Prior to Christmas, giving you all something to ponder for the New Year, I’ve decided to point out some myths that you will often read online regarding business and the economy in the Philippines.
It pays to know what you are talking about, should you decide to live here, and simply repeating common misconceptions does nobody any favors (Never let the truth get in the way of a good story, eh?).
So, without further adieu:
Myth #1: The Philippines is poor.
Truth: The economy of the Philippines is the 46thlargest in the world, placing it near the bottom of the top quarter of all nations. The government budget for 2011:
|
Budget Allocation |
Millions of Pesos (PHP) |
Millions of US Dollars (USD) |
% |
| Department of Education |
₱207,300 |
$4,573 |
30.86 |
| Department of Public Works and Highways |
110,600 |
2,439.8 |
16.46 |
| Department of National Defense |
104,700 |
2,309.7 |
15.58 |
| Department of Interior and Local Government |
88,200 |
1,945.7 |
13.13 |
| Department of Agriculture |
37,700 |
831.7 |
5.61 |
| Department of Social Welfare and Development |
34,300 |
756.7 |
5.11 |
| Department of Health |
33,300 |
734.6 |
4.96 |
| Department of Transportation and Communications |
32,300 |
712.5 |
4.81 |
| State Universities and Colleges |
23,400 |
516.2 |
3.48 |
The government does have money. Yes, there is a certain amount of corruption, and often mishandling, but the money is here, and it is spent in the local economy. The economy grew in 2010 (The last year statistics were compiled) by 7.6%… Far exceeding the 1% or less growth rates experienced in most of the US and Western Europe during the same time period. Yes, there is a significant poverty level in the country. A big part of the problem, however, is inequity of wealth, rather than lack of wealth. There is poverty, but there is also money.
The 2010 per capita GDP was US$2,310. However, when PPP is taken into account, that per capita level rises to US$3,737 (What this means is that with the strong Peso, and economy, though the actual GDP is low, the actual purchasing power is around 25% higher.) In other words, yes, people here have much lower income levels than their European counterparts, but their income goes much further.
Myth #2: Nothing is manufactured here.
Truth: The Philippine economy is still around 30% based on agriculture. Over the last two decades, that percentage has shrunk, and continues to shrink. What is replacing it? Quite simply, manufacturing, particularly in auto parts and electronic components and circuits. Honda, Ford, Mitsubishi, Isuzu, Intel, Texas Instruments, Nokia, Ericsson all have major manufacturing facilities in the country. The Philippines is the largest manufacturer in the world for wiring harnesses and brake systems. It is also the second largest microchip producer in the world.
Myth #3: Foreigners cannot own businesses here.
Truth: Yes, and no. What is often skipped over, and the complaints that you read, is confusion related to SMALL BUSINESS, rather than multinationals or large foreign investment. Truth number 1: The Philippines does little to encourage opening a small business by foreigners. Truth number 2: The Philippines does not want your US$10,000 investment. Truth number 3: The Philippines DOES want investments over US$200,000 that employ more than 50 Filipinos… And there are provisions in the law that allows serious levels of investment and foreign ownership. Small business ownership by foreigners is viewed as taking opportunities away from Filipinos. Yes, you may employ one, or a few, people, but more likely, as a small business owner, you would be competing with local people. The problem arises that the businesses that so many foreigners seem to want to start, (like sari saris, carinderias, jeepneys, Internet cafes, and so on) DO compete with local people on a certain level. These types of “grass roots” businesses generate little benefit even to the local economy, and virtually no benefit to the nation as a whole (You are not bringing much capital into the country). Honestly, most of the complaints heard from foreigners are related to tantrums because they find out that they cannot legally supplement their pensions. On the other hand, Intel, employing thousands of people, exporting the vast majority of their product, is welcome to do so. This type of investment is viewed favourably, and the DTI has many programs in place to encourage investment at these levels (US$86 billion foreign direct investment in manufacturing alone in 2009. US$26 billion in services and financial, like call centers and BPOs):
- Tax holidays of six years, or even longer, in some of the SEZs.
