Philippines market analysis,market entry strategy,leading industry, and economy analysis.

1. EMERGING MARKETS
-PHILIPPINES

2. PHILIPPINES COUNTRY PROFILE
The Philippines - a Spanish colony for more
than three centuries and named after a 16th
century Spanish king - was taken over by the
US in the early 20th century after a protracted
rebellion against rule from Madrid.
Spanish and US influences remain strong,
especially in terms of language, religion and
government.
The US is a close ally and has provided military
aid to help combat Muslim and communist
insurgencies.

3. PHILIPPINES COUNTRY PROFILE
(CONTD.)The US is a close ally and
has provided military aid to
help combat Muslim and
communist insurgencies.
More than 7,000 islands
make up the Philippines,
but the bulk of its fast-
growing population lives on
just 11 of them.

4. CHARACTERSTICS OF PHILIPPINES

5. SUMMARY STATISTICS
Region 2015
South-Eastern
Asia
Surface area (sq km) 2014 300000
Population (proj., 000) 2016 102250
Pop. density (per sq km) 2016 342.9
Capital city 2015 Manila
Capital city pop. (000) 2015 12946
Refers to the
National
Capital
Region.
Currency 2015
Philippine Peso
(PHP)
UN membership date 2013
24 October
1945

6. ECONOMIC INDICATORS
GDP: Gross domestic product (million
current US$)
2014 284582
GDP: Gross domestic product (million
current US$)
2010 199591
GDP: Gross domestic product (million
current US$)
2005 103072
GDP growth rate (annual %, const.
2005 prices)
2014 6.1
GDP growth rate (annual %, const.
2005 prices)
2010 7.6
GDP growth rate (annual %, const.
2005 prices)
2005 4.8
GDP per capita (current US$) 2014 2870.5
GDP per capita (current US$) 2010 2145.2
GDP per capita (current US$) 2005 1196.5

7. ECONOMIC INDICATORS (CONTD.)
Economy: Agriculture (% of GVA) 2014 11.3
Excludes
irrigation canals
and landscaping
care.
Economy: Agriculture (% of GVA) 2010 12.3
Excludes
irrigation canals
and landscaping
care.
Economy: Agriculture (% of GVA) 2005 12.7
Excludes
irrigation canals
and landscaping
care.
Economy: Industry (% of GVA) 2014 31.2
Excludes
publishing
activities,
includes
irrigation
canals.
Excludes
publishing

8. ECONOMIC INDICATORS (CONTD.)
Economy: Industry (% of GVA) 2014 31.2
Excludes publishing activities, includes
irrigation canals.
Economy: Industry (% of GVA) 2010 32.6
Excludes publishing activities, includes
irrigation canals.
Economy: Industry (% of GVA) 2005 33.9
Excludes publishing activities, includes
irrigation canals.
Economy: Services and other activity (% of
GVA)
2014 57.5
Excludes repair of personal and household
goods. Includes publishing activities and
landscaping care.
Economy: Services and other activity (% of
GVA)
2010 55.1
Excludes repair of personal and household
goods. Includes publishing activities and
landscaping care.
Economy: Services and other activity (% of
GVA)
2005 53.5
Excludes repair of personal and household
goods. Includes publishing activities and
landscaping care.
Employment: Agriculture (% of employed) 2014 30.4
Employment: Agriculture (% of employed) 2010 33.2
Data classified according to ISIC Rev. 3. Break
in the time series. Nonstandard population
coverage.
Employment: Agriculture (% of employed) 2005 36.0
Data classified according to ISIC Rev. 3.
Excluding regular military living in barracks.

9. ECONOMIC INDICATORS (CONTD.)Employment: Industry (% of employed) 2014 15.9
Employment: Industry (% of employed) 2010 15.0
Data classified according to ISIC Rev. 3.
Break in the time series. Nonstandard
population coverage.
Employment: Industry (% of employed) 2005 15.6
Data classified according to ISIC Rev. 3.
Excluding regular military living in
barracks.
Employment: Services and other (% of
employed)
2014 53.6
Employment: Services and other (% of
employed)
2010 51.8
Data classified according to ISIC Rev. 3.
Break in the time series. Nonstandard
population coverage.
Employment: Services and other (% of
employed)
2005 48.5
Data classified according to ISIC Rev. 3.
Excluding regular military living in
barracks.
Unemployment (% of labour force) 2014 6.6 Estimate.
Unemployment (% of labour force) 2010 7.4 Estimate.
Unemployment (% of labour force) 2005 7.7 Estimate.

