Philippines

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Investing in the Philippines

FDI in figures | Why you should choose to invest in the Philippines | Procedures relative to foreign investment | Finding assistance for further information

FDI in figures

Foreign Direct Investment has markedly decreased since 2008 because of the unfavourable international economic environment. Nevertherless, it has been showing signs of recovery since April 2009. In relation to comparative advantages of the Philippines (an English speaking and relatively well trained labour force and a strong cultural proximity with the United States), the FDI flow is rather weak, partly because the country is turning itself into a service society, without the capital strength, meaning with minimal equipment needs. Additionally, the government favors subcontracting agreements between foreign companies and local companies rather than FDI in the strict sense of the term.

Foreign Direct Investment	2005	2006	2007
FDI inward flow (millions USD)	1,854	2,921	2,928
FDI stock (millions USD)	14,562	16,024	18,952
Performance Index*, ranking on 141 economies	109	102	96
Potential Index**, ranking on 141 economies	74	77	-
Number of Greenfield investments***	65	60	95
FDI inwards (in % of GFCF****)	13.0	18.0	14.3
FDI stock (in % of GDP)	14.8	13.6	13.1

Source:

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk. *** Green field investments are a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. **** Gross fixed capital formation (GFCF) measures the value of additions to fixed assets purchased by business, government and households less disposals of fixed assets sold off or scrapped.

Why you should choose to invest in the Philippines

Strong points: The country's main strong points are:
- A skilled English-speaking workforce;
- A large domestic market;
- Its membership to ASEAN;
- A favorable investment policy;
- A very advanced legal system;
- A strategic location at the Asian gateway; and
- Considerable natural wealth.
Weak points: The country's weak points lie in its political instability, the bad quality of its infrastructures, judicial precariousness and lack of transparency.
Government measures to motivate or restrict FDI: Laws liberalizing business practices have opened up more fields to foreign investments and have provided foreign investors with the same incentives as ASEAN members, as well as simplified procedures.
Bilateral investment conventions signed by the Philippines: The Philippines have signed bilateral investment agreements with many countries, listed here.

Procedures relative to foreign investment

Freedom of establishment: Not guaranteed.
Acquisition of holdings: A majority holding interest in the capital of a local company is legal in the Philippines.
Obligation to declare: The agency for the promotion of foreign investment in the country provides information about the authorizations required for setting up business.
Competent organization for the declaration: Philippine Board of Investment
Requests for specific authorizations: The sectors open to foreign investment after an authorization has been obtained are listed in Annexe B of the Foreign Investment Act, available here.

Finding assistance for further information

Investment aid agency: Board of Investment
Other useful resources: Philippine Chamber of Commerce and Industry

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