- Duty free entry of equipment and raw materials.
- Visas for foreign-born management and technical personnel.
- Streamlined bureaucracy and licensure.
- Financing of exports (extending credit to buyers of products “Made in the Philippines”)
There are exceptions: Most of the SEZs (like Clark, Subic, or in the ARMM) offer benefits to smaller companies, particularly if they are engaging in activities that are related to 70% or greater percentage for export (eg: Fine, bottle your guava jam here. But, make certain that you are only selling it overseas and not locally… Something to consider). The listing from the DTI is over 80 pages long… It is complex and requires local knowledge and significant research.
Myth #4: The Philippines is a net importer, rather than exporter.
Truth: Yes, there is a trade deficit, but it is small. In 2009, the Philippines exported US$37.9 Billion in goods. Imports in 2009 were US$45.4 Billion. In 2010, the deficit was almost evenly split between exports and imports (Shrinking deficit). YTD balance of trade? US$-804 million) Imports were primarily commodities, fuel, finished consumer goods, vehicles, and electronics. Leading exports (in order) were electronic components, vehicle parts, copper, textiles, copra (coconut), and fruit. Where did the imports come from? Japan and the US at around 12% each. China and Singapore at 9%. The EU at 9%, and Taiwan at 5%. Where did the exports go? Almost 34% to Japan and the US. Nearly 8% to China, and another 7% to Hong Kong. As is evident, the trade is hardly only in one direction.
Myth #5: The Philippine economy is based on foreign aid.
Truth: Incorrect. Yes, there is foreign external debt owed by the government. Total amount? US$60 Billion, a modest 32% of GDP: Not ideal, but still manageable. Compare to other countries:
- USA: 99% of GDP
- EU: 85% of GDP
- China: 7% of GDP
- Russia: 33% of GDP
- Australia: 95% of GDP
Myth #6: Tourism is the Philippines’ economic savior.
Truth: In 2008, tourists spent US$2.7 billion in visits to the Philippines (As has been discussed on this site before, many were balikbayans). Though tourism can bring improvements on a very local level, the tourist dollars spent are dwarfed by the investments in manufacturing and services. In other words, not very significant as a whole. Compared to Malaysia, the world’s seventh biggest tourist market in terms of arrivals: 2009 economic impact of US$26 billion.
Myth #7: Filipino workers are less productive and need Western guidance.
Truth: Not correct. One of the primary reasons foreign companies invest in the Philippines is the presence of an educated, English speaking workforce, at lower wages than in the West. Are the wages that are paid fair? Perhaps not by Western standards. However, when compared regionally and versus other developing nations, the wage gap shrinks significantly. In fact, most of the large, foreign firms nearly all offer opportunities for career and educational advancement that would not otherwise be present.
Myth #8: Unemployment is rampant in the Philippines.
Truth: The unemplyment rate in July, 2011 was 7.1%: far below the average 9.5% in the USA. HOWEVER, the underemployment rate was at 19.1%, which is very high when compared with developed countries, indicating a large number of people working simply to survive, rather than in their professions or within their level of education. It is also important to keep in mind that in the Philippines, large segments of the population work in agriculture, which is normally either family farms, or “off the books”, so unemployment figures are more accurate in urban locations, rather than in the country as a whole.
Myth #9: Inflation is rampant.
Truth: Current inflation is 5.2%. This figure is not low, but is also not completely skewed when compared to the country’s ASEAN neighbors (In most of the West, inflation has varied from 1% – 7% over the last few years.)
Myth #10: Expats generate significant economic benefit to the economy.
