materials to a nonresident buyer for delivery to a
the market after January 1, 1997. resident local export-oriented enterprise to be used in manufacturing, processing, pack-
ing, or repacking in the Philippines of the said buyer’s goods and paid for in acceptable
foreign currency and accounted for in accordance with the rules and regulations of the
Percentage Tax BSP
c. Sale of raw materials or packaging materials to export-oriented enterprise whose export
sales exceed 70% of total annual production
Persons or entities not subject to VAT, d. Sale of gold to the BSP
including domestic common carriers of e. Those considered export sales under EO No. 226, otherwise known as the Omnibus
passengers, international carriers, and Investments Code of 1987, and other special laws
those in the amusement business, are sub- f. The sale of goods, supplies, equipment, and fuel to persons engaged in international
shipping or international air transport operations
ject to percentage tax on gross receipts or
gross income (see examples on Table 11). 2. Foreign currency-denominated sales which are the sale to a nonresident of goods, except
automobiles and non-essential goods, assembled or manufactured in the Philippines
for delivery to a resident in the Philippines, paid for in acceptable foreign currency, and
Stock Transaction Tax accounted for in accordance with the rules and regulations of the BSP
A stock transaction tax (STT) on the sale, 3. Sales to person or entities whose exemption under special laws or international agreements
barter, exchange, or other disposition of to which the Philippines is a signatory effectively subjects such sales to zero rate.
shares through the facilities of the PSE is
Zero-Rated Sale of Services
imposed at the rate of ½ of 1% of gross
selling price. 1. Processing, manufacturing, or repacking goods for other persons doing business outside
the Philippines which goods are subsequently exported, where the services are paid
for in acceptable foreign currency and accounted for in accordance with the rules and
Initial Public Offering (IPO) Tax regulations of the BSP
2. Services other than those mentioned in the preceding paragraph rendered to a person
A tax is also imposed on the sale, barter, engaged in business conducted outside the Philippines or to a nonresident person not
engaged in business who is outside the Philippines when the services are performed, the
exchange, or other disposition through
consideration for which is paid for in acceptable foreign currency and accounted for in
IPO of shares of stock in closely held cor- accordance with the rules and regulations of the BSP
porations in accordance with the propor- 3. Services rendered to persons or entities whose exemption under special laws or
tion of shares of stock sold through IPO. international agreements to which the Philippines is a signatory effectively subjects the
supply of such services to 0% rate
A closely held corporation is any corpora- 4. Services rendered to persons engaged in international shipping or international air
tion of which at least 50% in value of the transport operations, including leases of property for use thereof
outstanding capital stock or at least 50% 5. Services performed by subcontractors and/or contractors in processing, converting, or
manufacturing goods for an enterprise whose export sales exceed 70% of total annual
of the total combined voting power of all
production
classes of stock entitled to vote is owned 6. Transport of passengers and cargo by air or sea vessels from the Philippines to a foreign
directly or indirectly by or for not more country
than 20 individuals. 7. Sale of power or fuel generated through renewable sources of energy such as, but not
limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging
energy sources using technologies such as fuel cells and hydrogen fuels.
53
tax base shall be the gross selling price
Table 11 Selected Percentage Tax Rates
or gross value in money of the shares of
Type of Business Percentage Tax Rate
stock sold, bartered, exchanged, or other-
Life insurance companies doing business in the 5% of the total premiums collected wise disposed of.
Philippines
Water and gas utilities 2% of gross receipts Documentary Stamp Tax
Radio and/or television broadcasting companies 3% of gross receipts
The documentary stamp tax (DST) is
whose annual gross receipts do not exceed PhP10
million an excise tax on documents, instru-
Domestic common carriers of passengers 3% of gross receipts ments, loan agreements, and papers and
Carriers and garage proprietors Various rates, depending on the place of opera- on acceptances, assignments, sales, and
tion and on vehicles used. transfers of the obligation, right, or prop-
Overseas dispatch, message, or conversation 10% on gross receipts erty incident thereto. This tax is imposed
transmitted from the Philippines by telephone,
telegraph, telewriter exchange, wireless, and other on the maker, signor, issuer, accepter, or
communication equipment services transferor of the document.
Banks and non-bank financial intermediaries a) on interest, commissions and discount from
lending activities as well as income from In order to boost stock trading and the
financial leasing – 5% on gross receipts for
equity market, RA No. 9243 or the
instruments with maturities not exceeding
five years and 1% for those with maturities of Act Rationalizing the Provisions of the
over five years Documentary Stamp Tax was passed on
b) on dividends and equity shares and net February 17, 2004. The said act lists
income of subsidiaries – 0% additional transactions exempt from DST,
c) on royalties, rentals of real or personal prop-
erty, profits from exchange and all other items provides lower DST rates for investments
treated as gross income under Section 32 of in shares, and specifies the new DST base
the Code – 7% for insurance policies, annuities, and pre-
d) On net trading gains within the taxable year need plans and a uniform DST rate on
on foreign currency, debt securities, deriva-
debt instruments.
tives, and other similar financial instruments
– 7 %.
Sale of stocks listed and traded in the Stock 1
2 of 1% Table 12 shows some of the documents
Exchange requiring payment of DST.
Other non-VAT-registered businesses 3% of gross sales or gross receipts not exceed-
ing PhP1,500,000
Documents and Papers Exempt from
the DST
The IPO tax shall be at the following
rates, in accordance with the proportion of 1. Policies of insurance or annuities
shares sold, bartered, or exchanged to the made or granted by a fraternal or ben-
total outstanding shares of stock after the eficiary society, order, association, or
listing in the local stock exchange: cooperative
2. Borrowing and lending of securi-
Up to 25% 4% ties executed under the Securities
Over 25% but not over 33.33% 2% Borrowing and Lending Program of a
registered exchange
Over 33.33% 1%
3. Loan agreements or promissory
The IPO tax shall be paid by the issuing notes, the aggregate of which does
corporation in a primary offering or by not exceed PhP250,000 executed by
the seller in a secondary offering. The an individual for his or her purchase
54
on installment for his or her personal
Table 12 Some Documents Requiring Documentary Stamps
or family use, and not for business,
Bank Checks PhP1.50 for each check regardless of amount
resale, barter, or hire of a house, lot,
Debt instruments (loans, debentures, deposit PhP1 for every PhP200 of the issue price
motor vehicle, appliance, or furniture substitutes, bonds, promissory notes, etc.)
4. Sale, barter, or exchange of shares of Certificates of Stock PhP1 for every PhP200 of the par value on original
stock listed and traded through the issue. In case of transfers, the tax is PhP0.75 for
local stock exchange for a period of every PhP200 of the par value
five years from March 20, 2004 Deeds of Sale and Conveyances of Real PhP15 on every PhP1,000 consideration or Fair
Property Market Value (FMV), whichever is higher
5. Assignment or transfer of any mort-
Life Insurance Policies PhP0.50 on every PhP200 of the amount of premium
gage, lease, or policy of insurance collected
or the renewal or continuance of any
agreement, contract, charter, or any
evidence of obligation or indebted-
ness, if there is no change in the Customs Duty Importers and their brokers are required
maturity date or remaining period to keep records of importations within
of coverage from that of the original Goods imported into the Philippines are three years from the date of importation
instrument generally subject to customs duty (aside of the goods. The Bureau of Customs has
6. Fixed income and other securities from 10% VAT and excise tax on certain the power to conduct post-entry audit on
traded in the secondary market or goods). For customs purposes, the value the importers/brokers books within the
through an exchange of imported goods are based on their same period to determine compliance with
7. Derivatives, repurchase agreements, transaction value, i.e., the price paid or customs rules and to assess any deficiency
and reverse repurchase agreements payable for the goods when sold or export customs duty.
8. Interbranch or interdepartmental to the Philippines. The applicable duty
advances within the same legal entity rate (most-favored nation [MFN] rate) Local Taxes
9. All forebearances arising from sales will depend on the appropriate classifi-
or service contracts including credit cation of the goods under the Tariff and Under the Local Government Code, local
card and trade receivables Customs Code of the Philippines (TCCP) government units (LGUs) are given the
10. Bank deposit accounts without a fixed which generally ranges from 0% to 30%. authority to tax certain activities and
term or maturity Preferential rates under the Common business conducted within their jurisdic-
11. All contracts, deeds, documents and Effective Preferential Tariff of the tion unless otherwise expressly exempt
transactions related to the conduct of ASEAN Free Trade Agreement (AFTA) by law. LGUs are also authorized to
business of the BSP are generally lower than the MFN rates. levy an annual ad valorem tax on real
12. Transfer of property pursuant to tax- property such as land, building, machin-
free exchange, mergers, or consoli- Certain importations are exempt from the ery, and other improvements, as well as
dations under Sec. 40(C)(2) of the imposition of custom duty, such as condi- on the sale, donation, barter, or on any
National Internal Revenue Code tionally free importations, items entered other mode of transfer of real property.
13. Interbank call loans with maturity of into a customs bonded warehouse, and However, the taxing powers of LGUs do
not more than seven days to cover importations under special laws. not extend to the levy of income tax, cus-
deficiency in reserves against deposit toms duties, DST, estate tax, and gift tax,
liabilities, including those between or among others.
among banks and quasi banks.
55
Labor Requirements Night Shift Differential Pay
The laws on labor standards and employ- Night shift employees must be paid a dif-
ment relations are consolidated in the ferential of not less than 10% of the regu-
Labor Code of the Philippines, which lar wage for each hour of work performed
is supplemented, from time to time, by between 10:00 p.m. and 6:00 a.m.
legislative issuances. The salient points
of employment conditions and employee Service Incentive Leave Pay
benefits covered by Philippine labor laws
are given below. Every employee who has rendered at least
one year of service is entitled to a yearly
Hours of Work service incentive leave of five days with
pay.
Eight hours per day or 48 hours per week
is the maximum period an employee may Meal and Rest Periods
be required to work at his regular rate of
pay. Workers are entitled to a 24-con- Every employer is obliged to give his
secutive hour rest period after every six employees not less than one hour time-
consecutive normal work days. Some off for regular meals, except in the fol-
exceptions are managerial employees, lowing cases when a meal period of not
field personnel, those in the personal less than 20 minutes a day maybe given,
services of another, and workers paid by provided that such shorter meal period is
results. credited to the employee as compensable
hours worked: (1) where the work is non-
Work Day manual in nature and does not involve
strenuous physical exertion; (2) where
A day is the 24-hour period which begins the establishment regularly operates not
from the time the employee regularly less than 16 hours a day; (3) in cases of
starts to work. Thus, if an employee regu- actual or impending emergencies or where
larly works from 8:00 a.m. to 4:00 p.m., there is urgent work to be performed on
the work day of such employee is from machinery, equipment, or installations to
8:00 a.m. of a given day to 8:00 a.m. of avoid serious loss which the employer
the following day. Any work in excess would otherwise suffer; or (4) where
of eight hours within the 24 hour period the work is necessary to prevent serious
is considered overtime work regardless loss of perishable goods. Rest periods
of whether the work covers two calendar or coffee breaks running from five to 20
days. minutes shall be considered as compen-
sable working time.
Overtime Remuneration
Minimum Wage
Overtime (OT) premium is allotted for
The minimum wage rates for agricultural
work exceeding the maximum prescribed

