- 1. Make sure your business field is available
- 2. Figure out your business plan clearly
- 3. Pick the right company name
- 4. Learn about PEZA incentives
- 5. Be prepared for infrastructure issues
Setting up a business in the Philippines has its own unique benefits and challenges compared to other Southeast Asian countries. Below, we’ll outline what you need to know before starting a company in the Philippines.
1. Make sure your business field is available
The Philippines regulates the business fields that are available for foreign ownership in the Philippines Negative Investment List. If you’re a foreigner planning to invest in the Philippines, you should first make sure your industry isn’t forbidden or restricted.
It might turn that foreigners aren’t allowed to fully own businesses in your chosen industry. If that’s the case, you can try cooperating or making a joint venture with a local business. You can consult an incorporation service provider to find out what would be a feasible option for you.
This regulation also affects the amount of minimum capital that you’ll have to report. Depending on the share of foreign ownership in your company, you might need to have an investment capital ranging from USD 30,000 to USD 200,000.
2. Figure out your business plan clearly
Before you start doing business in the Philippines, you should already have a clear idea of your business plans. Specifically, you should have at least a general idea of how to answer questions like:
- What are your planned business activities?
- How much capital are you going to have?
- What are your revenue projections?
- How many partners or shareholders are you going to have?
Knowing these things is essential in choosing the right legal structure for your business when you start your incorporation process.
Foreign investors planning to enter the Philippines can choose between domestic corporations, branch offices, representative offices, and more. These options have different rights and responsibilities — therefore, you should choose whatever works best with the needs and results that each involved party expects.
You can consult an incorporation service provider to help review these options. However, having a clear business plan will help you choose a legal structure that better fits your needs.
3. Pick the right company name
Next, you should pick a name for your company that accurately represents your business activities. For the Philippines Securities and Exchange Commission — the governing body for business incorporation — to approve it, your company name must fulfill criteria such as:
- No offensive or obscene words
- Cannot be too similar to internationally known foreign corporations
- Cannot be similar to already registered or reserved company names
- Can’t infringe on company-owned words or trademarks
Once approved by the SEC, your name can be reserved (for a fee of up to PHP 120), for a maximum of 90 days.
You should prepare a shortlist of at least three company name options that you like.
Also, you can take this chance to check if a website domain that fits your company name is available — if you plan to create a website for your business.
4. Learn about PEZA incentives
Foreign businesses seeking an easier process to do business can consider applying to one of the Philippine Economic Zone Authority (PEZA) economic zones.
PEZA is a Philippines government agency that aims to promote and support investment in the country. Businesses that establish in the several economic zones throughout the country can get various benefits like tax exemptions or simplified bureaucratic processes.
Do note that not all business fields can qualify to set up in a PEZA zone, but it’s worth asking your incorporation service provider in case you can benefit from this policy.
5. Be prepared for infrastructure issues
If you’re a business planning to scale quickly across the country or engage in trading, you should be ready to face logistical challenges.
The Philippines is an archipelago of over 7.000 islands connected by road, air, and seaport lines. However, their airports and seaports are still facing congestion problems, preventing them from handling a high volume of traffic.
Case in point, this country’s score in the World Bank’s Logistics Performance Index (LPI) has declined since 2010. In 2010, they ranked 44th place out of 160 countries, while in 2014 they ranked 57th place. In 2018, they descended further into 60th place.
Even though improvements are being made, businesses planning to start in the Philippines might still face difficult bureaucracy or slow turnaround times when transporting goods.
Greenhouse empowers you to book business incorporation services and connect with market entry consultants in your target markets.
We’ll connect you with experienced consultants on the ground who can help answer your questions about doing business in the Philippines.