Truth: According to the Asian Development Bank, there were 374,000 foreigners living here as “official” expats in 2009. The largest groups: 1. China (40,282) 2. American (17,369) 3. Indian (14,098) 4. Korean (11,889 plus 8,300 on study permits) The remaining 300,000 or so are from everywhere else. Based on the 2007 census, that equates to only 0.45% of the population. Additionally, it is estimated that there are, approximately 100,000 Koreans and 100,000 Chinese living here illegally. Even with those numbers included (Total of 574,000), the total foreign-born population, resident here, is still well under 1%. (Those on tourist visas would have their expenditures included under “tourism”, as would balikbayans or dual citizens.) Discount those here illegally, since they are most likely not bringing money into the country, but surviving by working or other activities within the local economy. Say each expat spends US$1,000 per month derived from a pension that is brought into the country (some earn more, some earn less, and some work… Need to average it out). That becomes 374,000 X 1,000= US$ 374,000,000 per month. Multiply that figure by 12 months per year and you come up with US$4.48 billion per year. That assumes a steady income stream. Note that a significant number of the expats listed are students, generating little in the way of income or expenditures. Compare this to the US$68 billion in foreign direct investment in manufacturing alone and the number becomes nearly inconsequential. Indeed, as a group, it is only equivalent to a fraction of the government expenditures as a whole. In terms of percentage of GDP, it equates to a mere 2.4% of GDP. Is that over the percentage of population? Certainly. But is it significant? Absolutely not. In other words, for retirees, the Philippines does want you to spend money here, but your contributions are not as significant to the economy as you may think they are, nor is your influence as a group significant as a percentage of the population. The miniscule numbers of residents here give future credence to the futility of trying to start a business that only serves the expat market. The information I presented above are facts: based on reliable statistics (such as The Economist, NSO, etc.). I am not arguing that the country does not have its’ share of severe problems, mainly in the areas of wealth disparity, corruption, and brain drain. These are huge problems that have no easy, or short-term solutions. No leader can, for instance, pledge to eliminate corruption, and be successful in the short term. However, if you judge the business climate based solely by what you read online, you could easily get the impression that the Philippines is the proverbial economic basket case: Which it most assuredly is not. It is interesting to note that Goldman Sachs placed the Philippines in its’ Emerging Eleven: Eleven economies expected to drastically increase in economic muscle by 2050. Their projection for the Philippines? Someday, it may become the world’s 14th largest economy. Hopefully, slow, steady growth will keep the country on that path. It is important to remember that macroeconomics is not the zero-sum game that many politicians would have you believe. Examine the import and export data shown above related to China: The percentages for imports and exports are nearly identical, yet the Chinese are often held up as being evil, or unfair. Yet, the Philippines is exporting nearly as much to China as the Chinese are sending here. If both parties did not benefit, trade would not occur: That principle is universal, and applies everywhere on Earth, in every country. For trade to exist, there must be both a buyer and a seller. The Philippines possesses many assets that are in demand in much of the world: Educated labor, raw materials, adequate infrastructure in certain areas, and financial incentives. It is through managing the balance between supply and demand that growth occurs, albeit slowly.
____________________
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Side note from MindanaoBob – Would you like to help out with this year’s LiP Christmas Giveaway? Every year we go somewhere in Mindanao and distribute food and gifts to poor people who need it. For the past 4 years or so, the readers of this site have helped by making donations to the Giveaway, which are used to buy food and gifts for distribution. 100% of the money donated is used to purchase these items to give to the poor, there are no administrative costs or anything like that. If you can spare a few dollars, it would be greatly appreciated by me and certainly by those who will receive the help during Christmas. No gift is too small or too large! Any help is appreciated. Thank you, and Merry Christmas to all who are part of the LiP family!
John Miele is a Citizen of the World, having spent time in many locations around the globe. Currently, he finds himself in Manila, but travels throughout the Philippines. John joined the Live in the Philippines Web Magazine in mid-2008.
H John, another blockbuster of info. I’ve always wonder about the same thing because when I read the newspaper business section in Manila, it does support much of what you said, although as you already mentioned: wealth is not distributed evenly. Good post. Hello to the family and happy holidays.
