Strategies for the Market Entry
Philippines
June 2011
The good news
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English is widely spoken, the legal system is in English, English
is the business language, English is also used in the
communication with government – at all levels.
The government is accessible – up to the top; advocacy work in
both Houses of Congress is possible; discussions with the
Supreme Court are possible, too.
The interpretation of laws is relatively flexible; all shades of grey
vs. black : white. (this can – of course - be used against foreign
investors).
The 100 million people market is growing and offers business
opportunites in many fields – 7 BIG WINNERS.
The not so good news
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Too many laws; inefficient implementation;
Too many lawyers; too many cases; justice is slow and
unpredictable; arbitration outside the country is
recommended;
Too much democracy; everybody has an opinion and
makes it known: NGOs, the church, local governments
and the press;
The Philippines – government and the private sector–
is dominated by large (political) families; important
when deciding on a joint venture partner;
Strategies for market entry
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Market information / market analysis
 who is there already
 local and foreign investors in your sector
 are the large families active in that sector
 what are the government’s plans
Strategies for market entry
 Market
structures
 Laws dominating your potential
sector
 Privatisation policies by government,
i.e. energy and water
 Retail / wholesale / franchising
 Luzon, Visayas, Mindanao – where
to go?
Strategies for market entry
Partner search / partner selection – very
important
 Cooperation agreements – local lawyers
need to be involved
 Talk to people already active in the
Philippines – the first hour is FREE
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Contract structures
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Partnership agreements
Technology agreements
Service agreements
Board composition – Control mechanisms
Financing
Risk distribution
Arbitration clauses in contracts
Selection of lawyers important
Options for market entry
 Buying
a company or a share of a
company
 Joint ventures with existing companies
 Starting from scratch/ location is
important
 Partner selection important
What else is important?
 Dialogue
with the national and local
governments
 Dialogue with partners
 Dialogue with employees
 Dialogue with ‘neighbors’– NGOs,
Church, etc. - CSR
Investment incentives
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Tax holidays – low income tax later – for
priority sectors
Duty- and tax-free importation of investment
equipment / machinery, etc.
Repatriation of profits (if capital inflow was
registered with the Central Bank)
If 70% of production is exported – locate in an
export processing zone (PEZA)
…and finally…
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Many investors are earning good money
Learn from the mistakes of others
Make use of partners
Build and maintain contacts to government
Industry associations are important
ECCP is super important!!
…and now – 7 big winners
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Agri-Biz
IT/BPO
Tourism – medical travel – retirement
Creative Industries
Manufacturing
Mining
Infrastructure
Agri-Biz
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To address Food Security, it becomes essential
that businessmen and farmers work together
Created Agro-Industrial Zones with special
incentives
Good models for agri-biz: Nestlé’s cooperation
with coffee growers
Main crops: rice, corn, cassava, coconut, fruits,
fish / seafood,
IT / BPO
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Business Process Outsourcing: in 5 years, this sector
moved to 650,000 people employed and invoicing US$
8 billion in services
Philippines bigger than India in voice; growth in future
will be in non-voice
More Italian MNCs, dealing with English-speaking
clients, should outsource to the Philippines
Target 2016: employment for 1.3 million / service
export: US$ 20 billion
Tourism / medical travel /
retirement
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Philippines has more than 7,000 tropical islands but 3
million visitors per year only; large potential
Medical travel is becoming a big market; the Philippines
offers excellent medical services – US-trained doctors
and nurses
Philippines is the destination for retirement of aging
populations; a decent lifestyle at lower costs
Filipinos well prepared to deal with aging people and
care for patients
Creative Services
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This is a sunrise industry – from animation to design,
from performing arts to advertising, from multimedia
to music, from architecture to film and video
production, from content development to gaming,
from application development to fashion
This sector is closely related to IT/BPO and can be
seen as KPO – Knowledge Process Outsourcing
This is an attractive area for cooperation between
international creative sectors and the Philippines
Manufacturing
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Philippines is a logistics hub into Asia
Export processing zones all over the country; well
managed; 70% needs to be exported
Philippines: big in electronics and semiconductors
100 million Filipinos represent an exciting market for
all kinds of products; local formulation or production
will improve competitiveness
Attractive incentives for manufacturing available; zeroduty within ASEAN can make RP production hub!
Mining
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Philippines is rich in minerals: copper, gold, nickel –
with large deposits
Big copper mine – US$ 5.2 billion investment – to start
production in 2015
Substantial Chinese interest, but also from Canada and
Australia
As the market develops, substantial opportunities for
the supply industry – especially equipment
There are issues with local governments and the church
Infrastructure I
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The country only spent less than 2% of GDP on
infrastructure in recent years; target 5% of GDP
Building infrastructure consequently a cornerstone of
the new administration
Given the large financial requirements, the government
pushes PUBLIC PRIVATE PARTNERSHIP
In 2011, the first 10 infrastructure projects will be
bidded out
Many additional projects will follow in 2012
Infrastructure II
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The PPP ‘product’ is still being perfected
Projects are in transport (rail and road), power (LNG,
coal, natural gas and renewable), airports, seaports,
water...
On the European side, we have a few difficult projects
that need to be resolved before PPP can fully be
exploited: NAIA T3, Ro-Ro and Laguna Lake
Rehabilitation
But involvement in PPPs can be on smaller scale also:
Example: my weighing scale project!
… let me remind you…
Many investors are earning good money
 Learn from the mistakes of others
 Make use of partners
 Build and maintain contacts to government
 Industry associations are important
 ECCP is super important!!
 Let‘s go!
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Thank you!
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Hubert d’Aboville
President
European Chamber of Commerce of the Philippines,
Inc. (ECCP)
19th Floor, Philippine AXA Life Centre,
Sen. Gil Puyat Avenue
Makati-City
Tel: +63 2 7596680
Email: info@eccp.com
d-aboville@pamatec.com.ph