period. Table 13 presents the OT rates per and non-agricultural workers in every
hour for overtime work rendered on the region are determined by the Regional
specified days. Tripartite Wages and Productivity Board.
Effective July 1990, RA No. 6727 ratio-
56
nalized the structuring of the minimum
Table 13 Overtime (OT) Rates
wage adjustments in order to address the
regional and intraregional disparities in Category Computation
the cost of living in different regions (see
1. OT work on a regular day Daily rate x 1.25
Table 14 for the minimum wage rates of
2. OT work during rest day or special public holiday
nonagricultural workers).
First 8 hours Daily rate x 1.30
In excess of the first 8 hours Daily rate x 1.69
Salaries and wages must be paid at least 3. OT work on a special public holiday falling on employee's rest day
once every two weeks and must be in First 8 hours Daily rate x 1.50
legal tender and not by means of vouch- In excess of the first 8 hours Daily rate x 1.95
ers, token, or the like. 4. OT work on a regular holiday
In excess of the first 8 hours Daily rate x 2.60
Employees’ Compensation Program
5. OT work on a regular holiday falling on employee's rest day
Coverage under the Program is com- In excess of the first 8 hours Daily rate x 3.38
pulsory for every employer with one or
more employees and for the National
Government and only its political subdi-
visions and instrumentalities, including
government-owned and controlled corpo- and progressive contribution schedule
Table 14 Minimum Wage Rates by
rations (GOCCs). Private employees are to be determined by PHIC. Table 15
Region (Nonagricultural Jobs)
covered under the Social Security System enumerates some of the personal health As of June 16, 2005
(SSS); government employees are covered services granted to members or their
Regions Daily Minimum Wage
under the Government Service Insurance dependents under RA No. 7875 (effective
National Capital PhP325
System (GSIS). February 14, 1995). Region (NCR)
Cordillera PhP219
For the private sector, monthly contribu- Emergency, Medical, and Dental Autonomous
tions to the Program must be shouldered Services Region (CAR)
Region I PhP121 to PhP212
solely by the employer at the rate of 1%
Region II PhP165 to PhP208
of the employee’s total monthly salary Every employer is required to keep in his Region III PhP182 to PhP228.50
credits, but not exceeding PhP10.00 per establishment the first-aid medicine and Region IVA PhP210 to PhP277
month. All premiums, revenues, and equipment stipulated by the Department Region IVB PhP216
other collections constitute the State of Labor and Employment (DOLE). Region V PhP152 to PhP187
Insurance Fund, from which the compen- Region VI PhP155 to PhP205
If the work is hazardous, the part-time Region VII PhP190 to PhP223
sation and other benefits are paid to the
Region VIII PhP157 to PhP188
employees or their heirs. physician or dentist must be on the
Region IX PhP196 to PhP200
employer’s premises at least two hours a Region X PhP211 to PhP218
National Health Insurance day. If the number of employees requires Region XI PhP222 to PhP224
that a full time physician be in attendance, Region XII PhP213.50
All citizens of the Philippines are covered the physician must remain in the employ- Autonomous PhP180
by the National Health Insurance Program er’s premises for eight hours a day. If the Region in Muslim
Mindanao (ARMM)
(NHIP), which is administered by the work is non-hazardous, the physician and
Region XIII – PhP200

Philippine Health Insurance Corporation the dentist may be kept on retainer. Surigao del Norte,
(PHIC). All members of NHIP contribute Surigao del Sur,
to the National Health Insurance Fund in Agusan del Norte
& Agusan del Sur
accordance with a reasonable, equitable,
(CARAGA)
57
Woman and Child Labor Paternity Leave
Table 15 Partial List of National
Health Insurance Program
Benefits A female employee is entitled to mater- Effective August 1996, every married
nity benefits. If an employee is an SSS male employee both in the private and
• Room and board member and has paid at least three public sectors shall be entitled to a pater-
• Service of health care professionals monthly contributions in the 12-month nity leave of seven days with full pay for
• Medical examination services period immediately preceding the semes- the first four deliveries of the legitimate
• Prescription drugs and biologicals ter of her childbirth or miscarriage, she spouse.
Source: RA No. 7875 is entitled to maternity leave with pay for
60 days or 78 days in the case of cesarean Termination of Employment
delivery, subject to certain conditions
enumerated in the Social Security Act of The State guarantees the rights of all
1997, such as: workers to security of tenure and protects
all workers to arbitrary deprivation of job.
1. The employee should have notified her An employer, therefore, may not termi-
employer of her pregnancy and prob- nate the services of an employee except
able date of childbirth, which notice for a just cause or when authorized by
shall be transmitted to the SSS. the Labor Code. Just causes for termina-
2. The full payment shall be advanced by tion include serious misconduct or willful
the employer within 30 days from the disobedience, gross and habitual neglect,
filing of the maternity leave applica- fraud, commission of a crime or offense
tion. by the employee against the person of
3. The maternity benefits shall be paid his or her employer, and other analogous
only for the first four deliveries or causes. If the dismissal is based on any
miscarriages. of these just causes, the employer must
4. The SSS shall immediately reimburse give the employee two written notices
the employer the amount of the ben- and a hearing or opportunity to be heard if
efits advanced to the employee. requested by the employee before termi-
nating the employment.
No child below 15 years of age may be
employed unless directly supervised by Further, the employer may also terminate
a parent or guardian in activities that are the employment of any employee due to
nonhazardous and do not interfere with the installation of labor saving devices,
the child’s schooling. Any minor between redundancy, retrenchment to prevent
15 and 18 years of age may be employed losses, or the closing or cessation of
in nonhazardous undertakings if such operation of the establishment or under-
activities comply with regulations issued taking. In these instances, the employer is
by the DOLE. required by law to serve a written notice
to the employee and the DOLE at least
Under RA No. 7877, all forms of sexual one month prior to the intended date of
harassment in the employment, education, termination.
or training environment are unlawful.
Employers shall promulgate appropriate

rules and regulations to implement the
law.
58
Failure to comply with the procedural The following visas may be granted
Table 16 Key Features of BSP
requirements of notice and hearing will to foreigners who will work or render
Circular No. 5
make the employer liable for damages. service in the Philippines:
(Agabon vs. NLRC, G.R. No. 158693, • Foreign exchange may be freely sold
November 17, 2004) Treaty Trader's/Investor's Visa under and purchased outside the banking
system
Section 9(d) of the Philippine
Unions Immigration Act • Foreign exchange receipts, acqui-
sitions, or earnings may be sold for
The right of workers to form labor unions This visa is granted to aliens entering pesos to unauthorized agent banks
is recognized and respected by the gov- the country to carry on trade between or outside the banking system,
retained, or deposited in foreign
ernment. Workers may engage in con- the Philippines and the foreign state currency accounts, whether in the
certed activities for collective bargaining of which they are nationals, under and Philippines or abroad, or may be used
purposes or for their mutual benefit or pursuant to the provisions of a treaty of for any other purpose
protection. amity, commerce, and navigation. The Source: Bangko Sentral ng Pilipinas
immigration office requires an initial
investment of US$30,000 or annual trade
Financial and Monetary Policies worth US$120,000. At present, the only
countries with which the Philippines has national's AEP or the expiration of his
Philippine monetary policy is enforced entered into a treaty of amity, commerce, or her employment contract, whichever
by the BSP created under RA No. 7653. and navigation are the United States of comes first. The AEP is granted by the
Prior to May 1993, this authority resided America, Germany, and Japan. DOLE only after the sponsoring company
with the Central Bank of the Philippines. complies with the labor market test and
Foreign exchange regulations have been Prearranged Employee's Visa submits an Understudy Training Program.
relaxed with the issuance of BSP Circular under Section 9(g) of the Philippine The latter requires that the foreign
No. 5, dated September 15, 1993. The Immigration Act national train at least two Filipinos under
key features of this circular are shown in his or her supervision.
Table 16. This is a regular work visa given
to foreign nationals to undertake Special Nonimmigrant Visa under Sec.
employment in the Philippines in a 47(a)(2)
Other Business Regulations technical, managerial, or confidential
capacity. However, it must be shown that This type of visa may be issued to
Immigration and Employment there are no local Filipinos or residents foreign nationals employed by enterprises
Regulations for Foreigners in the who are willing and competent to perform registered with PEZA and the BOI,
Philippines the labor or service for which the foreign as well as those who are temporarily
national is being hired and that the assigned to work in government projects.
The government has liberalized latter's admission would be beneficial Although all of them enjoy multiple entry
the visa requirements for certain to the public interest. This type of visa privileges, foreign employees of PEZA-
categories of foreigners to encourage is subject to the approval of the Board registered enterprises are also exempt
foreign participation in the economic of Commissioners of the Bureau of from fingerprinting and registration
development of the country. Foreign Immigration (BI) meeting en banc. with the BI, paying fees, and securing
stockholders, investors, representatives of clearances. However, foreign nationals
investment houses, and land developers A requirement in processing this visa
with this visa are still required to secure