Mars: Thank you. Unfortunately, much of what you read online is either distorted or outright incorrect information… That is why I thought it necessary to state some pretty well-backed facts. Certainly inequity of wealth distribution is a major problem, but there is quite a bit of money in the country, and there is hope for the future.
Now you are speaking my language, John. I eat this kind of stuff up.
My business in the US was manufacturing, then I shut it all down to take it to China, no choice, do or die. So my business now is all importing and wholesale distribution, 100% sourced in China. The currency and inflation in China is starting to cause me to evaluate other options. To further my concerns, there is a lack of quality control and inconsistent lead time. Working in China is exhausting, talk about corruption, do I have stories!
It was getting to the point where I would consider going more vertical. So I asked a friend from the RP, one of the wealthy industrialist families, if I should invest, and tells me forget about it, it is too corrupt, and that I will have to do Technical Smuggling to get the raw materials into the country for conversion. Burst my bubble! The one country that I thought would be less corrupt, have a well educated workforce that speaks English, and I am advised by a Filipino against investing there. Uggg…
So now I am off to Indonesia to continue my outsourcing. Hope it works.
Enjoyed your article. I may not be able to invest there, but I still can live there!
John: My colleagues in China all tell me the same thing… They are no longer the cheapest game in town (Wages in Shenzhen for manufacturing have doubled in only a couple of years and cost of living has gone through the roof). Personally, I am familiar with the corruption in China, and, I’ll put it bluntly, it is systemic. Even if officially condemned, it is certainly condoned.
As to the Philippines, I’m not so sure that you will find much different in Indonesia. In my industry (Shipbuilding / maritime), Indonesia is just as corrupt as the RP, if not more so, and the quality of labor there tends to be much poorer, with lower education levels than the RP. I suggest that for serious investment you contact several people, rather than just one… Some Filipinos have a negative view on the country (especially regarding corruption) and, though well-intentioned, you may not be getting the true picture for your industry. I suggest that before you write off the country entirely from a business standpoint that you attend some networking functions in Manila and get a broader perspective (Perhaps if there is a trade show here in your industry that would be a place to start).
Good luck on your ventures!
As a side note: I was told by a colleague living in China about a month ago that the income tax for resident foreigners there is about to be raised to a whopping 56%! He is looking at moving to Hong Kong (15%)… even at lower salary, he would still come out well-ahead. The Chinese government wants technical expertise, but at these rates they will soon price themselves well out of the market!
Thanks John. My business is furniture. I have tried trade shows in Manila and Cebu, and just cannot get the prices, we are talking 40% higher. I go every year, and I watch the shows decline, but I still keep going, holding onto hope.
These Filipino factory owners just don’t get it; I think they are risk averse to invest in running volume. If they do not get the price right, there is no future. And then they think their business is worth more than gold! I will not say where, but I was in discussion with a guy, for he wanted to sell out his business, and because his business included to”timber connections”, he wanted an insane amount for it! I guess there is a lot of illegal logging going on there.
My first trip into Asia was Cebu about 13 years ago and it was a bustling furniture town. But I saw China coming on fast, so that is where I went. Now Cebu seems like a ghost town to my industry, just like it is here in the US. Now the business is in every country other than the RP: China, Thailand, Vietnam, and now Indonesia.
So I will just keep on contracting out to factories wherever I can find them, it just does not look like the RP:(
John: I know very little about the furniture business other than about 15 years ago, while still in school, I was approached by a Danish manufacturer about a sales position. At the time, it was exciting to me, but as time has passed…
There is lots of illegal logging going on, and it sounds as you are pretty spot on as far as your assumption.
Don’t despair, though… I’ve been living in the Philippines for 4 years and quite easily doing business in the rest of Asia without any problems!
That is my plan, to live in the RP and conduct my business from there. Target date, winter 2013. Now I just need to decide where. So far, I am liking Tagaytay. Merry Christmas John!
John: Rebecca would love Tagaytay, but the connections going up North would be a real pain for us (gotta transit across Manila each time… ugh!)… Enjoy your Christmas and good luck with the move!
