Doing business in the Philippines - SGV & Co.

1 A member firm of Ernst & Young Global LimitedDoing business in the PhilippinesMESSAGEWe recognize the importance of generating new investments to sustain the growth of the philippine economy over the long on renewed investor sentiment, the government is now taking the next step to further streamline business transactions and, in the process, reduce the cost of Doing business . This is in keeping with our objective of having a more investor-friendly the government and the private sector working hand in hand to ensure a stable and predictable economic environment, investors are all the more encouraged to make sound investment decisions and take advantage of long-term opportunities that go with infusing additional we accelerate our efforts of promoting the country in the global community, a corresponding surge of enthusiasm resounds in the private sector. We laud SGV s unabated commitment in coming up with this publication, Doing business in the Philippines , to prime potential investors for the numerous opportunities that await them the moment they set foot on philippine are confident that with the active participation of the private sector, the government will sustain economic development as the Philippines attains a high level of L.

2 DOMINGOS ecretaryMALACA AN PALACEMANILAMESSAGEThe Philippines stands on the cusp of a new era of prosperity, with great opportunities to effect lasting socioeconomic, political and cultural reforms. Our economy remains resilient, cushioned by a dynamic local consumer market, continued foreign investment, and sound performance in key growth integral platform of our administration is to establish stronger, more streamlined linkages with global business sectors. We have prepared plans, programs, and legislation to encourage partnerships with local and international investors. There is renewed confidence in the Philippines and its potential for business investments. We are committed to full transparency, collaboration and efficiency. Procedures for business registration are being reviewed and simplified, with the objective of stimulating new businesses and supporting entrepreneurship.

3 This issue of Doing business in the Philippines , published by SGV & Co., offers only a snapshot of the immense growth potential of our country the competitiveness of our industries, the resilience of our talented workforce, the richness of our resources, and our revitalized political will, which are all vital to our nation s progress. I wish to invite the international business community to join me and our people as we tread the path to economic S. AQUINO IIIMANILAT eeming with natural resources and boasting of staggering landscapes, the Philippines does not disappoint those who go the extra mile to reach it. Indeed, nothing compares to the abundance of diverse natural resources offered by the Philippines . However, it is the Filipino that makes the country truly wonderful. Even when faced with adversity, Filipinos are the most ebullient and easygoing people anywhere and are noted for their courtesy and hospitality.

4 Highly competent, multi-skilled and trainable, the Filipino worker can surpass any other in dedication and hard work. The country is blessed with an educated, multi-cultural, bilingual and skilled labor force. The Philippines ranks 38th out of 60 economies in the 2013 IMD World Competitiveness Yearbook and ranks highly in labor market (#1), fiscal policy (#9), and attitudes and values (#9). These indicators show that the Philippines has a low-cost, economically sound, and cosmopolitan environment in which to do business . Skilled labor is readily available and Filipino workers are also open to foreign ideas, being flexible and adaptable when faced with new - Head officeGeneral SantosBacolodCebuCagayan de OroDavaoBaguioCaviteThe Philippines SGV & Co. officesLegend:Why you should invest in the PhilippinesRegional growth areasTo promote regional development, the government has identified 11 growth networks/corridors scattered around the country that are currently under various stages of implementation.

5 Four of these areas are in the investment promotion stage. North Quad - integrates the coastal provinces of Ilocos Norte, Ilocos Sur, La Union, Pangasinan, and the inland areas of Abra and Southern Benguet at the northwestern tip of Luzon Calabarzon - a large-scale multisectoral project complex in a region contiguous to Metro Manila; it is composed of the Southern Luzon provinces of Cavite, Laguna, Batangas, Rizal, Quezon and Aurora Cagayan de Oro-Iligan Corridor - unites the two cities of Cagayan de Oro in Misamis Oriental, an agro-industrial center, and Iligan City in Lanao del Norte, an industrial hub SOCCSKSARGEN - the more popular name for the areas of South Cotabato, Sultan Kudarat, Sarangani, and General Santos City2 Economy overviewThe philippine economy grew in 2013, notching the second fastest increase in Asia after China. The growth is attributed to the expansion of investment and manufacturing as well as the strong performance of consumption and servic-es which together helped offset the impact of a string of natural disasters throughout the year.