10. ECONOMIC INDICATORS (CONTD.)
Food production index (2004-2006=100) 2014 120 2013.
Food production index (2004-2006=100) 2010 113
Food production index (2004-2006=100) 2005 100
Balance of payments, current account
(million US$)
2014 10917
Balance of payments, current account
(million US$)
2010 7179
Balance of payments, current account
(million US$)
2005 1990
Break in the time
series.
Exports (million US$) 2015 58648.1
Imports (million US$) 2015 70153.5
Balance (million US$) 2015 -11505.4
Major trading partners (% of exports) 2015
Japan (21.1), United
States (15.0), China
(10.9)
Major trading partners (% of imports) 2015
China (16.4), United
States (10.9), Japan

11. PHILIPPINES- AN EMERGING
MARKET.
The Philippines is currently one of the most dynamic economies in
the East Asia region, with sound economic fundamentals and a
globally recognized competitive workforce.
The Philippine economy grew at an annual rate of 6.9 percent in the
first half of 2016, up from 5.5 percent during the same period in
2015, exceeding growth of China, Malaysia, Thailand and Vietnam.
Growth in real household income, partly due to effective social
protection programs, is gradually improving the welfare of the poor
Recent estimates suggest that extreme poverty in the Philippines,
measured by the international poverty line of 1.9 dollars a day (2011
purchasing power parity), decreased from 10.6 percent in 2012 to 8.4
percent in 2015.

12. PHILIPPINES- AN EMERGING
MARKET (CONTD.)
The poorer segment of the population reported faster growth in
household income than the average figure, showing that income
inequality is easing downward.
The new administration has reassured businesses and investors by
continuing existing macroeconomic policies while reforming the tax
collection system.
The new administration’s 10-point socio-economic agenda
emphasizes equitable tax reform, enhanced public spending, greater
transparency and accountability, improved ease of doing business,
and continued investment in education, skills, health and social
assistance to the poor.

13. TOP 9 INDUSTRIES IN THE
PHILIPPINES
Business Process Outsourcing: Over one million Filipinos are
employed by BPOs generating roughly 11% of the country’s GDP and
it is estimated that 1.5M new jobs will be created next year by the
BPO sector.
Retail: Developers have adopted the retail-tainment concept.Malls are
not only havens for shopping but as venues for entertainment. One
good example is the Arena in The SM mall of Asia or Samsung Hall in
SM Aura.
Gaming: Industry analysts are expecting double-digit revenues as
licensed casino operators like Travellers International Hotel Group,
Bloombery Resorts Corp., Melco Crown Philippines Resorts Corp., and
Tiger Resorts come online.
Hospitality and Leisure: In 2013, tourists hit 4.7M. Total earnings
from tourism in 2014 amounted to US$4.84B, higher by 10% from
2013 levels of US$4.40B. The government aims to attract 10.0 million

14. TOP 9 INDUSTRIES IN THE
PHILIPPINES (CONTD.)
Real Estate: Impacting the growth stemming from the BPO sector, all
businesses servicing it are expected to have a boost. One lucky
industry is the real estate.
Manufacturing: The manufacturing sector has grown 10 % since the
last quarter of 2013 which accounts for 55% of GDP. What further
gives this growth stability is that the expansion in manufacturing is
broad-based coming from shipping, medical products, toys, auto
parts, and agriculture.
Construction: Construction contributed about one-third of fixed
investment growth of 11.7% in 2012. Construction is forecasted to
remain buoyant with double digit growth. The infrastructure budget
in 2014 was raised equivalent to 3.0% of GDP.

15. TOP 9 INDUSTRIES IN THE
PHILIPPINES (CONTD.)
Energy & Automotive: The energy sector recorded a total of 19 energy
projects by the first half of the year, worth Php 159B, which is
expected to generate 2,064 megawatt power to address the power
cuts and shortages in the provinces.
Shipbuilding: shipbuilding and aerospace sectors are likely to be
sunshine industries given investor interest to bridge the islands of
the Philippines.

16. MARKET ENTRY SERVICES AND
SOLUTIONS
Overall market opportunity
Connections to local distributors, manufacturers and partners
Local Agent or Representative
Business matching
Incubation & office
Business vehicle to incorporate
Due diligence
Expansion plans from Metro-Manila to provinces

17. WORKING ENVIRONMENT OF THE
PHILIPPINES
Minimum employable age: The minimum age for employment is 15 years old and below
that age is not allowed. Persons of age 15 to 18 can be employed given that they work in
non-hazardous environments.
Overseas employment: As for overseas employment of Filipinos, foreign employers are not
allowed to directly hire Philippine nationals except through board and entities authorized
by the Secretary of Labor.
Minimum wage rate: Minimum wage rates in the Philippines vary from region to region,
with boards established for each region to monitor economic activity and adjust minimum
wages based on growth rates, unemployment rates, and other factors
Regular work hours and rest periods: Normal hours of work. - The normal hours of work
of any employee shall not exceed eight (8) hours a day.
Rest days: All employees have the right to have a 24 consecutive hours of rest day after
every 6 days of work.