Geez, talk about Filipino “crab mentality” . I hope that you take a second look at our country John and not just listen to your wealthy “reliable” Filipino friend. Do a realistic networking with the local industry and hopefully it wil change your mind to invest in the PH. Good luck!
Great Article John. A little deceptive as number do nnot always tell the true story. This is a very poor country partly because the influence of the Church that encourages large familes and too many mouths to feed. Lack of education keeps people in menial labor jobs. Poor roads and infastructure keep it looking 3rd World. BUT, one area that does in fact for the most part helps keep this economy afloat and can really move it into the modern era are the OFW’s and the billions they send back to support their familes and investments in the country. All these new real estate developments…OFW’s and their familes. Malls….OFW’s and their families etc….
Yes there are call centers sprouting up all over the place providing local opportunity but in reality aside from the well to do Filipinos that control the wealth in this Country , it is the OFW’s that are creating all the new investments here and are the future of this country unless they can make a better trasition from agricutural to manufacturing. The Philippines is a Gold mine but to become a Dragon they need to improve infastructure and protect their environment. Tourism could be a giant but not with how they are destryoing the reef and foret. This is a very disjointed response but the Philippines you talk about is all numbers and not pragmatic reality. GO Philippines.
Joseph:
Though these are numbers, they are from reliable sources… I didn’t just make them up. As I wrote above, there ARE serious problems in the country that do not have easy solutions. I am not so naive as to deny the obvious poverty, wealth inequity, and infrastructure issues. However, the picture is not nearly so bleak as some mqake it out to be… Very seldom are the positives mentioned, and there are, indeed, many positives.
Total Remitances from OFWs are around US$1Bn per month. Though the brain drain is quite extraordinary, the $12Bn per year is really not as significant to the economy as it is often portrayed to be… As noted above, the $89Bn per year in direct foreign investment dwarfs the amount OFWs return home to the country.
Until they develop more infrastructure (electricity and roads), manufacturing will not develop here. Thailand, even with its flooding and political situation, is developing manufacturing estates and giving large incentives to Honda, Toyota, etc. Philippines assembles Ford Escape, Honda City, and a few others. But given the lack of electricity, good harbor facilities, and a local market, not much incentive.
One problem is Philippines is a country of 70+ million spread over a 1000 islands. Outside of Metro Manila/Luzon, the government invests little. Thailand is attached to greater Asia so transport to markets will always be cheaper.
Don: The infrastructure does need improving… However, manufacturing IS developing here, albeit at a slower pace than in some neighboring countries. Keep in mind that many of the infrastructure problems have arisen precisely due to economic growth and the demands of growth. As I wrote above, it is a question of balance of resource utilization.
Another area to note is the credit ratings of each country. Thailand, Malaysia and Singapore all have investment credit rating while Indonesia, Philippines and Vietnam are still in junk rating. Indonesia is steadily improving and will probably exit junk rating. Junk rating prohibits lots of investment funds from investing in these countries as a matter of policy, so its costs more for the government to fund itself.
Credit is, indeed, a serious problem that still needs to be addressed by the government.
Thanks John Miele for this article. I always enjoy reading your well researched articles. Please don’t get tired writing, keep it coming…
Thank you El Moro.
