Setting up shop in the Philippines

Reading Time: 4 minutes

Multinational corporations (MNCs) are finding it increasingly harder to survive in an evermore competitive global economy. The challenges decision makers of the world’s leading enterprises are facing are as cut-throat as a Darwinian ecosystem. Likened to a metaphorical organism struggling to fight its way to the top of the food chain, a corporation constantly needs to reduce costs, innovate and diversify in order to survive. With high costs and sluggish demand in the West and growing potential in emerging markets, it is only natural for MNCs, large and small, to search for opportunities in the latter.

Few regional markets have proven to be more promising than Southeast Asia, specifically the Association of Southeast Asian Nations, or ASEAN. It has positioned itself as a dynamic regional player over the recent years. Shaped by robust and flourishing economies, ASEAN is a crucial destination for MNCs hoping to gain an upper hand over their competitors and to establish a foothold in one of the fastest-growing economic regions in the world.

Investvine-MNC-Article

As an important destination for MNCs, the first question that must be asked is which ASEAN country is best suited for investment? Thailand, Malaysia and Singapore have traditionally been the strongest markets in the region. However, previously underdeveloped economies such as Vietnam, Indonesia and Myanmar boomed strongly in recent years and are catching up with their peers. But perhaps the most promising country in the region is the Philippines. Previously dubbed the “sick man of Asia”, the Philippines has experienced rapid growth and modernisation in the recent past owing to the advent of open market policies and a business-minded government. Sporting average GDP growth rates between five and seven per cent over the past five years, the Philippines proved itself as one of the fastest growing economies in ASEAN.

With English taught in all schools throughout the country, the Philippines is the world’s sixth largest English-speaking nation as per the the number of English speakers among its population. Surprisingly, Pearson English Business Solutions, a US-based specialist for Business English communication, ranked the Philippines the world’s best country in Business English proficiency, even outscoring the US. It’s then no wonder that the Philippines attracted the likes of Facebook, Google, JP Morgan, Tata and many other MNCs to its robust economy. In addition to its exceptional English skills, the Filipino labour force has proved itself to be also well versed in the fields of IT, engineering and manufacturing.

Investvine-MNC Article-Salary

According to the Department of Foreign Affairs of the Philippines, the average wage for a skilled Filipino worker is one fifth of that in the US. An entry-level BPO worker in the Philippines earns between $200 and $250 a month, and a manager earns between $1,000 and $2,000. Junior IT executives are paid within the range of $350 and $500, and banking and finance mangers between $400 and $500 per month. The department estimates that a US business can cut staff costs by an average of 40 per cent by opening an equivalent office in the Philippines.

The Philippines is located in the western Pacific Ocean and as such can serve as a logistical hub for the ASEAN region, particularly for the US and Japan. The sea lanes that were once contested for by the Imperial Japanese Navy and the US Navy in order to serve their global ambitions now function as a gateway to the region. Within the framework of the ASEAN Free Trade Area, deregulation of trade barriers allows Filipino- produced goods to reach regional markets via a large number of air freight and shipping channels faster than ever before.

The government is also working hard to entice foreign investment to the Philippines. The country’s flat corporate income tax rate of 30 per cent is well below the almost 40 per cent levied in the US. There are also a number of incentives for foreign companies. For example, the Philippine Economic Zone Authority (PEZA) offers MNCs benefits such as operational savings, tax relief and other monetary advantages. Requiring only one simple registration, MNCs located within PEZA’s Special Economic Zones are eligible for a 5-per cent flat tax on gross income and exemption from all national and local taxes even after their initial income tax holiday has expired.

Investvine-MNC-Article-PEZA-MakatiLocal businesses such as real estate developers have partnered with PEZA to ensure that the Special Economic Zones become even more appealing. Reputable developer Century Properties Inc. for example, has been at the forefront of the PEZA initiative of providing state-of-the-art offices. Just recently available for pre-sale, the PEZA-accredited Century Spire Offices tower allows MNCs to enjoy investment incentives in the heart of the bustling business district of Makati in Metro Manila. These offices stand out by boasting luxurious interior design provided by renowned Armani/Casa studio and unique futuristic architecture.

In a nutshell, ASEAN is a must-be market for global enterprises, particularly the Philippines which has distinguished itself as a rising tiger in the region. Its tech-savvy, English-speaking population naturally suits the needs of MNCs, and with the government providing generous investment incentives and labour costs being distinctively lower than in the West, the decision to set up shop in the Philippines is actually a no-brainer. Adding to that, with over 7,000 islands scattered over the archipelago, natural beauty abound and many attractive destinations only less than an hour flight away from the capital Manila, leisure-time possibilities are not cut short. The tropical paradise of El Nido in Palawan or the lively beaches of Boracay, just to name two popular destinations, make for a relaxing getaway or a rewarding company get-together. With all the benefits laid out, all that is left to do is to get a taste of the fact that life and work is “more fun in the Philippines”.