are among the categories granted this is the submission to the BI of the Alien an AEP from the DOLE.
special incentive. Employment Permit (AEP). Normally, the
validity date of this visa is co-terminus
with the validity date of the foreign
59
Special Nonimmigrant Visa under EO While in the Philippines, aliens are
Areas where a project impacts No. 226 allowed by the BI to convert their
the environment immigration status from tourist/temporary
This visa is granted to foreign personnel visitor to another visa category without
1. Natural environment — land, water,
atmosphere, terrestrial life, aquatic assigned to BOI-registered regional having to leave the country.
life, ecological balance or area headquarters of multinational
companies in the Philippines. They are The foreign national must be in the
2. Socioeconomic conditions — entitled to multiple entry privileges and Philippines when his or her application
demographic, lifestyles, amenities, are exempt from paying immigration fees, for conversion of immigration status
cultural minorities, historical sites, fingerprinting, registration with BI, and is approved; otherwise, it will be
health, economics securing an AEP from DOLE. invalidated. If this happens, there will be a
need to file an application for revalidation.
Special Nonimmigrant Visa under PD
No. 1034 The spouse and dependent children
Examples of negative impacts
may likewise qualify for the same visa
1. Water and air pollution This visa is granted to foreign personnel category as that of the principal applicant.
2. Destruction of historical or of offshore banks duly licensed by the
archaeological sites BSP to operate as an offshore banking While the expatriate's application for
3. Disruption of wildlife habitats unit. They are also entitled to multiple conversion of immigration status is being
4. Increase of urban congestion entry privileges and are exempt from processed by the BI, he or she should
5. Threats to health paying immigration fees, fingerprinting, apply for a Provisional Permit to Work.
6. Undesirable land use patterns registration with BI, and securing an AEP
Source: Implementing Rules and Regulations from DOLE. Philippine Environmental Laws
for PD No. 1586
Special Subic Work Visa When an investment involves a proposed
project or undertaking which may affect
This visa is granted to foreign nationals the quality of the environment, the project
employed as executives by Subic Bay proponent is subject to the implementing
Freeport Zone enterprises and to other rules and regulations of PD No. 1586,
foreign nationals possessing highly otherwise known as the Philippine
technical skills. Environmental Impact Statement (EIS)
System. PD No. 1586 requires a project
Other Immigration Policies proponent to conduct an Environmental
Impact Assessment (EIA) to ensure that
Foreign nationals who wish to come to all possible environmental effects of
the Philippines can either enter as a tourist the project are addressed, in line with
without visa under EO No. 408, or secure the country's overall goal of sustainable
a temporary visitor's visa under Section development.
9(a) before any Philippine consular post
abroad. The Section 9(a) visa can either The EIA process results in the preparation
be for business, pleasure, or health and of an EIS or an Initial Environmental
normally entitles an alien to an initial stay Examination (IEE), depending on the
of 59 days, extendible to a year. location and nature of the project. The
60
final report is submitted to the DENR, codified into a single law the different
together with other required documents legal issuances governing IPR protection Functions of the Intellectual
Property Office
such as clearances from other government in the country. With the creation of the
agencies and endorsements of the project Intellectual Property Code of 1997 (RA
• Examine applications for grant of letters
from local government officials. After No. 8293), the Philippines provides patent for inventions and register utility
its review, the DENR decides on the an effective means of encouraging models and industrial designs
issuance or denial of an Environmental innovation by local and foreign scientists,
Compliance Certificate (ECC), without investors, artists, and other gifted citizens
• Examine applications for the
registration of marks, geographic
which the project cannot be implemented through the protection of their intellectual indication, and integrated circuits
legally (e.g., the proposed project site property rights and creations. Embodied
cannot be altered in any way). in this Act is the establishment of the • Register technology transfer
arrangements and settle disputes
Intellectual Property Office.
involving technology transfer payments,
The ECC typically includes a number and develop and implement strategies
of conditions which the proponent RA No. 8293 aims to develop domestic to promote and facilitate technology
must follow during the construction creative activity, facilitate transfer of transfer
and operational phases of the project. technology, attract foreign investments,
The ECC identifies all other applicable and ensure market access for our • Promote the use of patent information
as a tool for technology development
environmental laws, regulations, or products.
guidelines which the proponent must • Publish regularly in its own publication
comply with to ensure the continuous Due to the extraterritorial nature of IPR the patents, marks, utility models,
and industrial designs issued and
implementation of the project. If an ECC protection, the Philippines has acceded to
approved, and the technology transfer
is denied, the proponent may submit a international conventions under the World
arrangements registered
new EIS corresponding to a new site or International Property Organization.
change the facilities' design and operation. The Philippines is a signatory to the • Administratively arbitrate contested
following conventions: Berne Convention proceedings affecting intellectual
property rights
Philippine Laws on Intellectual for the Protection of Literary and
Property Rights Artistic Works (Brussels Act of 1948); • Coordinate with other government
Rome Convention for the Protection of agencies and the private sector on the
The Philippines provides foreign investors Performers, Producers of Phonograms, formulation and implementation of
with ample protection of their intellectual and Broadcasting Organizations; and plans and policies to strengthen the
protection of intellectual property rights
property rights (IPR). In contrast to other Paris Convention for the Protection of
in the country
countries in the Asia-Pacific region where Industrial Property (Lisbon Revision).
IPR protection is either lacking or only
recently provided, the Philippines had in
place the necessary legal infrastructure
for IPR protection even before the
country became independent in 1946.
This infrastructure is basically patterned
after US laws, regulations, and practices.
In 1997, the Philippine government
61
Costs of Doing Business
Operating Costs in Metro Manila
As of January 2005
Manpower (Annual Basic Pay)1 Utilities

Occupation As of January 2005 Water – Residential6
Chief Executive Officer I PhP3,986,280 First 10 cu.m. PhP46.88
Head of Finance/Finance Director PhP2,596,110 Per excess cu.m. Starts at PhP5.72
Head of Human Resources & PhP2,184,950 Water – Industrial
Administration/Director of Human First 10 cu.m. PhP230.52
Resources & Administration In excess Starts at PhP23.20
Head of Information Technology PhP2,451,870 Sewage treatment 60% of basic + CERA7 + Foreign
Head of Manufacturing/Director of PhP2,881,010 Currency Differential Adjustment
Manufacturing (FCDA)8
Head of Sales/Sales Director PhP2,371,450 Power Rates per kWh9
National Sales Manager II PhP1,613,440 Residential Around PhP6
Accountant PhP336,060 Commercial/Industrial Around PhP7
Systems Analyst PhP385,310
Production Supervisor PhP401,480
Senior Secretary PhP313,790 Telecommunications
Secretary PhP238,680 Residential10
Office Driver PhP181,690 Installation PhP1,200
Monthly billing PhP780
Office Space2 Business
Based on “Grade A” office developments Installation PhP1,500
Selling Monthly billing PhP1,500
- Makati CBD PhP48,000/m2 Cellular Phone Kits11
- Ortigas CBD PhP30,000/m2 Prepaid (includes handset and SIM card)
Rental Globe PhP3,490-26,090
- Makati CBD PhP375-425/m2 Smart PhP3,290-11,790
- Ortigas CBD PhP220-300/m2 Sun Cellular PhP2,990-35,390
Industry Land and Factory Building Postpaid (subscription has a 24-month contract, includes
handset and first month subscription free)
Monthly lease rate for industrial land US$0.15-1.20/m2
Globe PhP3,300-28,780
Selling rates of industrial lots US$35-70/m2
Smart PhP2,000-42,500
Monthly lease rate for standard factory building
Sun Cellular PhP500-38,000
- Warehouse US$1.74-6.50/m2
Fax Unit12 PhP5,600-14,900
- Bare lot and build-to-suit development US$3.38-5.00/m2
International Calls
- International long dis- US$0.40/minute
tance direct dial (IDD) rate
Accommodations to all countries
Sales
Residential condo unit – 2-bedroom
- Makati PhP47,000/m2
- Ortigas PhP30,000/m2
Monthly Rental
House
- Makati PhP50,000-250,000
- Ortigas PhP40,000-170,000
- Alabang PhP80,000-200,000
Residential condo unit – 2-bedroom3
- Makati PhP325/m2
- Ortigas/San Juan PhP200/m2
Hotel Costs per Night4