confirms everything thought i had. and my thoughts did not come from reading. they come from being there and looking around and feeling it out. corru[tion is always part of the equation, America is corrupt as the day is long and has been for a long long time, but as i said part of the equation, good luck with dreamin it away. but the work force and the knowledge is there . especially if the brain drain could slow up or stop. and the only way to do that is to have the availabilty of good work. b ut that also needs to come from within. the filipino’s need to believe they can achieve what they want. and that only comes from liberty and and thinking. the only point i would disagree with you on is “distribution of wealth” , i ask who would be the decider of this and who distributs it. you want corruption? throw that in the mix. the eqaulity in wealth needs to ha[[en organicaly and it will if left to do so. but if some overly educated underschooled politicians try to fix that it will get worse, look at america, poverty has only grown since it institued welfare and the welfare recipient is living worse. no robin hood mentality or the philippines will stall out in its own tracks. I persoanlly believe asia is the next frontier, and if the philippines wants to be part of it, the people need to believe they can….as stated above , most filipino’s believe their country is the most corrupt out there. well they are flat wrong. I do not hold hope for the philippines,, I know the philippines will grow and i hope it is slow and steady. do not create bubbles,, they burst. I am betting my life on that nation
Brian: You and I are largely in agreement on this topic… The media tends to focus only on the negative, and much of what you read online is simply incorrect or burdened with spin. Foreign investment is a solution… And I’m not necessarily talking the small business that so many foreigners gripe about. Encouraging entrepreneurship among Filipinos is part of the reason that small business ownership by foreigners IS restricted. However, for those companies who wish to provide substantial amounts of capital and use Filipino labor, they are most certainly welcomed here.
great piece, john! looking forward to more
cheers,
Thank you Biz Doc!
Great article John,… if Philippines would be insulated from the rest of the world. Unfortunately that is not the case, PR will eventually catch the highly contagious cold from the USA.
You know what cold I am talking about,… the one called US Unfunded Liabilities.
It is in the lower right corner. http://www.usdebtclock.org/
The $117 TRILLION of liabilities!!!
I wonder if anyone here understand what this means?
Bob: After the E. Asian financial crisis in ’97, many of the banks, along with the government, really tightened their standards and checks & balances… Which is why SE Asia has weathered the storm quite well, IMHO.
wow you know more about the Philippines better than I do, the incredible thing is that all you said is true base on my research after reading your article.
Philippine186: I don’t claim to be any expert. There is always another side to every story, though.
true but as a expat knowing all these things is flattering dont know why
Another well written and very informative article, John! You are one of the writers here on LiP that keeps me coming back.
Sadly, I don’t think Philippines can or even want to stop the “Brain Drain” syndrome. But I would hope that they can slow it down… way down.
Miss August:
Thank you!
Brain drain is a problem… I’m involved in a project at work where it is quite evident. However, one of the things that gives me hope is the fact that on this project, they are trying to do as much as possible in the Philippines, by Filipinos, for reasons of national pride. I hope that they are successful in the venture. If it fails, they at least had the desire and fortitude to try.
John,
thank you for such an informative article. you clarified so many things in the one read for me. I really appreciate your time and effort.
Michael
Thank you Michael.
Aloha
Very interesting info., So what will happen to the Philippines when the dollar crashes next year and the euro crashes next year, is this going to help the Philippines or destroy it?
The dollar WILL crash.
thanks,
thewind
Wind: Well, what are the alternatives? Sterling? Swiss Franc? C$? A$? JPY? The US$ and Euro are what 90% of the world’s currencies use as reserve. The RMB is not a floating currency, so there is no government in the world that would back their currency with it. The Philippines uses a currency basket as reserves, so drops in one currency are offset by others.
The US and Europe still have vast resources and manufacture many goods. They also have combined about 20% of the world’s population that still will demand various goods. Will they decrease in value? Perhaps. But I don’t see any cataclysmic crashes of either currency.
To: Thewind
The US Dollar crash will simply not happen now nor next year but the danger will be real in about five years time. That is what charts are suggesting at present.
However, if it happens, there will be NO safe currency nowhere!
Pray that it never happens!
Just let me add this about gold.
George Soros said this: Gold is expected to crash right after the famous date 12/21/12.
The charts are also confirming the same.
Hi John,
Bingo. That’s a nice Christmas present to readers of LiP. You put the bigger picture there that we tend to overlook.
1. Yes, there is money in the country. The country’s accounting system does not account for the cash economy (e.g. the sari sari stores, the fruit vendors, etc) since micro businesses are not necessarily registered with the BIR or other agencies. The OF remittances as reported does not cover the informal remittances, e.g. door to door. Many businesses refuse to automate, or even get cash registers, go the manual system to adjust their taxable income. You know what I mean.
