Welcome to the Philippines
A Southeast Asian archipelago of 7,107 islands, The Philippines is home to a well-educated people known for their intelligence, ingenuity, hospitality, cultural adaptability, and resourcefulness.
Geography. A natural gateway to the
East Asian economies, The Philippines is strategically located in the
Asia-Pacific region. It also has numerous international & domestic airports and
seaports. The country's location makes it ideal for a company's 24/7 operations.
|
Average Flying Time and
Distance from Selected Cities to the Philippines (Source: Board of Investments) |
||
| City | Average Flying Time(hm) | Distance(mi.) |
| Hong Kong | 1.40 | 705 |
| Taipei | 1.40 | 721 |
| Singapore | 3.00 | 1,489 |
| Kuala Lumpur | 3.15 | 1,533 |
| Jakarta | 3.25 | 1,732 |
| Seoul | 3.25 | 1,732 |
| Tokyo | 3.40 | 1,863 |
| Shanghai | 4.00 | 1,149 |
| Bangkok | 4.30 | 1,372 |
| San Francisco | 11.00 | 6,968 |
| Los Angeles | 12.35 | 7,306 |
| New York | 15.00 | 8,495 |
| Washington D.C. | 15.00 | 8,562 |
| London | 11.30 | 6,676 |
| Paris | 11.30 | 6,676 |
| Rome | 11.20 | 6,457 |
| Vancouver | 11.20 | 6,562 |
| Sydney | 8.00 | 3,897 |
Government. The Philippines is a democratic republican state with a
presidential form of government. It is the oldest working democracy in Asia with
a strong adherence to constitutional process.
People. As of end 2001, there were an estimated 80 million Filipinos.
Population growth rate is estimated at 1.99% annually for the period 2000 -
2005. The Philippines is the third largest English-speaking country in the world
with a national literacy rate of 94.8%. Each year, approximately 380,000
graduates join the country's skilled labor force, which already numbers around
29 million. Engineers, accountants, marketing professionals and ICT specialists
comprise the majority.
Education. Information Communication Technology (ICT) education is a top priority. Schools at all levels have incorporated ICT courses in their curricula. These range from computer classes for beginners to high-level courses in programming, computer engineering and software technology. Enrollment in ICT courses and related programs has increased dramatically over the years. This continues to produce a workforce with proven excellence in fields such as data processing and conversion, software development, and assembly and/or manufacture of physical ICT products.
Economic Climate. The Philippine economy counts as one of the most open in Asia. It has been resilient in times of crisis, and consistently posted strong growth rates. Liberalization, deregularization and privatization have provided local and foreign businesses alike with an even more conducive environment for investing in the country.
Political Climate. The Philippine Government is relentlessly trying to curb the number of armed group activities in the country. Most of these activities, however, are concentrated in a small island region that is 600 miles south of Metro Manila, the country's capital and center of business. Since the Philippines is an archipelago, bodies of water provide natural barriers between islands. As a result, Manila-based businesses hardly, if at all, experience disruptions with regard to day-to-day operations. The current Administration has been noted for its strong focus on the economy. All efforts have been geared towards creating a stable political environment for business, encouraging foreign and local investment.
(Sources: Deutsche Bank Philippines Guide, 2001; Gartner's Report on Philippine IT Competitiveness, 2002; Joaquin Cunanan & Co.'s "How to Invest in the Philippines," 2001; "Staking Our Claim to ICT Leadership")
I.C.T. OUTSOURCING LOCATION OF CHOICE
Business leaders in the Philippines and around the world have long recognized the country as one of the top destinations of choice for a variety of Information Communication Technology (ICT) services: Business Process Outsourcing (BPO), Contact Centers, Medical and Legal Transcriptions, Software Development and Maintenance, Animation, Graphics and Web, Engineering, and Computer-Aided Design.
Recently, however, research study shows that the Philippines is not only one of the top but also the number one destination of choice for ICT outsourcing. In no time, the country has caught up with erstwhile leaders India and Ireland and expanded the gap with followers China and Malaysia.
This early, the Philippines is already showing signs of dominating emerging offshore markets for BPO, contact center services and medical transcription services, primarily because of its inherent invest-ability.