3-star hotel US$35-60
Hotel Car Rental (AVIS)5 US$55-100
62
Internet Service Fees13
Dial-up rates
Installation fee Free-PhP825
E-mail account Included in subscription
Web account Included in subscription
Monthly fee (depending PhP220-4,950 (VAT-inclusive)
on number of hours)
Cable/broadband rates
Installation fee Free-PhP2,500
E-mail account Included in subscription
Web account Included in subscription
1
Watson Wyatt Worldwide
Subscription 2
Source: Leechiu & Associates, Inc. Research. Rates
Personal account PhP1,500-3,000 (VAT-inclusive) and prices in US$ are as at end-August 2004 (US$1:
Corporate account PhP4,000 (3 computers networked) PhP56.8342).
PhP9,000 (8 computers networked) Prepared by the Consultancy Services Department
PhP80,000 (40 or more computers of Leechiu & Associates Inc. (L&A), a member of
networked) FPDSavills International, for information only.
US$1,200 (dedicated bandwidth Whilst reasonable care has been exercised in prepar-
with unlimited number of ing this, it is subject to change and L&A makes no
computers) representation as to its truth, accuracy, or complete-
ness, and accordingly cannot be held responsible for
any liability whatsoever for any loss whosoever aris-
Mailing Rates ing from or in reliance upon the whole or any part of
International the contents.
Airmail letters (20 g-1 kg) PhP17-805
Additional rate in excess of 1 kg PhP271-400
3
Monthly lease rates are exclusive of association dues
Postcards PhP11 and utility charges.
Printed matter (20 g-1 kg) PhP15-737 4
Prices are exclusive of 10% service charge and 10%
Each additional 500 g or less PhP252-366 VAT.
Domestic (first 20 g-2 kg)
Ordinary mail PhP6-120
5
For a minimum 10-hour charge. Prices are exclusive
Priority mail PhP10-130 of gasoline (per consumption) charge, driver’s meal,
Express PhP20-150 toll fees and parking charges.
Registered mail PhP15-129+PhP5 for return 6
Manila Water
receipt
PO Box rental per month PhP480-1,440
7
CERA: PhP1 surcharge for every cubic meter con-
Postal ID fee PhP75 (for companies) sumed.
PhP245 (for personal use) 8
FCDA: 2.76% of basic.
9
Meralco
Others 10
Philippine Long Distance Telephone Co.
Household help with free board & lodging14
Family driver US$125-140
11
Various cellular phone service centers in Metro
Cook US$125 Manila. Prices of units depend on model, telecom
Maid US$50-200 company’s prepaid phone kits and plans, and special
Fastfoods and restaurants promos.
Set meals in fast-food restaurants US$1-3 12
Various appliance centers in Metro Manila
Executive lunch/buffet in restaurants US$5-10 13
Various Internet service providers in Metro Manila
Taxicab rates (air-conditioned)

Flagdown for first 500 m PhP30 14
Monthly salaries
Every 250 m thereafter PhP2
63
Costs of Doing Business
Operating Costs in the Philippines
As of January 2005
Clark1 Subic Cebu2 Davao

1. Manpower Salary per Month
Manufacturing Director PhP23,667 (Entry Level for a PhP20,000-50,000 (Manufac- PhP170,000-180,0003 PhP75,0004
Mfg. Head) turing Head)
Sales Director - PhP50,000-60,000 PhP50,000-70,000 PhP50,000
Sales Manager - PhP20,000-30,000 PhP25,000-30,000 PhP18,000
Accountant PhP10,088 (Entry Level) PhP7,000-7,500 (Entry Level) PhP30,000-38,000 PhP35,000-40,000
Software Developer - PhP10,000-17,000 PhP10,000-18,000 PhP8,000
Field Services Engineer - PhP18,000-30,000 PhP40,000-70,000 -
Production Supervisor PhP8,831 (Entry Level) PhP7,000-7,500 (Entry Level) PhP35,000-40,000 PhP10,000-15,000
Executive Secretary - PhP10,000-15,000 PhP15,000-18,000 -
Secretary - PhP7,000 (Entry Level) PhP8,000-12,000 PhP6,070-8,000
Chauffeur PhP6,154 (Entry Level for PhP6,800 (Entry Level) PhP6,000-7,650 PhP5,070
Messenger-Driver)
2. Office Space 5
Selling N/A N/A PhP45,000/m2 PhP47,000-93,000/m2
Monthly lease rate US$5.50/m2 plus 5% service US$3.50-15/m2 PhP200-375/m2 PhP246-300/m2
charge (ready-to-occupy)
Industrial Land & Factory Building
Monthly lease rate for industrial US$0.30/m2 (land) US$0.12-4/m2 $0.40/P22.406 PhP150-500/m2
land US$1.50-4.00/m2 (structure)
Selling rates for industrial lots N/A N/A PhP20,000/m2 along the PhP700-3,000/m2
highway7
3. Accommodations
Sales
Residential condo unit (2-bed- - N/A PhP4,000,000 (M) per unit8 N/A
room)
Monthly Rental
House PhP16,500/mo. (2BR unit, PhP39,200-65,000 (2BR unit, PhP32,000-58,000 (execu- PhP15,000-60,000
unfurnished) furnished) tive house)9
PhP22,500/mo. (2BR unit, PhP44,800-67,000 (3BR unit,
fully furnished) furnished)
PhP50,400-67,000 (4BR unit,
furnished)
Residential condo unit (2-bed- - PhP30,000-40,000 N/A
room)
Hotel Costs Per Night
3-star PhP2,000-2,900 $35.71-53.5710 PhP1,100-2,90011
4-star US$125 (Standard) PhP3,200-3,800 PhP3,500 -5,000 PhP1,500-45,600
US$200 (Junior Suite)
US$280 (Holiday Villa)
US$25 (Extra Person/Bed)
5-star $178.57-1,660.71
Hotel car rental (per day) Within Ecozone limits : PhP1,200 first 3 hours PhP2,000-2,500
PhP350/hour (car w/ driver) PhP320 succeeding hr.
PhP500/hour (van w/ driver)
4. Utilities
Water – Residential
1
First 10 m3 PhP82.50 Standing Charge21 : PhP363.80 PhP108.51 ( —2 inch meter) PhP32.0013
3
0-10m3 =PhP14.80/m3 PhP175.97 ( —4 inch meter)12
(per m3 ) 11-20m3 : PhP8.91 11-30m3 : PhP16.28/m3 11-20m3 : PhP11.97 11-20m3 : PhP8.40
21-30m3 : PhP9.41 31-60m3 =PhP22.20/m3 21-30m3 : PhP14.07 21-30m3 : PhP10.85
Above 31m3 : PhP9.90 61-100 =PhP25.90/m3 Over 30m3 : PhP38.61 31-40m3 : PhP14.40
over 100m3 =PhP29.59/m3 41 m3 -up: PhP21
64
Clark Subic Cebu Davao
Water – Industrial
First 10 m3 PhP165 Standing Charge: PhP363.80 PhP344.60 (1 inch meter) Minimum charge of
0-10 m3 : PhP26.88/m3 PhP2,184.92 (2 inches meter) PhP32
(in excess) 11-20 m3 : PhP17.77 11-30 m3 : PhP29.57/m3 11-20 m3 : PhP11.97 11-20 m3 : PhP8.40
21-30 m3 : PhP18.81 31-60 m3 : PhP33.59/m3 21-30 m3 : PhP14.07 21-30 m3 : PhP10.85
Above 31 m3 : PhP19.86 61-100: PhP36.28/m3 Over 30 m3 : PhP38.61 31-40 m3 : PhP14.40
over 100 m3 : PhP38.97 (comm’l) 41 m3 -up: PhP21
Power Rates per kWh Industrial, Commercial, Residen- Res’l/Comm’l 22: Household14 Residential: PhP3.2428
tial : PhP4.706/kWh 0-20 kWh : PhP137.64 PhP5.20 Commercial: PhP3.4027
succeeding kWh: PhP6.8819 Business PhP5.46 Industrial: PhP3.5783
5. Telecommunications
Telephone Rental
Residential
Installation PhP1,590 (installation charge) PhP500 23 PhP1,20015 waived
PhP50 (telephone unit)
Monthly billing PhP628.65 PhP540 PhP684-700 PhP700 (+10% VAT)
Business
Installation PhP2,335 (installation charge) PhP800 PhP1,500 waived
PhP500 (telephone unit)
Monthly billing PhP1,089.97 PhP950 PhP900-1,000 PhP1,200 (+10% VAT)
6. Internet Service Fees
Installation fee Waived PhP500-waived24 Residential: PhP2,000 Waived17
Business: PhP2,00016
E-mail account As low as PhP4,000/mo. Residential: 1 e-mail: free, Free-PhP825
each additional: PhP90
Business: 5 e-mails: free,
each additional: PhP90
Web account As low as PhP8,000/mo. Residential: 1st 10MB: free, PhP375-39,000
beyond: PhP136
Business: 1st 10MB: free,
beyond: PhP909
Subscription–depending on type PhP220-1,430 Residential PhP1,500-80,000
of plan and hours PhP1,995 (384 kbps)
PhP2,500 (512 kbps)
PhP3,000 (786 (kbps)
Business
PhP4,000 (512 kbps)
PhP8,000 (786 kbps)
PhP14,500 (1MBps)
7. Others
Household help w/ free board and lodging
Family driver PhP6,000 PhP5,000 PhP5,000-7,000 PhP1,500-2,50018
Cook PhP8,000-10,000 PhP3,000 PhP3,500-5,000 PhP1,000-2,500
Maid PhP3,000-5,000 PhP3,000 PhP2,000-5,000 PhP1,000-2,500
Fastfoods and restaurants
Set meals in fast food restau- $1-3 PhP45-120 PhP60-100 PhP45-84
rants
Executive lunch/buffet in $5-10 PhP250-500 PhP550-75019 PhP200-552
restaurants
Taxicab rates (aircon)
Flagdown for first 500m PhP25 Within Central Business PhP2520 PhP25
District: PhP50
Thereafter PhP2 To other destinations : PhP51-300 (Every 300m) PhP2 (Every 300m) PhP2
1 13
Clark Development Corporation Rates are from Davao City Water District, DCIPC
2 14
SGV Cebu Rates per kWh are taken from CIPC
3 15
Monthly rates are taken from various payroll services in the branch Telephone rates are from PLDT
4 16
Manpower rates are from Davao City Investment Promotion Center Internet rates are taken from PLDT
17
(DCIPC) Rates are from various ISPs in Davao, DCIPC
5 18
Rates are from Pryce Business Park and DCIPC Rates are taken from actual household survey by DCIPC
6 19
Ave monthly rate of land located in MEZ, converted at $1=P56 Rates taken from various hotels in Cebu
7 20
Rate taken from Union Bank of the Philippines Rates taken from Department of Trade and Industry
8 21
Rate taken from Cebu Holdings, Inc. Rates are from Subicwater
9 22
Rates are from Cebu Investment Promotion Center (CIPC) Rates are from Subic Enerzone
10
Rates are from various hotels in Cebu 23
Rates are from Subic Telecom
11
Rates are from various hotels in Davao, DCIPC 24
Rates are from Infocomm Technologies
12
All rates for water residential and industrial are taken from Metro Cebu
Water District
65
The Philippines
The People ary schools, 8,091. Close to 13 million

