Philippines Country Snapshot

Country Snapshot

Basic facts

Population

86.97 million (2006 est.)*

GDP

PHP 1364.5 B

(Q1 2006 est.)*

Main languages

Tagalog, English, Spanish

GDP real growth rate

5.8%

(2006 est.)**

Currency

Philippine Peso (PHP)

Inflation

6.3%

(Aug 2006 est.)*

Economic communities

Asia Pacific Economic Co-operation, Association of South-East Asian Nations, World Trade Organization

*National Statistics Office (Philippines)

** Philippine Institute of Development Studies

Political environment

The Philippines is a pluralist democracy modeled on that of the US, with an executive presidency, a bicameral Congress and a Supreme Court that can rule on the constitutionality of government actions.

In 2001 Gloria Macapagal Arroyo, then vice-president, replaced the incumbent president, Joseph Estrada, in a civilian coup backed by the military. She was re-elected to a six-year term as president in May 2004 and she remains in office after an impeachment attempt failed in September 2005. The next elections are due in May 2007.

Foreign trade and investment

Exports

$4,050 billion (June 2006 est.)*

Imports

$4,534 billion (June 2006 est.)*

* National Statistics Office (Philippines)

Leading export markets: Japan (the largest), the United States, the Netherlands and the People’s Republic of China

Major exports: Electronic equipment, machinery and transport equipment, garments, optical instruments, coconut products, fruits and nuts, copper products and chemicals

Attracting foreign investment is a government priority. Incentives include income-tax holidays, credits for tax and duties on imported raw materials, and exemptions from local taxes.

Business and financing

Business forms

Sole proprietorships, partnerships, corporations

Foreign firms usually set up sole proprietorships, partnerships or corporations, but may also operate through branches.

A partnership may be organized by at least two individuals who shall execute the articles of partnership and register the same with the Securities and Exchange Commission if the capitalization is PHP3,000.00 or more.

A corporation in the Philippines generally has a limited foreign equity which does not exceed 40%. However, small and medium-sized domestic market enterprises with paid-in equity capital less than the equivalent of US$200,000.00, are reserved to Philippine nationals unless they involve advanced technology, or they employ at least fifty direct employees, in which case a minimum paid-in capital of US$100,000.00 shall be allowed to non-Philippine nationals.

The most popular corporate form in the country is the share corporation. It has a charter limited to 50 years and renewable for the succeeding 50-year terms.

A branch may be established by a 100% foreign-owned enterprise. The paid-up capital of the branch must be at least US $200,000.00 subject to conditions where this capital requirement may be waived.

Although branches and subsidiary corporations have the same registration fees and same requirements for business licenses and investment, tax regimes differ.

The main financial centers in the country are Metro Manila and Metro Cebu.

Labor environment

Unemployment

8.0% (July 2006 est.)*

Underemployment

23.5% (July 2006 est.)*

* National Statistics Office (Philippines)

The minimum daily wage rate as of June 2005 is PHP325.00 for non-agricultural workers in Metro Manila (the National Capital Region) and PHP288.00 for agricultural workers.

Standard social security benefits include disability pension, retirement pension, sickness allowance, funeral benefit worth PHP 20,000, maternity leave of 60 or 78 days, maternity pay and other miscellaneous loans.

Although national policy favors local skills and manpower, the state permits foreign participation in employment in line with its policy to attract foreign investment. The work permits issued to foreign workers may be obtained from the Department of Labor and presented to the Bureau of Immigration and Deportation for the issuance of a working visa that will enable the alien employee to stay in the Philippines for the duration of this employment.

Taxation

Corporate tax

Main rate

35%

Resident domestic corporations are taxed at 35% of taxable income from all sources. However, resident foreign corporations, which are identified