Current business situation
While the weak consumer demand is affecting the speed of the Philippines economic recovery, the three sectors that share the economy are showing positive signs:
- Overall remittance flows remain resilient as the recovery in the US is helping this trend, which accounted for 40 per cent of remittances in 2020 (Source: WB: PH among top remittance recipients).
- Overseas Filipino Workers (OFWs) send back A$45 billion to the Philippines in 2020, equivalent to 9.2 per cent of the GDP (Source: OFW remittances hit record high of $33.5 billion in 2019).
- The global pandemic has spurred the Philippines’ BPO sector on the lead of increased global demand for remote business operations. According to IBPAP CEO Rey Untal, the IT-BPM industry generated AS$35.7 billion in revenues, 7.1 per cent higher than the previous year.
- The Philippine government’s commitment to extensive infrastructure investments amount to 5.3 per cent of GDP (A$29.37 billion) has kept the economy going (Source: Infrastructure spending goal reduced in 2020, expanded in 2021).
Celebrating 75 years of bilateral relations in 2021, Australia and the Philippines enjoy close relations, as reflected by the following:
- Trade between Australia and the Philippines has expanded by over 125 per cent since the ASEAN-Australia-New Zealand Free Trade Agreement entered into force in 2010.
- Australia continues to keep its position as the key destination for the growing number of Filipino students looking to study abroad and continues to experience growth with over 24,000 student enrolments in 2020.
- Over 300 Australian companies employing 44,000 Filipinos are present in the Philippines, tapping into its 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.
Business is normally conducted in English. During initial meetings it is
recommended to address the Filipino 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.
Hence, establishing new relationships during the pandemic has been difficult. Filipinos will normally engage in light conversation and even ask personal
questions in order to 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 can be relaxed when it comes to 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 important 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.
We strongly suggest Australian companies to 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 unprecedented challenges of the global pandemic, the Philippines is able to maintain a steady economy, increase public spending, control inflation, keep interest rates low, and sustain 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) continues to take steps to improve its prudential
regulation and supervision of the operations and activities of banks and
non-bank financial intermediaries. These are likely 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.