The Philippines . . . at a Glance
students were enrolled in the elementary
Land Area: 300,000 km2 (115,830m2 ); Origin and Culture level and 6.2 million in the secondary
archipelago of 7,107 islands level.
Capital: Manila (land area of 38.3 km2 ) Majority of the population are from the
Government: Democratic Malay stock. Strong influences of Islamic, The Philippines is one of the Asian
Hindu, and Chinese cultures are also evi- countries with an edge in number of
Political System: The 1987 Constitution
provides for a presidential system of dent. Long before it was “discovered” in universities, colleges, and institutions of
government with a bicameral parliament higher learning. As of March 2004, Higher
1521 by the explorer Ferdinand Magellan,
and three equal branches: the executive,
legislative, and judiciary the archipelago—eventually named the Education Institutions (HEI), including
Philippines after King Philip II of Spain— satellite campuses, totaled 1,735, of which
Population: 76.5 million (official result of
Census 2000)* already had trading relations with the 1,316 were private and 173 were public.
Population Growth Rate: 2.36% (actual flourishing civilizations in the region. The State colleges and universities numbered
annual growth rate for 2003) first Spanish settlement in the country was 111. Total enrollment in the tertiary level
Population Density: 255 persons/sq. km. established on the island of Cebu in the for school year 2002-2003 was recorded at
(official result of Census 2000) 2.1 million.
Visayas in 1565. Spanish rule lasted
Life Expectancy: 67.8 years, male; 73.1 for 333 years. American colonial rule
years, female (data as of 2005) Language and Skills
followed and lasted for nearly 50 years.
Literacy Rate: 92.6%
Many aspects of Philippine culture today
Languages Spoken: Filipino, English, Chi- reflect an eclectic cultural heritage. Filipino is the national language, although
nese, and Spanish over 80 dialects are spoken in different
Ethnic Background: Christian Malay, Muslim parts of the country. English is widely
Malay, Spanish, American, and Chinese
Education
spoken and is the medium of communica-
Major Religion: Predominantly Roman tion in business and higher education. The
Catholic (82.9%), Protestant (5.4%), The literacy rate in the Philippines is
Islam (4.6%) listed at 92.6% by the UNESCO Insti- Spanish and Chinese languages are also
Ports of Entry: Manila, La Union, Aparri, tute for Statistics. This rate is one of the spoken by a small minority.
Legaspi, Subic Bay, Tabaco, Cebu, Iloilo, highest in Southeast Asia, higher than
Cagayan de Oro, Davao, General Santos, Filipinos are highly trainable and adept at
Zamboanga that of Malaysia, Indonesia, Vietnam, and
Singapore. producing medium- to high-technology
Climate: Tropical with a normal year-round
temperature of 320C (900F); dry and wet products. Both skilled and unskilled work-
Education is culturally very important to ers consistently rate well in quality of
Time Zone: GMT + 8 hours
the Filipino, and is usually regarded as a work in surveys of executives in the Asian
Currency Unit: Philippine Peso (US$1 =
PhP51.31 as of March 9, 2006) means of moving up the social ladder. region. The people are also recognized for
_________________ This importance can be seen in the num- their management capabilities, computer
*85.2 million (projected for 2005)
ber of schools and students in the country. skills, craftsmanship, and design artistry.
Elementary schools numbered 41,688
in school year 2003-2004 and second-
66
Religion
Christianity is the predominant religion in

the country, with Roman Catholics
comprising a major portion of the Chris-
tian population. Dominant Protestant
denominations include Baptists, Method-
ists, and Lutherans. Locally established
Christian churches, namely, the Iglesia ni
Kristo and the Philippine Independent
Church, together with Islam and Bud-
dhism, comprise less than 15% of the
population.
Population
Based on official results of the year 2000

national census, the country’s total
population has reached 76.5 million, and
is estimated to reach 85.2 million in 2005.
With a total land area of 300,000 square
kilometers (km2), the country has a popu-
lation density of 255 persons per sq. km. Celebes Sea on the south, and the South facility, has an area of 1,970 square kilo-
Urban population was placed at roughly China Sea on the west and north. meters and a coastline of 192 kilometers.
36.8 million, around 48.1% of the total
population. The Philippines is made up of 7,107 is- The country has two distinct seasons: the
lands and islets, making it one of the larg- dry season, from November to May, and
As of 2003, the size of the labor force was est archipelagos in the world. The islands the wet season, from June to October. The
estimated at 52.3 million, composed of are grouped into three geographic areas: different parts of the country experience
persons age 15 years old and over. Of this Luzon, the biggest island group where the varied weather conditions because of the
number, 60.3% were employed. capital city of Manila is located, Visayas, general airstreams that cross the islands,
and Mindanao. namely, the monsoons and tradewinds.
The average annual rainfall in the Philip-

The Land Topography is varied, consisting of pines is about 2,030 millimeters. Temper-
lowlands, high mountain areas, and a ature ranges from 290 to 340C and humid-
The Philippine archipelago lies off the coastline of 18,411 kilometers on which ity varies from 70% to 85%, depending on
southeastern coast of mainland Asia. The there are 60 natural harbors. Manila Bay, the time of year.
Pacific Ocean bounds it on the east, the considered the country’s premier seaport
67
The Resource Base expansion of inland fishing remains, as
Fast Facts
there are interisland waters and swamps
Resource Base Crops that may still be developed into fishing
areas.
The Philippines is one of the 10 most
biologically diverse countries in the world. Philippine land is suitable for grow-
Despite a total land area of a mere 298,000 ing various crops including rice, corn, Minerals
km2, Philippine forests contain over 15,000
plant species. coconut, sugarcane, tobacco, abaca, and
tropical fruit like banana and pineapple. The Philippines has about 13 known
The Narra is an internationally known metallic and 29 nonmetallic mineral
Philippine hardwood used for making fine
furniture. Forests resources. Metallic minerals available in
commercial quantity include copper, gold,
The Philippines has no wild animals of the size
and strain of those found in mainland Asia Most Philippine forests are of the tropical nickel, chromite, silver, iron, lead, zinc,
and in Africa but is home to countless rare rain-type and contain predominantly manganese, and mercury. Nonmetallic
species such as the tarsier, mouse deer, and dipterocarp varieties. Almost half of the mineral reserves of economic significance
monkey-eating eagle.
total land area of the country is classified include gypsum, salt, sand and gravel,
The water buffalo (carabao) is indigenous to as timberland. Commercial hectarage is marble, limestone, clay, feldspar, dolo-
the Philippines.
mostly found in the Mindanao area and mite, carbide, rock phosphate, guano, and
The Philippines is 88% water, with 36,000 km Palawan. pyrite.
of coastline, and is one of the few countries
in the world where 100% of its population live
within 100 km of the shoreline. Marine Resources Currency
488 out of the 500 known coral species
of the world, 6 out of the 8 species of sea An abundant supply of marine products The Philippine monetary unit is the peso
turtles, and at least 23 species of marine can be harvested from the 167 million (PhP), divided into 100 centavos. Most
mammals can be found in the country's hectares of Philippine waters. The coun- international currencies are accepted for
waters.
try’s brackish water fishponds make up conversion into pesos and, in general, are
More than 2,000 species of fish including a large area of developed fishponds in allowed to be freely sold and purchased
the economically important yellowfin, skipeye,
and bigeye tuna can be found in Philippine Southeast Asia. A good potential for the outside the local banking system.
seas.
The numerous coral beds are home to

pearl-oysters. The Philippine pearl is known
worldwide.
The 919-km nautical highway links Luzon,

Visayas, and Mindanao by land and sea routes
using the roll-on, roll-off (RO-RO) system of
terminals and ferryboats and other modes of
land transportation.
68
The Philippine Economy in 2005
Chart 1 Growth of Output, %
Economic Growth
The Philippine economy slowed down. 6.2 6.0

5.7
5.6
After accelerating to 6.0% in 2004, its 4.7
5.1
4.3 4.3
highest in the past decade, the economy
posted a moderate 5.1% growth in 2005
(see Chart 1).* Many of the challenges
remain in the horizon and are poised to
dampen growth prospects in 2006.
2002 2003 2004 2005
Agriculture Sources:
GNP GDP National Statistical Coordination Board (NSCB),
National Economic and Development Authority (NEDA)
In 2005, the agriculture sector grew by
2.0% or less than half its 4.9% ban-
ner performance in 2004 (see Chart 2).
Despite the government’s Agriculture and
Fisheries Modernization Act (AFMA)
program, the sector withered from the
Chart 2 Growth of Output by Sector, 2003 to 2005, %
high costs of farm inputs and the extended
dry spell induced by El Niño. Farmers 7.1
have reduced planted areas, particularly 6.0 6.3
5.8
in Visayas and Mindanao. Result: lower 5.1 5.2 5.3
4.7 4.9
agricultural yields except for the coconut
3.7 3.8
and banana. Both crops are among the
country’s leading agricultural exports. 2.0
Services
GDP Agriculture Industry Services
The services sector has become the
primary source of growth and provider 2003 2004 2005
Sources: NSCB, NEDA
of jobs in 2005. It posted a 6.3% growth
in 2005, on top of the 7.1% growth in
2004. Finance, which includes banks and
non-banks, led the services sector with
15.4%. The communications subsector,
particularly mobile communications,
sustained its robust performance with
a 14.8% growth. Other subsectors that
posted above-average growth rates were

storage and service incidental to transport
(18.7%), domestic retail trade (5.9%),
medical and health (6.5%), and business
* Economic data are as of January 2006
69
services (6.0%). The business services
Chart 3 Consumer Spending, in PhP billion subsector includes IT-enabled services
such as animation, contact centers, medi-
cal transcription, and business processing
Miscellaneous, 857 outsourcing.
Industry
Trans/commm, 374 Industry growth improved to 5.3%. Manu-

facturing, which accounts for two-thirds
Food, beverage of industry output, improved to 5.6%,
and tobacco, 1815
Utilities, 185 thanks to its four biggest subsectors food
manufacturing, petroleum and coal, elec-
trical machinery, and chemicals. Mining
Household operations, 396
also improved to 9.3% while construction
Household furnishings, 58
Apparel, 86 and electricity, gas, and water slowed
down.
Sources: NSCB, NEDA