6 Amid such robust performance, the Philippines has been hailed by many as the next economic tiger of Asia. It has enjoyed a string of upgrades in recent years from credit raters recognizing the country s improving fundamentals. On 27 March 2013, Fitch Ratings upgraded the Philippines credit rating to BBB-, giving the country its first ever investment grade. This was followed by simi-lar upgrades from Standard & Poor s (S&P), Japan Credit Agency, and Moody s Investor Service in the same year. S&P has since raised the country s rating a notch higher to BBB, noting in May 2014 the ongoing reforms in the spending, Overseas Filipino Workers (OFW) remittances, and the offshoring and out-sourcing sector have been consistently driving philippine economic growth. In 2012, government spending accelerated and complemented consum-er spending. Public investment rebounded and led the resurgence in capital sectors such as transport, trade, bank-ing, and other services revved up alongside the growth of business process outsourcing (BPO).

7 Finally, exports of commodities other than elec-tronics and semiconductors National Capital Region continues to be the leading growth area in terms of population, res-idential projects and commercial projects. Cebu in the Visayas also appears in the top three in all three lists. Negros Occidental in the Visayas and Cavite and Bulacan in Luzon complete the top five in population , Laguna and Rizal all in Luzon complete the top five in the residential projects list. Aklan in the Visayas, Pampanga in Luzon and Davao del Sur in Mindanao complete the top five in the commercial projects merchandise exports hit a record high of billion in 2013. This turnaround contributed to the higher growth rate of the economy. The key markets for both exports and imports are Japan, China, USA, Singapore, and forceThe Philippines had a strong labor force by 2013 with the labor force participation rate at , constant with the year continued economic growth, the unemploy-ment rate fell to as of October 2013, slightly lower by percentage point from the same period the year latest figures from the Commission on Higher Education website show that accounting and busi-ness administration, education, engineering, and medical and allied courses consistently produce the highest number of graduates.

8 The number of information and communications technology (ICT) professionals is increasing together with the growth of the ICT industry. Offshoring and outsourcingThe Philippines is among the world s top outsourc-ing destinations, thanks in large part to low busi-ness costs and a large pool of university-educat-ed, English-speaking, highly adaptable workers. 3 The philippine offshoring and outsourcing sector s total revenues grew by 17% in 2013 to billion, supported by 900,000 direct jobs. Collec-tively, the industry provides services for a wide range of prominent Fortune 1000 firms in North America, Asia, and the European Union. The Philippines remains the global leader for voice business process management services and the second-preferred location for non-voice services, showing capabi lity in areas such as healthcare, IT, finance and accounting, human resources and creative 2013, a Tholons study ranked Metro Manila third and Cebu eighth among the Top 10 Out-sourcing Destinations while Davao, Sta.

9 Rosa, Iloilo, Bacolod, and Baguio were in the Top 100. By 2016, the sector is estimated to have at least USD25 billion in revenue, million direct em-ployees and million indirect employees. By then, the ICT service sector is projected to ac-count for approximately 8% of the country s GDP and 10% of the global information technology and business process management is another bright spot in the economy. The philippine Department of Tourism has report-ed a increase in tourist arrivals, totaling to nearly million international visitors in 2013. There are 10 international airports in the coun-try with several slated for major renovations via Public Private Partnerships (PPPs). Key gateways include those in Manila, Cebu, Davao, Clark, Pam-panga and Laoag. The Ninoy Aquino International Airport is the main airport, which serves more than 30 international airlines with flights to Asia, the Middle East, Europe and North America.

10 Two adjacent airports have daily domestic flights that link major cities in the country has been upgraded to a Category 1 rating in Aviation Safety by the US Department of Transportation s Federal Aviation Administration, allowing local airline companies to expand their operations in the US. The European Union (EU) has also lifted the flight ban on philippine Airlines and Cebu Air, Inc., due to their commitment to safety and full compliance with the international aviation safety Mactan International Airport in Cebu has regular flights from Busan, Doha, Taiwan, Hong Kong, Singapore and various cities in Korea, China and Japan. The Davao International Airport has regular flights from Indonesia and Singapore and seasonal flights from Macau. The Diosdado Macapagal International Airport in Pampanga has regular flights from Hong Kong, Doha, Dubai, Macau, Singapore and various cities in Korea and Malaysia.