With continued government and private sector support and the global outsourcing market projected at $800 billion by 2005, the Philippines is in a position to generate revenues of approximately $1-billion a year of exported ICT services from its current pool of at least 290,000 ICT-skilled Filipino professionals.
(Sources: CIO.com Outsourcing Guide, 2002; DTI; Gartner's Report on Philippine IT Competitiveness, 2002)
APPLICATIONS DEVELOPMENT
There are numerous Applications Development Services firms in the Philippines today that are engaged in analysis and design, programming and testing, customization, reengineering and conversion, installation and maintenance, and education and training.
The Applications Development Services Sector has over 50,000 top-caliber programmers, systems analysts and project managers. An estimated 30,000 to 50,000 of the approximately 380,000 college students graduate each year with a degree in Computer Science and Programming.
The Philippines is a virtual mine of top-caliber programmers, systems analysts and project managers. Yet, ICT manpower costs in the country remain competitive with US/Euro rates. Since the cost of living is lower in the Philippines than the US and more advance economies, ICT professionals in the country can afford to cut their professional fees to about a fourth to a fifth lower than that of their US/Europe-based counterparts.
With options such as subcontracting, joint venture, subsidiary and alliance, business potentials for foreign clients, who are looking to outsource their application development needs, are plentiful and favorable. Foreign clients can avail of Government incentives, and get more than 100% return of investment.
(Sources: DTI; Gartner's Report on Philippine IT Competitiveness, 2002; Philippine Software Association's Philippine IT Industry Overview; "Staking Our Claim to ICT Leadership")
WHY THE PHILIPPINES?
Government & Private Sector. The private sector enjoys the support of the Philippine government, which has embraced the ICT Industry as a major economic driver. Both sectors work together actively and synergistically in ICT-enabled service industries.
Plans and Policies.
Headed by President Gloria Macapagal-Arroyo herself, the Information Technology and E-commerce Council (ITECC), with representatives from the private sector and from government agencies, is the country's highest ICT policymaking body. Alongside ITECC policies are several strategies and laws affecting the ICT industry: (1) the Electronic Commerce Act (2) the National Information Technology Plan, (3) ISP.COM, and (4) the Medium Term Development Plan. The Philippines is a member of the Information Technology Agreement (ITC), which allows the country’s ICT sectors to export to other ITA members with low or no duties.
Security. Several measures are enforced to ensure the protection of intellectual property rights, privacy and data security: (1) The Intellectual Property Code of the Philippines, (2) WTO’s Trade-Related Intellectual Property Agreement (TRIPS), and (3) WIPO Copyright Treaty. The government's Medium Term Development Plan counts among its major objectives the intention to "craft policies and enforcement mechanisms for data protection and network security," and to pursue legislation that will help put an end to cyber-related fraud.
Focused Training. The private sector is supported by the Philippine government in coordinating programs to encourage the growth of the ICT industry. These programs have resulted in a number of focused training options that have bolstered the workforce with valuable skilled labor.
(Sources : Gartner Research; Focus the Philippines; Deutsche Bank Philippines Guide; Joaquin Cunanan & Co.'s How to Invest in the Philippines; Philippine Software Association’s Philippine IT Industry Overview; Staking Our Claim to ICT Leadership)
Infrastructure. The Philippines has a solid system of power and telecommunication infrastructure. There is redundant international connectivity, including fiber optic cables and satellite communication, and a significant amount of trans-Pacific data communication bandwidth is readily available. High-quality, low-cost bandwidth is expanding the domestic telecommunication network while a number of international carriers for telecommunication services are providing a competitive landscape for buyers.
Special economic zones, or what are known as IT Parks and/or Buildings, have ample and up-to-date telecommunications capabilities: (1) an abundant supply of available telephone lines, ISDN, and fiber optic technologies, and (2) a clean, uninterruptible power supply and computer security, and building monitoring and maintenance systems. Nine IT Parks/Buildings with sizes ranging from 11 to 25 hectares have already been put up; seven are located in Metro Manila, and two in Metro Cebu.