Consumer Spending
Consumer spending remained the main

growth driver in 2005. Peso sales im-
proved to 12.8%. Food sales, which
account for about half of the household
Chart 4 CPI and Inflation by Commodity Group, 2002-2005 budget, grew by 12.2% (see Chart 3).
Transport & communications sales
22.0
rose 34.9% while fuel light, and water
20.0 18.0
increased 16.7%. But the double-digit
18.0
16.0
increases were due to higher prices. In
14.0 real terms, consumer spending moder-
11.8
12.0 ated. Spending on food slowed down
Growth, %
10.0
7.6
while purchases of fuel, light and water,
8.0 6.4 and household furnishings declined. The
6.0 4.5
3.5
sales of major and even small household
4.0
appliances fell considerably in 2005. By
2.0
contrast, the purchases of cars increased
0
2002 2003 2004 2005 by 10.2%. Consumer spending slowed
down despite the government’s increase in
Fuel, light & water Food and beverage legislated minimum wages and the record
Services Housing
growth in OFW remittances.
All items Clothing
Source: NSCB
70
Inflation
Inflation rose to 7.6% in 2005 on top of

the 6.0% average in 2004 (see Chart 4).
The price increases of basic goods like
food and beverages were lower than
inflation. But the prices of fuel, light, and
water soared 18.0%, while that of services
rose by 11.8%. With the high oil prices in
the world market and the implementation
of EVAT, inflation is expected to further
erode the households’ purchasing power. Chart 5 OFW Remittances, in US$ million
11000
10,689
Labor Force and Unemployment
10500
10000
The country’s labor force reached 37 mil-
lion in October 2005. In the World Com- 9500
petitiveness Yearbook Report 2005, IMD 9000

8,550
ranked the Philippine among the leaders 8500
in terms of availability and growth of
8000
skilled labor. Unfortunately, the domestic 7,578
economy has not generated enough jobs 7500
6,886
for its growing labor force. Unemploy- 7000
ment was estimated in October 2005 at 6500
10.3%. 6000
6,031
5500
Overseas Filipino Workers
5000
2001 2002 2003 2004 2005
Filipinos have increasingly taken ad-
Source: Bangko Sentral ng Pilipinas (BSP)
vantage of job opportunities overseas.
About a million OFWs are deployed in
America, Asia, Australia, Europe, and the
Middle East as professionals, technicians,
production or service workers, labor-
ers, or domestic helpers. The Philippines
is the second largest source of migrant
workers after Mexico. In January-Decem-
ber 2005, OFWs sent US$10.7 billion in
dollar remittances for a 25% growth over
the 2004 level (see Chart 5). The Philip-
pines has become the largest recipient of

overseas remittances behind India, China,
and Mexico. These remittances fund basic
household needs, micro enterprise activi-
ties, and savings of households.
71
Exports
Chart 6 Key Export Products, in US$ billion
The DTI reported US$41.2 billion of
Philippine merchandise exports in 2005
Electronics 27.3 (see Chart 6). In 2004, exports totaled
US$39.7 billion. Year-on-year growth was
Machinery 2.6
a negligible 3.9%.
Garments 2.2
0.8
Electronic products continued to be the
Other Industrial
country’s top export, accounting for
Processed Food 0.8 66.3% of total exports. The Philippines
Petroleum pdts 0.7 was given a #1 rating for high-tech ex-
ports in the IMD World Competitiveness
Coconut pdts 0.7
Yearbook 2005.
Others 6.1
Year-on-year growth of the sector,
0 5 10 15 20 25 30 however, was only 2.1%. Demand for
Source: DTI
electronics weakened in 2005 as people
curtailed spending in the aftermath of
surging oil prices.
The country’s other major export prod-

ucts were machineries and transport
equipment, garments, coconut products,
processed foods, other industrial manufac-
Chart 7 Key Export Markets, in US$ billion tures, and petroleum products. Machinery
represented 6.3% of total exports in 2005
Netherlands, 4.0 and increased by 8.0% in comparison with
China, PR, 4.1
2004 figures.
HK, SAR, 3.3
The United States and Japan were the two

Singapore, 2.7 biggest markets for Philippine exports.
Japan, 7.2
The US, with US$7.4 billion in exports,
accounted for 18% while Japan, with
Malaysia, 2.5
exports of US$7.2 billion, accounted for
17.5% (see Chart 7). Exports to the US
increased by 9.6% year-on-year, while
exports to Japan declined by 9.8% for the
Others, 10.1 USA, 7.4 comparable period. Other markets of note
were China, the Netherlands, Hong Kong,
Source: DTI
Singapore, and Malaysia.
72
Exporters have diversified to other devel-
oping economies in Western Europe, the Chart 8 Key Import Products, in US$ billion
Middle East, and the Caribbean. Exports
to these regions have grown at double- 12.0
digit rates. Electronics
Other Industrial
Economic arrangements with industrial
Petroleum 11.3
economies and emerging markets will products
6.2
help boost the country’s prospects in trade Machineries/
transport 3.8
and investment.
Chemicals 2.6
Imports 1.8
Processed food
Metal
The total value of imports was flat in manufactures
1.5
2005, with imports totaling US$47.0

Others 7.7
billion, higher by only 1.8% over 2004
figures (see Chart 8). Imports consisted 0.0 2.0 4.0 6.0 8.0 10.0 12.0
primarily of raw materials and inputs Source: DTI
for manufacturing exporters and other
producers. Manufacturers of electronic
products imported about US$12.0 billion
worth of electronic parts and accessories
for the manufacture or assembly of elec-
tronic components and products. Impor-
tations of other industrial manufactures
dropped by 15.6% to US$11.3 billion in Chart 9 Key Import Suppliers, in US$ billion
2005 from US$13.4 billion in 2004.
Taiwan, 3.4
China, PR, 3.0
The major suppliers in 2005 were the US Singapore, 3.7
S. Korea, 2.3
and Japan (see Chart 9). Imports from the
US declined by 4.0% in 2005 to US$8.2 Saudi Arabia, 2.2
billion in comparison with imports in
Japan, 8.0
2004.
Others , 16.0
USA, 8.2
Source: DTI
73
approved were the manufacture of petro-
Chart 10 Approved Foreign Direct Investment, in PhP billion chemical products and operation of power
plants. A total of 75,874 jobs are expected
180 to be generated by these approved invest-
160 155.5 ments.
140
Prospects for 2006
120
The 5.1% growth in 2005 fell short of the
100
5.3% target for the year. The slowdown
80 does not augur well for the economy.
59.4
60 Government has implemented reform
46.0 measures to address the chronic deficit,
40 34.0
resulting in improved ratings from Fitch
20 Ratings and Standard & Poor's. Mean-
while, oil prices hovered at US$60 a
0
2002 2003 2004 1st-3rd Q 2005 barrel and demand for electronic exports
Source: NSCB
remains soft. Political tensions continue
to build up. For 2006, government proj-
ects economic growth of 6.3% to 7.4%.
Private economists and donors project
growth of about 5%.
Approved FDI
FDI commitments for the three quarters The Political System

