Key Investment Policies

Anyone, regardless of nationality, may invest in the Philippines.

Foreign ownership of up to 100% is allowed for export
enterprises. Export enterprises are defined as those businesses
wherein at least 60% of output is exported. 
For domestic market enterprises, foreign ownership is
allowed up to 100%, except for specific areas listed under the
Foreign Investments Negative List. Under the Negative List, investment
is limited to up to 40%.
Basic rights are guaranteed under the Philippine constitution.
These include:

a) Right to repatriate the proceeds of the liquidation
of investments.
b) Right to freedom from expropriation without payment
of just compensation.
c) Right to remit earnings from the investments.

d) Right to remit foreign exchange as may be necessary
to meet principal and interest payments on foreign obligations.

e) Right to non-requisition of investment without just
compensation.


Foreign Investments NegativeList 

Limited By Constitution and Specific Laws 
No Foreign Equity

Mass Media 
Services involving Licensed Professionals: 

Engineering
Medical and Allied Professions 
Accountancy 
Architecture 
Criminology 
Chemistry
Customs Broker
Forestry 
Geology 
Marine Deck Officer
Marine Engine Officer
Master Plumbing 
Sugar Technology
Social Work
Librarian
Law 

Retail Trade
Cooperatives
Private Security Agencies
Small-scale Mining 
Utilization of Marine Resources (except deep sea fishing)
Rice and Corn Industry 

Up to 25% Foreign Equity

Recruitment agencies
Contracts for locally-funded public works

Up to 30% Foreign Equity

Advertising

Up to 40% Foreign Equity


Exploration and development of natural resources

Land ownership
Public utilities
Educational institutions
Financing companies
Construction


Limited for Reasons of Security,Defense, Health, Morals, and Protection of 
Local Small and Medium-Scale
Enterprises
Up to 40% Foreign Equity

Firearms, explosives, telescopic and sniper devices
Guns, weapons, ammunitions, armaments, missiles, military
equipment 
Dangerous drugs
Sauna and steam bathhouses, massage clinics
Gambling
Domestic market enterprises with capital of less than
US$500,000
Export enterprises with equity of less than US$500,000
that utilize the depletion of natural resources


Special Investment Areas

Enterprises must be registered with the Board of Investments
(BOI) and must engage in activities targeted in the Investment
Priorities Plan (IPP) in order to enjoy certain benefits and incentives
such as tax exemptions and concessions.

Priority investment areas in the IPP include the following:


export activites;
agriculture, food, and forestry-based industries;
basic industries such as iron, steel, cement, mining,
chemicals, petroleum, natural fibers, leather; 
engineering industries such as machinery and equipment,
aluminum rods, shipbuilding;
infrastructure and services such as power generation,
transportation, telecommunications, industrial estates;
tourism such as tourism estates, hotels, resorts, and
other tourist accommodations, tourist buses;
socialized housing;
health products and services;
modernization and rehabilitation programs;
environmental conservation and protection;
science and technology-oriented research and development.


Incentive Policies for Registered Firms

Enterprises registered with the BOI and engaging in activities
under the IPP can enjoy the following incentives:

tax and duty free importation of capital equipment;

tax credit on domestic capital equipment;
income tax holiday of four to six years, total period
not to exceed eight years;
additional deduction for labor expense;
tax and duty free importation of breeding stocks and genetic
materials for agricultural producers;
tax credit on domestic breeding stocks;
simplified customs procedures for imports and exports;
unrestricted use of consigned equipment provided a re-export
bond is posted;
employment of foreign nationals in supervisory, technical,
or advisory positions;
tax credit for taxes and duties paid on materials and
supplies used in export production;
access to bonded warehousing systems;
exemption from wharfage dues and any export taxes and
duties.
exemption from tax and duties of imported spare parts
and supplies used for export production. 

Major business opportunities can be found in certain industrial
estates and zones in the Philippines that include incentives for
investment.
Clark Special Economic Zone / Subic Bay Freeport

Both the Clark Special Economic Zone (CSEZ) and Subic Bay Freeport
(SBF) are the result of the conversion of what were once the air
bases/facilities of the U.S. military into a world class civil
aviation complex, industrial estate, and tourism, trade and business
center.

Advantages.  The main advantages of these two special
zones include the following:


1)  Infrastructure.  Existing infrastructure and support
facilities left by the U.S. Navy include transportation facilities
such as an airport, berth, and an internal road network; power
plants and facilities; water and sewerage system; telecommunications
network; fire stations; buildings for warehousing, offices, and
other light-to-medium types of industries; residential units;
and other community facilities. 

2)  Labor.  A highly skilled labor force exists in the
area, many of whom were formerly base workers displaced by the
withdrawal of the U.S. Armed Forces.  These workers are comprised
of English-speaking laborers used to the Western style of business
management.

3)  Location.  Situated about two hours away from the capital
city of Manila, CSEZ and SBF are strategically located in the
center of the fast-growing economies of Asia.  The area is about
two to four hours away by plane from Hong Kong, Taiwan, Singapore,
Japan, Malaysia, Thailand, and other major Asian cities.

4)  Incentives.  Enterprises registered and doing business
in the designated Main Zones of CSEZ and SBF are exempt from the
payment of all national and local taxes, except for a 5% final
tax on "gross income earned", which shall be remitted
to the national government.  In addition, all articles may be
imported into the zones free of customs and import duties, except
for those goods prohibited by law.  Articles for personal and
household use may also be imported by zone residents free of taxes.

Industry Preferences.  Investments in the zones are
encouraged in light to medium industries which are non-pollutant
such as electronics and computers, machineries and parts, textiles
and garments, banks and other financial institutions, and residential
and tourism-related industries.
Who May Do Business.  Registration to do business in
these zones are open to any domestic and foreign enterprise. 
Any such enterprise wanting to do business in a zone must have
a representative or agent who is a legal resident of CSEZ or SBF.
 Any enterprise affiliated with a business organization operating
outside a zone must establish a separate legal organization to
conduct business exclusively within the zone.

Government-Run Export Processing Zones (EPZs)


A number of government-run export processing zones are available
in the Philippines.  Like Clark and Subic, these zones are specially
designated industrial centers with tax incentives and whose objective
is the development and support of export-oriented businesses.
 Such EPZs include the following:

1.  Baguio EPZ

2.  Bataan EPZ

3.  Cavite EPZ

4.  Mactan (Cebu) EPZ
Private Industrial Estates


Privately-developed industrial estates that are registered with
the Board of Investment are also provided with investment incentives
similar to other specially designated zones.  These estates are
targeted to include industries listed in the government's priority
investment areas.  Such estates include the following:

1.  Camelray Industrial Park

2.  First Cavite Industrial Park

3.  Gateway Business Park

4.  Laguna International Park

5.  Laguna Technopark Inc.

6.  Light Industry & Science Park

7.  Luisita Industrial Park

8.  Makar Agricultural Industrial Development Corp.

9.  Philstar Marketing Corp.

10.  Victoria Wave

Related Links

Government Trade Agencies

¦^¨ì«e­¶