Attractive Expatriate Lifestyle. The Philippines has consistently been given high satisfaction ratings by expatriates. As a result, there is a higher availability of project managers, call center operations managers and various middle to upper-level managers who are willing to relocate or work on multi-year assignments. This is because of the ease in cultural assimilation, as well as the language proficiency with the country.
There are, likewise, an abundance of modern recreational facilities, first-rate educational institutions (International schools like The British school, German school, Japanese school, Mandarin school, etc.), world-class medical facilities and value-for-money housing. The hospitable lifestyle is made even more attractive with the cost of living lower than the more advanced economies.
Since the Asian economic issues in 1997, the Philippines has an overcapacity of high-quality real estate space (comparable with Singapore and Hong Kong). As a result, the price of commercial and residential real estate is extremely low compared to equivalent options in India and its surrounding region.
The Philippines is a member of the Information Technology Agreement (ITC), which allows the country’s ICT sectors to export to other ITA members with low or no duties.
(Sources: Gartner Research; Focus the Philippines; Deutsche Bank Philippines Guide; Joaquin Cunanan & Co.'s “How to Invest in the Philippines”; Philippine Software Association’s “Philippine IT Industry Overview”; “Staking Our Claim to ICT Leadership”) DOING BUSINESS IN THE PHILIPPINES
The Philippine government has taken a very friendly stance towards foreign investors, encouraging investment with special incentives and liberalized policies and regulations.
Registration. Before a foreign corporation can do business in the Philippines, it must register with the Securities and Exchange Commission (SEC) to acquire status as legal persons with all the rights, benefits and privileges of a corporate citizen.
Those who wish to avail of investment incentives should first seek approval from the Board of Investments (BOI) or the Philippine Economic Zone Authority (PEZA) before filing an application with the SEC.
Businesses operating in one of the 39 cities and towns that are defined as Ecozones by the Special Economic Zone Act, are entitled to additional incentives.
Incentives. The Investment Priorities Plan (IPP) is issued annually by the Board of Investments (link to BOI), and lists preferred areas of investment. Qualified ICT services—such as software development projects, ICT-enabled services, support and knowledge-based services, and business process outsourcing—enjoy an impressive array of incentives in the form of tax exemptions and concessions. Guidelines for the registration and administration of incentives of IT services are detailed in Executive Order No. 226.
Ownership. Since the liberalization of the foreign investments law, 100% foreign equity may be allowed in all areas of investment, except financial institutions and those included in the fifth regular Foreign Investment Negative List *link (effective October 22, 2002).
Modes of Entry. Based on provisions determined by the Foreign Investment Act of 1991, a foreign corporation may establish itself in the Philippines through one of several means:
(1) Representative Office. A representative office's activities are limited to promotion and information dissemination regarding the products and services of the company it represents.
(2) Branch. A branch office may conclude sales contracts with local entities in its own name and engage in income-producing activities in the same manner as its parent company.
(3) Domestic Subsidiary. While incorporated and existing under Philippine laws, a domestic subsidiary is either wholly owned or at least majority-owned by a foreign parent corporation. However, the liability of the parent corporation to creditors of the subsidiary is limited to its shareholdings in the domestic subsidiary
(4) Regional Headquarters. A regional headquarters acts as a center for supervision, communications and coordination for the company's subsidiaries, branches or affiliates in the Asia-Pacific Region.
(5) Joint Venture. Foreign and domestic corporations may enter into a joint venture and form a new domestic corporation, which is to perform a single, specific undertaking or project with each of the partners contributing to its performance.
Other Modes.
(1) A foreign company may purchase shares in an existing corporation.
(2) A foreign-owned domestic subsidiary can merge or consolidate with a domestic corporation.
(3) A technology transfer arrangement involving licensing of computer software and transfer of systematic knowledge for a product's manufacture, among other things, may be entered into by domestic and foreign countries.
(4) A foreign corporation may enter into a five-year management contract that enables it to manage all of the business of a domestic corporation not involved in wholly or partially nationalized enterprises.
Registration with the Central Bank. The Bangko Sentral ng Pilipinas or BSP ensures that the repatriation of capital and the remittance of dividends, profits and earnings can be made using foreign exchange from the banking system.
(Sources: Deutsche Bank Philippines Guide; Joaquin Cunanan & Co.'s “How to Invest in the Philippines”)