of 2005 contracted by 56% in comparison
with the same period in 2004. In the first The Philippines is the first democracy
quarter of 2004, approved FDI soared to in Asia and considers June 12, 1898 its
PhP118.6 billion mainly because of the Independence Day.
approved application of the Republic of
Nauru for the operation of a power plant The country became a Spanish colony
in Bataan. In the first quarter of 2005, ap- during the 16th century and remained un-
proved FDI totaled only PhP31.5 billion. der Spanish rule for over three centuries
before being ceded to the United States.
Expansions in approved FDI in the second In 1935, the Philippines became a self-
of third quarters of 2005 brought up the governing commonwealth under President
total approved FDI as of October close to Manuel Quezon. The country fell under
PhP60 billion (see Chart 10). Japanese rule in 1942 before again attain-
ing independence in 1946.
Japan was the top source of approved
FDIs with pledges of about PhP23.5 bil- The current Philippine government is
lion. Manufacturing was the top recipient divided into three branches: the execu-
of approved FDIs. Among the projects tive branch, the legislative branch, and
74
the judicial branch. The executive branch Joseph Ejercito Estrada succeeded Ramos
consists of the President—who is both in 1998. His administration’s thrust was Fast Facts
the chief of state and head of govern- to address the plight of the disadvantaged
ment—and the cabinet. The legislative sectors of society. However, his six-year Politics
branch is a bicameral congress consisting term was cut to three years after his The Philippines is the first democracy in Asia.
of the Senate and the House of Repre- impeachment trial on corruption charges
Independence Day from Spain is June 12,
sentatives. The judicial branch is made up led to widespread demonstrations—a 1898.
of a system of courts, the highest of which second People Power revolt—resulting
is the Supreme Court. in his ouster in January 2001. His Vice In February 1986, the inspiring People Power
phenomenon forced Ferdinand Marcos into
President, Gloria Macapagal-Arroyo, suc-
exile after a 21-year rule.
Philippine democratic tradition was inter- ceeded him. She was reelected as Presi-
rupted during the 21-year rule of Ferdi- dent in 2004. In January 2001, the Supreme Court
declared Joseph Estrada unable to rule in
nand Marcos, who declared martial law
view of mass resignations from his
in 1972. Under the Marcos regime, trade The current administration’s Medium government. Chief Justice Hilario Davide
remained liberalized but consolidated Term Development Plan revolves around Jr. administered the oath of office to then
and doled out to cronies. The system was Arroyo’s 10-point national development Vice President Gloria Macapagal-Arroyo as
Estrada’s constitutional successor.
toppled in 1986 by the “People Power” agenda. This agenda covers the creation
revolt, a bloodless revolution led by Cora- of six to 10 million jobs, education for Economy/Business
zon C. Aquino. People Power inspired all, balancing the national budget, and the In the World Investment Report 2002, the
United Nations Conference on Trade and
nonviolent movements for democracy in development of transport and digital infra-
Development (UNCTAD) cited the Philippines
other countries. structure to connect the entire country. It as one of the world’s export winners for its
also includes the provision of power and improved export performance from 1985-
Aquino was installed as President and water supply to all barangays; deconges- 2000.
authentic democratic rule was restored. tion of Metro Manila by developing new In Industrial Development Report 2002/2003:
She presided over the peaceful transfer centers for government and housing in Competing through Innovation and Learning,
of power to her successor, Fidel Ramos. Luzon, Visayas, and Mindanao; and the the United Nations Industrial Development
Organization (UNIDO) cited the Philippines
The Ramos administration was marked by development of Subic and Clark into the among the biggest winners in the Industrial
greater stability and economic progress. best international service and logistics Development Scoreboard.The Philippines,
The government carried out key eco- center in Asia. Specific targets include together with China, moved up the industrial
performance rankings by 20 ranks between
nomic reforms, implementing the BOT the increase in growth to 7% or more up
1985 and 1998.
scheme, allowing private sector participa- to 2010, the reduction of poverty inci-
tion in previously regulated sectors, and dence from 34% to 17%, the increase in The number of mobile phone subscribers in
encouraging private sector participation the investment rate from 19% of GDP to the Philippines increased from 6.4 million in
2000 to 32.9 million as of the end of 2004
in economic and social development. It 28% in two years, the increase in exports according ot the latest Information Economy
also passed the Local Government Code, from US$38 billion to US$50 billion in Report of UNCTAD. With Filipinos making
empowering local government units to two years, the development of two million extensive use of the short message service
(SMS) (otherwise known as text message) of
undertake economic activities in the hectares of agri-business land, and the de-
the country’s telecommunications companies,
countryside. velopment of and support for two million the Philippines is considered the world leader
entrepreneurs. in per capita SMS usage.
75
David L. Balangue SGV & Co. is the Philippines’ largest professional services firm with nine offices across the coun-
Chairman and Managing Partner try. It employs over 1,800 people. SGV professionals from various disciplines provide integrated
solutions that draw on diverse and deep competencies in assurance, tax, and risk services. Up-
Cirilo P. Noel
Vice Chairman and holding the highest standards of quality, the Assurance and Advisory Business Services division
Deputy Managing Partner
of SGV & Co. has been ISO-certified since 1996.
Luis Y. Benitez, Jr.
Vice Chairman for Assurance and
Advisory Business Services SGV & Co.’s track record has remained unmatched in the region. It has accumulated invaluable
resources in its nearly 60 years of operation—highly qualified and competent staff, state-of-the-
Amelia B. Cabal
Vice Chairman for art facilities, and an enviable international network. The Firm envisions not only to give value-
Financial Markets added services to its clients but, more importantly, to become a partner in their and the region’s
Roman Felipe S. Reyes development.
Vice Chairman for Industries
SGV & Co. is a member practice of Ernst & Young Global. Ernst & Young, a global leader in
professional services, understands the business issues that are important to senior executives.
* * *
With extensive business knowledge and hands-on industry experience, the Ernst & Young
Washington SyCip organization can implement a broad array of solutions to help companies capture growth, improve
Founder
financial performance, and manage risk—
anywhere in the world. Its 107,000 people
serve as trusted business advisors in more
than 140 countries, offering auditing,
accounting, tax, and transaction advisory
services across all industries to many of
today’s leading global corporations as well
as emerging growth companies.
76
Services
Assurance and Advisory Business Tax Services

Services We offer a full range of tax compliance, tax Risk and Technology Services
advisory, tax planning, and tax outsourcing We help you manage risk effectively while
We have invested substantially in innovating services. We also provide advocacy work executing your business strategies by
our global, risk-based audit methodology and before the Bureau of Internal Revenue, reviewing your company’s risk profile, sharing
technology and knowledge enablers. All our the Bureau of Customs, the Department our insights on the critical issues affecting
auditors are equipped with our global audit of Finance, local governments, and other your business and industry, and providing
process management and documentation agencies such as the Subic Bay Metropolitan ongoing feedback through internal audits.
tools. The methodology is supplemented by Authority, the Bases Conversion Development
comprehensive standards and quality controls Authority, the Philippine Economic Zone • Internal Audit Services
that are applicable to every client engagement. Authority, the Securities and Exchange • Enterprise Risk Management
Commission, and the Department of Trade • Employment Solutions
• External Audit and Industry. Our tax advice on cross-border • Treasury Risk Solutions
• Compilation and Review Services transactions; corporate restructuring on
• Accounting Consultations acquisitions, mergers, and consolidations; We offer comprehensive information
• International Accounting Standards financial products and arrangements; transfer technology and security-related services
Conversions and Advisory pricing; contract review; and estate planning ranging from IT risk management and
• US Generally Accepted Accounting make us valuable to our clients. We also assurance to IT controls and security design
Principles (GAAP) Conversion prepare US 1040 and Philippine returns for and implementation. We help organizations
• Regulatory Compliance individuals. in their efforts to ensure that IT investments
• Extended Audit Services support business strategies and provide
• Accounting Advisory and Consultation • Tax Compliance Review maximum security and risk mitigation in the
Services on Deal Structuring • Tax Planning Engagement most cost-effective manner.
• Due Diligence Work • Tax Due Diligence Review
• Tax Advocacy/Controversy Work • Enterprise Systems Risk Management
Luis Y. Benitez, Jr. • Litigation Support Services • Enterprise Security Management
Head • Investment Advisory Services • IT Infrastructure Risk Management
Luis.Y.Benitez@ph.ey.com • General Advisory Services
Tel : (632) 894-8108/(0917) 894-8108 • Transfer Pricing Services Medel T. Nera
• Customs Services Head
• Contract Tax Services/Outsourcing Medel.T.Nera@ph.ey.com
• Income Tax Return Preparation Tel: (632) 894-8107/(0917) 894-8107
• Estate/Family Wealth Planning
• Tax Seminars

Cirilo P. Noel
Head
Cirilo.P.Noel@ph.ey.com
Tel: (632) 894-8144/(0917) 894-8144
77
SGV & Co Partners & Principals SGV & Co Offices Makati - Head Office
6760 Ayala Avenue, Makati City,
1226 Metro Manila, Philippines
Vincent O. Abella PO Box 1408, Makati Central Post Office
Emmanuel C. Alcantara 0740 Metro Manila, Philippines
Florante A. Aseron Tel: (632) 891-0307
Ladislao Z. Avila, Jr. Telex: EE 63743
Bennette A. Daplas-Bachoco Answerback: 63743 SGV PN
Teresita M. Baes
Fax: (632) 819-0872 / (632) 818-1377
David L. Balangue
Ma. Fides A. Balili E-mail: SGV_Information@sgv.com.ph
Luis Y. Benitez, Jr.
Warren R. Bituin
Amelia B. Cabal Branches Head of Branches Cebu
Protacio T. Tacandong Officers-in-charge:
Jessie D. Cabaluna Maria Madeira R. Vestil - Audit
Mary Ann C. Capuchino E-mail: Protacio.T.Tacandong@ph.ey.com
Mobile: (0917) 894-8104 E-mail: Maria.Madeira.R.Vestil@ph.ey.com
Aldrin M. Cerrado
Mobile: (0917) 894-8297
Lucy L. Lim-Chan
Bacolod Dalisay V. Bas-Catedrilla - Tax
Winston A. Chan
Emmanuel V. Clarino Jessie D. Cabaluna E-mail: Dalisay.V.Bas-Catedrilla@ph.ey.com
J Carlitos G. Cruz E-mail: Jessie.D.Cabaluna@ph.ey.com Mobile: (0917) 894-8296
Romulo S. Danao, Jr. Mobile: (0917)894-8106 6/F, Ayala Life FGU Center
Sharon Gabionza-Dayoan Officer-in-charge: Riz Ann Tonette U. Fernandez Mindanao Avenue corner
Ramon D. Dizon E-mail: Riz.Ann.Tonette.U.Fernandez@ph.ey.com Biliran Road, Cebu Business Park
Josephine H. Estomo Mobile: (0917) 301-2321 Cebu City
Rossana A. Fajardo
Luis Jose P. Ferrer 302 A Chan Building Tel: (032) 231-7551 to 55
Juanito A. Fullecido Lacson St Mandalagan Fax: (032) 231-9539
Renato J. Galve Bacolod City
Manolito F. Gonzales 6100 Negros Occidental Davao
Martin C. Guantes Tel: (034) 441-2861 to 62 Fabian K. delos Santos - Tax
Eduardo B. De Guia Fax: (034) 441-2863 E-mail: Fabian.K.delos.Santos@ph.ey.com
Arnel F. de Jesus Mobile: (0920) 961-8324
Joselito E. Lopez Baguio Officer-in-charge: Alicia O. Lu
Aris C. Malantic Aileen L. Saringan E-mail: Alicia.Lu@ph.ey.com
Cynthia A. Manlapig E-mail: Aileen.L.Saringan@ph.ey.com Mobile: (0917) 894-8295
Melinda Gonzales-Manto Mobile: (0917) 894-8150
Leonardo J. Matignas, Jr. 8/F, Pryce Tower
Officer-in-charge: Mary Cresencia P. MacBean Pryce Business Park
Marydith C. Miguel E-mail: Mary.Cresencia.P.MacBean@ph.ey.com
Manolito Q. Montes JP Laurel Avenue
Mobile: (0917) 506-9789 Bajada, Davao City
Medel T. Nera
Cirilo P. Noel Suite 3H, West Burnham Place Tel: (082) 227-3070
Virginia T. Obcena Kisad Road, 2600 Baguio City Fax: (082) 224-3857
John C. Ong Tel: (074) 443-9858
Jose A. Osana Fax: (074) 442-6509 General Santos
Feliza A. Peralta Fabian K. delos Santos - Tax
Noel P. Rabaja Cagayan de Oro E-mail: Fabian.K.delos.Santos@ph.ey.com
Mildred R. Ramos Officer-in-charge: Mirasol L. Padayhag Mobile: (0920) 961-8324
Roman Felipe S. Reyes E-mail: Mirasol.L.Padayhag@ph.ey.com Officer-in-charge: Cedric M. Caterio
Washington A. Roqueza E-mail: Cedric.M.Caterio@ph.ey.com
Mobile: (0917) 712-0637
Jaime F. del Rosario Mobile: (0917) 891-9915
Ruben R. Rubio 2/F, Insular Life Building
Maria Vivian G. Cruz-Ruiz Don Apolinar Velez St cor 2/F, SAFI Building II
Vicky B. Lee-Salas Uldarico Akut St Mansanitas St corner
Gemilo J. San Pedro Cagayan de Oro City Magsaysay Avenue
Fabian K. delos Santos Tel: (08822) 725-078; 726-555 9500 General Santos City
Veronica A. Santos Tel: (083) 552-7001 to 02
Fax: (088) 856-4415
Gerard B. Sanvictores Fax: (083) 552-5314

