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Investing in the Philippines

The Philippines represents an enormous opportunity for investment for companies who take the time to check out what this country has to offer.

The Philippines is open to foreign investment and is committed to the liberalization of the service sector in accordance with WTO guidelines. Indeed the Philippines was one of the founding members of the World Trade organization. We offer special incentives to companies that invest into priority areas as designated by the government.

We have a skilled workforce that has been educated with English as the primary means of instruction. The overall literacy rate of the population is above 94% and among college graduates more than 99% have a professional proficiency in English. What is more our people speak English as one of our national languages making them oral/aural proficient. This is especially important in call center and customer support operations. The Philippines is already excelling in these areas.

We have a government that is committed to growing the IT services industry and which offers attractive investment incentives to companies setting up here.

We have an exchange rate that makes both real property and employment highly affordable for those companies who want to get in on the ground floor and know the bargain that we offer.

Our cities and our lifestyle are designed for relaxed living. Whether you are in Manila, or the other major urban centers of Cebu City or Davao you will find modern well-equipped cities with facilities designed for international living and at highly affordable prices.
Finally we can offer you the Philippines: A beautiful country that is a paradise for those who love the outdoor life. We have golf courses that are world class, dive sites all over the country for those who like the water, unspoiled beaches for those who just want to relax - and all at very affordable prices. For the sophisticates we have fine dining with the best the world has to offer. We have world-class entertainment at the National Cultural Center and in major provincial centers
Importantly, we have superb international schooling in Manila and at all major centers including the Subic and Clark special economic zones. Our international education is world class and several offer the international baccalaureate program as part of their curriculum.

Investing in the IT Sector

Knowledge based industries are rapidly replacing traditional manufacturing as the growth engine of the 21 st century and the Philippines is well paced to take advantage of the shift. The Philippines has been cited as "the world's top source of knowledge workers" according to Meta Group's Global New E-Economy Index (GNEI). This is based on criteria such as the availability of qualified engineers and ICT workers.

"The 'knowledge jobs' category of the Global New E-Economy Index (GNEI) is one of the indicators of a country's IT-readiness and capability." This sector is growing rapidly in the Philippines and key “cluster industry centers” are already emerging in Manila, in Cebu and in a number of the PEZA investment zones.

In relation to the IT sector, the current Investment Priorities Plan Special sets out those areas covered by special investment incentives. These include:

• ICT services: applications development (system software, middleware, application software and application systems);

• ICT enabled services: business process outsourcing (BPO) including customer contact centers, content creation, distance learning, market research, travel services, finance and accounting, human resources and other administrative services such as purchasing and where these can be transformed and delivered through the ICT infrastructure.

• ICT support activities including pure research and development, education and training for ICT, incubation centers for ICT projects and community access facilities.

Investment Incentives

Under the Omnibus Investments Code, an investor may enjoy certain benefits and incentives, provided he invests in preferred areas of investments found in the current Investment Priorities Plan (IPP). The IPP, issued annually by the Board of Investments (BOI), is a list of promoted areas of investments eligible for government incentives in consultation with related government agencies and private sector.
An enterprise may still be entitled to receive incentives even if the activity is not listed in the IPP so long as:
• At least 50% of production is for exports, if Filipino-owned enterprise; and

• At least 70% of production is for exports, if majority foreign-owned enterprise (more than 40% foreign equity), The BOI in certain instances as indicated in the IPP may completely or partially limit the incentives available to export products. Under Book I of the Omnibus Investments Code, BOI-registered enterprises are given a number of incentives in the form of tax exemptions and concessions. These are

• Fiscal Incentives

• Non-Fiscal Incentives

• Incentives for Regional Headquarters and Regional Operating Headquarters in the Philippines Full details of the incentives available can be obtained from the Board of Investments website. These include:

• A 4 – 8 year income tax holiday (ITH) depending on the size and nature of the investment;

• A special 5% tax rate after the lapse of the ITH;

• Tax and duty exemption on imported capital equipment;

• Unrestricted use of consigned equipment;

• Additional deductions for training expenses;

• Additional deductions for labor expenses;

• Exemption from wharfage dues, duties and other fees and charges;

• Ease of employment of foreign nationals.
There are a number of local service companies who can provide specialized advice in this area.



Planning Your Investment  |  Investing in the Philippines  |  SEC Registration Requirements

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