18. WORKING ENVIRONMENT OF THE
PHILIPPINES (CONTD.)
Nightshift differential and overtime: The night shift starts from 10 o’clock in the
evening until 6 o’clock in the morning, and employees will receive 10% more of
his/her regular wage rate.
Household helpers: The minimum wage of household helpers is P800 per month
for some cities in Metro Manila, while a lower wage is paid to those outside of
Metro Manila.
Termination by employer: The employer has the right to terminate an employee
due to the following reasons: serious misconduct or disobedience to the
employer, neglect of duties or commission of a crime by the employee, and such
gives the employer a just case to terminate the services of the employee.
Retirement: employee may retire at the age of 60, given that he/she has served
the employer for 5 years, and shall be given a retirement pay of at least half a
month’s salary for every year of service ( 6 months of work given is considered
as 1 whole year for the retirement pay).

19. PHILIPPINES - MARKET
CHALLENGES
Graft and Corruption: Corruption, a constraint to business and outside
investment, is a pervasive and long-standing challenge in the Philippines.
Ineffective Judicial System: The Philippines’ complex, slow, and complicated
judicial system can inhibit the timely and fair resolution of commercial
disputes. Most cases take many years to reach a final verdict.
Limited Ownership: The Philippines has restricted foreign ownership in
selected industries, including utilities and the media. The Government also
lists several professions where foreign participation is not allowed.
Regulatory System: Product registration, product standards, and
environmental and labeling requirements place restrictions on certain
products.

20. PHILIPPINES - MARKET
CHALLENGES (CONTD.)
Value-Added Tax (VAT): The VAT is a 12 percent tax levied on the
sale of all goods and services, including the imports of goods into the
Philippines. The VAT is an indirect tax which is generally passed on
to the buyer/consumer.
Infrastructure: The Philippines lags behind many of its neighbors in
infrastructure development. Major improvements are needed in
transport infrastructure.
Highly Price-Sensitive Market: U.S. products are generally known as
being high quality, but more costly. U.S. exporters should not expect
to apply their U.S. pricing strategy in this market. Distributors and
customers will request payment terms.

21. PHILIPPINES - MARKET
OPPORTUNITIES
Best prospects for U.S. companies in the Philippines are
infrastructure, energy, (including renewable energy, renewable fuels
and smart grid), information and communication technology (ICT),
defense, medical, and water resources.
ICT companies in particular may find opportunities in providing
equipment and services to the growing business process outsourcing
(BPO) sector, which is growing at a rate of 15 percent a year.
Energy production, conservation and efficiency are top priorities as
the country is presently operating on low reserve margins and at high
rates.

22. PHILIPPINES - MARKET
OPPORTUNITIES (CONTD.)
Companies in water/wastewater
management will also find
opportunities in the Philippines.
The Government of the
Philippines actively seeks foreign
participation to promote
economic development of these
PPP projects.

23. PHILIPPINES - MARKET ENTRY
STRATEGY
Agents and distributors are commonly used in the Philippines and are
essential for most U.S. companies.
It is recommended that U.S. companies visit their agents and
distributors to strengthen these relationships and assess the local
companies’ abilities.
If possible, they should also visit existing and potential clients with
their agents and distributors to promote their product lines and/or
better understand the clients’ requirements.
U.S. companies should be patient yet diligent in pursuing contracts,
particularly projects with the Philippine Government.

24. MODE OF ENTERING PHILIPPINE
MARKET
Franchising: Franchising continues to be one of the fastest growing
sectors of the Philippine economy and a powerful tool for economic
development. Population growth, consumer preferences, and
increased economic activity contribute to the growth of franchises in
the Philippines.
Direct Marketing: The Direct Marketing Association of the Philippines
(DMAP) has more than 100 active corporate members. In recent years,
however, the local market has been exposed to a wider array of direct
marketing media such as product sampling, business reply
envelopes, fax-back forms, marketing via e-mail, the internet,
telemarketing, leafleting, establishment of membership clubs, and
[recently] Short Message Service or SMS.

25. MODE OF ENTERING PHILIPPINE
MARKET (CONTD.)
Joint Ventures/Licensing: Businessmen are allowed begin operations
in the Philippines through joint ventures with local enterprises. The
Philippine Government (GPH) does not require the submission of
licensing/technology transfer arrangements for approval and
registration by the Intellectual Property Office.
Selling to the Government: The Philippines has not acceded to the
WTO Government Procurement Agreement. Instead, all procurement
for the Philippine government (departments, bureaus, offices and
agencies, state universities and colleges, government-owned and/or
-controlled corporations, government financial institutions, and local
government units) is governed

26. MODE OF ENTERING PHILIPPINE
MARKET (CONTD.)
Distribution and Sales Channels: Local agents are effective marketing
tools. It is critical that U.S. suppliers support their Philippine
representatives through frequent communication, regular training,
and promotional assistance.
Selling Factors/Techniques: Understanding the local business culture
will help U.S. suppliers gain and maintain market leadership.
Commercial Service in the Philippines (CS Philippines) assists U.S.
exporters in finding representatives overseas through its various
services which include: International Partner Search (IPS), Gold Key
Service (GKS), and International Company Profile (ICP) reports, among
others.