Aileen L. Saringan
Rebecca Go Sarmenta Cavite
Juanito A. Fullecido Mactan
Jose Joel M. Sebastian Officers-in-charge:
Protacio T. Tacandong E-mail: Juanito.A.Fullecido@ph.ey.com
Mobile: (0918) 994-8120 Maria Madeira R. Vestil - Audit
Mark Anthony P. Tamayo
Officer-in-charge: Christine I. Marquez E-mail: Maria.Madeira.R.Vestil@ph.ey.com
Henry M. Tan
Wilson P. Tan E-mail: Christine.I.Marquez@ph.ey.com Mobile: (0917) 894-8297
Joel L. Tan-Torres Mobile: (0917) 801-0398 Ma. Cristina C. Larrobis - Tax
Antonette C. Tionko E-mail: Ma.Cristina.C.Larrobis@ph.ey.com
Narciso T. Torres, Jr. 2/F, SGV Building III Mobile: (0917) 478-5773
Bella B. Valdez Gen Trias Drive, Tejero
Rosario, Cavite 2/F, Block A
Ma. Victoria A. Villaluz
Tel/Fax: 741-1375; 845-2065 Mactan Marina Mall
Romulfo B. Villamayor
Wilfredo U. Villanueva Pusok, Lapu-Lapu City
Rafael C. Vinzon Tel: (032) 340-7945 to 46
Betty C. Siy-Yap www.sgv.com.ph Fax: (032) 340-3507
Jose Pepito E. Zabat lll
www.ey.com
78
Glossary of Frequently Used Abbreviations and Terms
AEP Alien Employment Permit IFRS International Financial Reporting Standards

AFMA Agricultural and Fisheries Modernization Act IMF International Monetary Fund
AFTA ASEAN Free Trade Agreement IPO Initial public offering
ARMM Autonomous Region of Muslim Mindanao IPP Investment Priorities Plan
ASEAN Association of South East Asian Nations IPR Intellectual property rights
BI Bureau of Immigration IT Information technology
BIR Bureau of Internal Revenue ITH Income tax holiday
BOI Board of Investments LGUs Local government units
BOT Build-Operate-Transfer MA Mineral Agreement
BPRT Branch profits remittance tax MCIT Minimum corporate income tax
BSP Bangko Sentral ng Pilipinas MFN Most-favored nation
Calabarzon Multisectoral project complex in Cavite, Laguna, MW Megawatts
Batangas, Rizal, and Quezon provinces in Napocor National Power Corporation
Southern Luzon NEDA National Economic and Development Authority
CDC Clark Development Corporation NHIP National Health Insrurance Progran
CITEM Center for International Trade Expositions and Missions North Quad Northwestern Luzon Growth Quadrangle integrating Ilocos Norte, Ilocos
CME Coco methyl ester Sur, La Union, Pangasinan, Abra, and Southern Benguet
CNG Compressed natural gas NPAs Nonperforming assets
CSEZ Clark Special Economic Zone NPC National Power Corporation
CWT Creditable withholding tax NPLs Nonperforming loans
DepEd Department of Education NSCB National Statistical Coordination Board
DENR Department of Environment and Natural Resources OBUs Offshore banking units
DOE Department of Energy OECD Organization for Economic Co-operation and Development
DOLE Department of Labor and Employment OFWs Overseas Filipino workers
DOT Department of Tourism PD Presidential Decree
DST Documentary stamp tax PECR Philippine Energy Contracting Round
DTI Department of Trade and Industry PEZA Philippine Economic Zone Authority
ECC Environmental Compliance Certificate PHIC Philippine Health Insurance Corporation
ECCP European Chamber of Commerce of the Philippines PICPA Philippine Institute of Certified Public Accountants
EDA Export Development Act of 1994 PSE Philippine Stock Exchange
EDC Export Development Council R&D Research and development
EIA Environmental Impact Assessment RA Republic Act
EIS Environmental Impact System RHQs Regional or Area Headquarters
EO Executive Order ROHQs Regional Operating Headquarters
EP Exploration Permit RORO Roll-0n, Roll-off
EPIRA Electric Power Industry Reform Act RWs Regional Warehouses
EPZ Export processing zone SBF Subic Bay Freeport and Special Economic Zone
FCDU Foreign currency deposit units SBMA Subic Bay Metropolitan Authority
FDI Foreign Direct Investment SEC Securities and Exchange Commission
FIA Foreign Investments Act SEIPI Semiconductor and Electronics Industries in the Philippines, Inc.
FINL Foreign Investments Negative List SME Small and medium enterprises
FTAA Financial or Technical Assistance Agreement SOCSKSARGEN Economic growth corridor in Mindanao consisting of South Cotabato,
FWT Final withholding tax Sultan Kudarat, Sarangani, and General Santos City
GDP Gross domestic product SPV Special-purpose vehicle
GNP Gross national product SRC Securities Regulation Code
GOCC Government-Owned and -Controlled Corporations SSS Social Security System
IAS International Accounting Standards TESDA Technical Education and Skills Development Authority
ICT Information and Communications Technology TIN Taxpayer Identification Number
IE Industrial estate VAT Value-added tax
All rights reserved Photo credits

No part of this publication may be reproduced, stored in a retrieval system, or Carla Madarang (cover), Willie de Vera (page 9), NAVEL
transmitted in any form or by any means without the prior permission of the publisher, Productions and The Animation Council of the Philippines,
or be otherwise circulated in any form of binding or cover other than that in which it is Inc. (page 11), Michelle Malasig (page 67), Jing Antonio
published and without a similar condition including this condition being imposed on the (page 68), EY Branding Zone (other photos)
subsequent purchaser.
While the publisher has taken every care with regard to the accuracy of the information Information in this brochure is as of March 2006.
in this brochure, it cannot be held responsible for any errors or omissions therein.
79
SyCip Gorres Velayo & Co www. sgv.com.ph
© 2006 SGV & Co.

All rights reserved.
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2006 Edition

Doing Business in the

Doing Business in the

Despite enormous challenges in 2004, the Philippine economy had

We began 2005 with greater promise, with our sovereign currency

The rebirth of the Philippine mining industry continues to attract foreign

Apart from these developments, the Philippine accounting industry

recorded in 2003. Philippine merchandise

In 2005, the Philippines continues to courses on English as a second language,

Why You Should Invest in the Philippines

How to Operate in the Philippines

Bangko Sentral ng Pilipinas 45

SGV & Co.

and call centers).

The Country’s Bests

the Philippines with regard to clarity and tions).

ahead. The Philippines’ full adoption of

…offers expatriates a comfortable lifestyle

Fax: (632) 892-1724

can swim with the world’s largest fish,

9 Alex Perry, “Best of Asia – Best Animal

diversity of fish species for nearby fishing

19 Offshore Outsourcing World Staff. 2004. Interview. Tape recording, 20 February.

Given recent developments, investors are In September 2003, the Department of

tion of coco methyl ester (CME) as an

• Allows full foreign ownership of retail

government has identified 11 growth The region is envisioned to be an indus-

Ilocos Norte Toyota Sta. Rosa (Laguna) Special Economic Zone II

Laguna International Industrial Park Ayala de Zamboanga Industrial Park

1. Basic rights and guarantees to investors

Maritime Industry comply with the age limit requirement

• Exemption from value-added tax on

While the 1987 Constitution provided that

applicable fiscal and non-fiscal incen- development expenditures accumu-

Mineral Onshore, in any one province: 25 years; renewable Filipino citizen

Although initially challenged for being Agriculture and Fisheries

Opportunities for growth and diversifica-

tion are expected to be tied in with the

Investment Policy and Laws Omnibus Investments Code of 1987

• Freedom from expropriation without If not listed in the IPP, an enterprise is

various incentive bodies.

The 2005 IPP identifies 11 preferred

Enterprises passage marked the end of decades of

• Logistics services who occupy the same positions as the

Incentives Available to Exporters regulatory framework for the participation

Mandaluyong City, Philippines the realignment of its powers, the SEC

385 Industry and Investments

Estimated processing time:

A. Applicant must be at least 18 years old

 No PERD prepares disapproval

Applicant submits Yes

Tel: (632) 551-3457

Estimated processing time:

Applicant submits Letter of Intent and application

Subic Bay Metropolitan Authority

To address concerns of investors and

Registration with Bangko Sentral ng Pilipinas

Foreign loans and foreign

Corporations are also liable for the MCIT,