Current business situation
Growth in the Philippines is largely driven by:
- Household consumption which currently accounts for 73.8 per cent of GDP (Source: World Bank 2018).
- Filipino consumers are rated as the second most confident consumers in the world, according to the AC Nielson Global Consumer survey.
- Extensive infrastructure commitment: 5.4 per cent of GDP has been allocated towards public investments (A$23.36 billion) with 11 projects approved as of June 2017.
- Remittances from Overseas Filipino Workers (OFWs) which account for 15 per cent of the Philippines’ GDP. In 2018, remittances worth A$50.6 billion were sent back to the Philippines.
- Business Processing Outsourcing (BPO): Information Technology-Business Process Outsourcing (IT-BPO) is the fastest growing industry in the Philippines today. It boasts a steady growth in revenue with an average of 9 per cent yearly and covers about 10-15 per cent market share of the global outsourcing market. As prime outsourcing destination in Southeast Asia, direct employment for Filipinos in this sector was at 1.23 million jobs and generated approximately A$35 billion in revenues. (Source: Doing Business in the Philippines.com)
Having recently marked its 70th year of bilateral relations, Australia and the Philippines enjoy close relations, as reflected by the following:
- Two-way trade between Australian and the Philippines is valued at approximately A$4.3 billion in 2016. It has grown 50 per cent since 2010. Trade between Australia and the Philippines has expanded by over 70 per cent since the ASEAN-Australia-New Zealand Free Trade Agreement entered into force in 2010. There is appetite on both sides to boost two-way total trade, which was valued at A$4.7 billion in 2018.
- Australia maintains its position as a key destination for the growing number of Filipino students looking to study abroad and continues to experience growth with over 21,000 student enrolments in 2019
- Over 280 Australian have established a presence in the Philippines. While some of these companies are pursing specific opportunities locally, others use the Philippines as a service delivery centre for the Australian or third markets.
- Over 300 Australian companies employing 44,000 Filipinos are present in the Philippines, tapping into a young, well-educated, English speaking talent pool. While some of these companies are pursing specific opportunities locally, others use the Philippines as a service delivery centre for the Australian or third markets.
- There is an increasing appetite by major Philippine conglomerates to invest in Australia, secure their supply chains and access advanced products and technology, particularly in energy and technology. Philippine investment in Australia amounted to A$365 million in 2018.
Business is normally conducted in English. During initial meetings it is
recommended to address the Filipino person by using their surname and title
(for example, ‘Secretary Cruz’ or ‘Director Mendoza’) as a sign of respect.
After the first meeting, titles can generally be disregarded in
conversation, but it is preferable to use them in correspondence. Filipinos
normally use two forms of address/names. Their ‘full name’ is used for
official business transactions, such as signing of contracts while their
‘nickname’ is the one that is usually seen on their business card and the
name that they prefer other people to address them during a conversation.
Personal relationships are very important in the Philippine business
culture, with personal interaction and face-to-face meetings considered
necessary to establish and maintain a solid business relationship.
Filipinos will normally engage in light conversation and even ask personal
questions as this is how they establish a relationship. Humour plays an
important role in relationship building but avoid topics on politics and
Filipinos are very sensitive about losing ‘face’ and place a premium on
their reputation. Avoid direct confrontation, criticism or actions which
will cause offence or public embarrassment for the Filipino business person
as this may prove counterproductive. Always be polite and courteous when
talking with Filipino business contacts. Related to the concept of ‘face’
is the hesitation of the Filipino to say “no”. In order to save face and to
avoid disagreement, Filipinos will rarely say “no”. Foreigners should
closely observe the subtle nuances in the body language to discern the
non-verbal message being relayed by the business person.
Filipinos have a relaxed concept of time (Filipino time) and may not always
be punctual for business meetings. Business appointments should be made a
few weeks before arrival and it is recommended that a call to reconfirm be
made a day before as confirmed appointments can be cancelled or postponed
at the last minute.
Setting up in market
In many cases, a foreign entity cannot own more than 60 per cent of the
enterprise, with the majority owned by local entities. Depending on the
industry, a local partner may be necessary to facilitate doing business in
the Philippines. However, exceptions for majority foreign ownership exist
for certain types of industries. It is best to get to know the market and
the key players prior to deciding on a partner. Austrade’s team in Manila
can assist in providing market intelligence and insights, and introducing
relevant contacts in the market.
It is strongly suggested that Australian companies seek professional legal
and accounting advice prior to establishing a business in the Philippines.
Austrade Manila can refer professional service companies that specialise in
Banking and Finance
Despite external challenges of the world market, the Philippines currently
enjoys a strong domestic economy, increased public spending, stable
inflation, low interest rates, and a solid external position which boosts market confidence in the financial sector.
The Bangko Sentral ng Pilipinas or BSP (formerly the Central Bank of the
Philippines) is taking continuing initiatives to improve its prudential
regulation and supervision of the operations and activities of banks and
non-bank financial intermediaries, which can be expected to further
strengthen the Philippine banking system and achieve economic stability for
A wide range of banking services is available. The market for specialised
banking services is relatively new, but it is maturing.
Foreign banks play an important role in the banking system, particularly in
facilitating inbound foreign capital. A number of major international banks
have branch operations in the Philippines offering full banking services.
The Philippine Stock Exchange lists a variety of equity securities. There
are generally no constraints on transactions by foreigners.
Foreign investors currently may acquire up to 60 per cent equity in a
(Source: Doing Business in the Philippines – PWC)
Links and resources
Government, business and trade
Australia-Philippines Business Council
Australia and New Zealand Chamber of Commerce of the Philippines
Bureau of Investments in the Philippines
Department of Trade and Industry
Philippines-Australia Business Council
Philippine Economic Zone Authority
Philippine Government Portal
Philippine Securities and Exchange Commission
News and media
Philippine Daily Inquirer
Manila Bulletin Online
Intellectual property protection
As part of a market entry strategy, Australian companies should do an
intellectual property (IP) audit and be acquainted with how best to protect
their IP rights in the Philippines. For more information visit the IP Australia
Intellectual Property Office of the Philippines
Dispute resolution in the Philippines need to be handled by an appointed
local legal advisor who has been given the license to practice Philippine
law. Austrade Manila can refer professional service companies that
specialise in this area.
Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.