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Multinational corporations (MNCs) are finding it increasingly harder to survive in an evermore competitive global economy. The challenges decision makers of the world’s leading enterprises are facing are as cut-throat as a Darwinian ecosystem. Likened to a metaphorical organism struggling to fight its way to the top of the food chain, a corporation constantly needs to reduce costs, innovate and diversify in order to survive. With high costs and sluggish demand in the West and growing potential in emerging markets, it is only natural for MNCs, large and small, to search for opportunities in the latter. Few regional markets have...

Reading Time: 4 minutes

Multinational corporations (MNCs) are finding it increasingly harder to survive in an evermore competitive global economy. The challenges decision makers of the world’s leading enterprises are facing are as cut-throat as a Darwinian ecosystem. Likened to a metaphorical organism struggling to fight its way to the top of the food chain, a corporation constantly needs to reduce costs, innovate and diversify in order to survive. With high costs and sluggish demand in the West and growing potential in emerging markets, it is only natural for MNCs, large and small, to search for opportunities in the latter.

Few regional markets have proven to be more promising than Southeast Asia, specifically the Association of Southeast Asian Nations, or ASEAN. It has positioned itself as a dynamic regional player over the recent years. Shaped by robust and flourishing economies, ASEAN is a crucial destination for MNCs hoping to gain an upper hand over their competitors and to establish a foothold in one of the fastest-growing economic regions in the world.

Investvine-MNC-Article

As an important destination for MNCs, the first question that must be asked is which ASEAN country is best suited for investment? Thailand, Malaysia and Singapore have traditionally been the strongest markets in the region. However, previously underdeveloped economies such as Vietnam, Indonesia and Myanmar boomed strongly in recent years and are catching up with their peers. But perhaps the most promising country in the region is the Philippines. Previously dubbed the “sick man of Asia”, the Philippines has experienced rapid growth and modernisation in the recent past owing to the advent of open market policies and a business-minded government. Sporting average GDP growth rates between five and seven per cent over the past five years, the Philippines proved itself as one of the fastest growing economies in ASEAN.

With English taught in all schools throughout the country, the Philippines is the world’s sixth largest English-speaking nation as per the the number of English speakers among its population. Surprisingly, Pearson English Business Solutions, a US-based specialist for Business English communication, ranked the Philippines the world’s best country in Business English proficiency, even outscoring the US. It’s then no wonder that the Philippines attracted the likes of Facebook, Google, JP Morgan, Tata and many other MNCs to its robust economy. In addition to its exceptional English skills, the Filipino labour force has proved itself to be also well versed in the fields of IT, engineering and manufacturing.

Investvine-MNC Article-Salary

According to the Department of Foreign Affairs of the Philippines, the average wage for a skilled Filipino worker is one fifth of that in the US. An entry-level BPO worker in the Philippines earns between $200 and $250 a month, and a manager earns between $1,000 and $2,000. Junior IT executives are paid within the range of $350 and $500, and banking and finance mangers between $400 and $500 per month. The department estimates that a US business can cut staff costs by an average of 40 per cent by opening an equivalent office in the Philippines.

The Philippines is located in the western Pacific Ocean and as such can serve as a logistical hub for the ASEAN region, particularly for the US and Japan. The sea lanes that were once contested for by the Imperial Japanese Navy and the US Navy in order to serve their global ambitions now function as a gateway to the region. Within the framework of the ASEAN Free Trade Area, deregulation of trade barriers allows Filipino- produced goods to reach regional markets via a large number of air freight and shipping channels faster than ever before.

The government is also working hard to entice foreign investment to the Philippines. The country’s flat corporate income tax rate of 30 per cent is well below the almost 40 per cent levied in the US. There are also a number of incentives for foreign companies. For example, the Philippine Economic Zone Authority (PEZA) offers MNCs benefits such as operational savings, tax relief and other monetary advantages. Requiring only one simple registration, MNCs located within PEZA’s Special Economic Zones are eligible for a 5-per cent flat tax on gross income and exemption from all national and local taxes even after their initial income tax holiday has expired.

Investvine-MNC-Article-PEZA-MakatiLocal businesses such as real estate developers have partnered with PEZA to ensure that the Special Economic Zones become even more appealing. Reputable developer Century Properties Inc. for example, has been at the forefront of the PEZA initiative of providing state-of-the-art offices. Just recently available for pre-sale, the PEZA-accredited Century Spire Offices tower allows MNCs to enjoy investment incentives in the heart of the bustling business district of Makati in Metro Manila. These offices stand out by boasting luxurious interior design provided by renowned Armani/Casa studio and unique futuristic architecture.

In a nutshell, ASEAN is a must-be market for global enterprises, particularly the Philippines which has distinguished itself as a rising tiger in the region. Its tech-savvy, English-speaking population naturally suits the needs of MNCs, and with the government providing generous investment incentives and labour costs being distinctively lower than in the West, the decision to set up shop in the Philippines is actually a no-brainer. Adding to that, with over 7,000 islands scattered over the archipelago, natural beauty abound and many attractive destinations only less than an hour flight away from the capital Manila, leisure-time possibilities are not cut short. The tropical paradise of El Nido in Palawan or the lively beaches of Boracay, just to name two popular destinations, make for a relaxing getaway or a rewarding company get-together. With all the benefits laid out, all that is left to do is to get a taste of the fact that life and work is “more fun in the Philippines”.

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