2. Yes, inequitable distribution of wealth is the root of the poverty issue in the country. I can’t believe business owners paying less than minimum wage to their employees or maintain minimum wage levels only for educated staff even as they are raking in millions in profit. Imagine a nurse at St. Luke’s make only P12,000/mo. That nurse I know of decided to jump to JP Morgan (call center I think) for almost 50% more in pay.
3. Yes, corruption exists right down to the lowest level but not the extent as in some countries (like China you mentioned). And the local Filipinos tend to believe it is ” onli in da Pilipins” they have the kind of politicians and corruption. In many ways, they have an idealized concept of democracy and politics. It’s hard convincing them that many of the political shenanigans happening there are available in even so called developed countries.
Finally, you forgot to mention shipbuilding, and I don’t mean galleons. Even before Hanjin, et al came to the Philippines, the country has built tankers, ships etc in the past. Tsuneishi has been in Cebu for like 3 decades, and there’s FBMA which I understand has shut down now. Even before Hanjin Subic opened, the country was at least in the top 20 of shipbuilding countries already. With Hanjin Subic, it is aiming for top 10 or even top 5.
Nice research. Ok to copy and repost in Filipino forum. You have excellent data.
Alex
Alex: Actually, last year, Hanjin’s tonnage made the country number 4 (Behind Japan, Korea, and China), albeit temporarily. Hanjin is having big labor problems in Korea and has moved a substantial amount of production here. As to FBMA, it is a very good facility and I have heard that it may soon be reopened under new ownership.
As to copying, Bob always requests that you quote and link to the site… That’s the fair way to do it.
Have a great holiday!
The figures of illegals in the Philippines are…well, unexpected especially that most came from countries with “better economy”
Katrina:
Many of the Chinese are here because, keep in mind, something that is almost never mentioned are the 900 million peasants in China who have not benefitted from the economic prosperity.
As to the Koreans, many are younger people who stay for a myriad of different reasons.
Another great article John. Although, when you mentioned Goldman Sachs’ forecast on the RP, it kind of gave me the shivers. It seems like every week I read about a case where GS says one thing out loud and goes the complete opposite direction and Shorts it behind the scenes. Lets hope they’re not running that scam here too 🙂
Also, with the advantage of having so many English speaking folks, not to mention so many amazing places to visit, spread out over all the islands, the RP could certainly do much better in the tourism department than it currently does (I know that topic has been well covered previously here as well).
Merry Christmas All.
WW
Wonderwall: Goldman Sachs has always produced very good statistical analysis… It is when they start promoting individual investments that things fall apart, since they have a vested interest in those.
John,
Kudos for an informative article! As far as I remembered, studying in college was never this informative. The point that I totally agree with you is the inequal distribution of wealth, it is all around the PH, that’s why we OFWs are OFWs. Thanks and Merry Christmas to you and your family!
Jonathan: Thank you… There is inequity, and you are correct in stating that many leave. I have also been reading quite a bit about OFWs coming home to start their own businesses, though… I think that is a trend that will increase in the future.
John,
Good article I have been reading your post for while now. I really enjoy your insight. I am have a SEO and website development business and presently have 7 employees in the Philippines working from their homes. The quality of their work is world class. I am glad to see someone talk about businesses other than local business. I have been working on moving my base to the Philippines. If you are going to employ a substantial number of Philippine citizens say 50 the process seems to somewhat straight forward. It is time consuming (well more than what I would expect) but I am employing a local law firm that has helped a lot of BPOs get set up. I should mention I have been to the Philippine, and gotten to the some of the people and a lot about the culture. I was married there and live there for a few months. For my business I think it is great. Not perfect but confident we can do well there. Met a guy in Angeles that has been doing the same thing. successfully.
James: Thank you. It can be done, as you have discovered, if you are serious about investing and have the money to do so. It is also important to note that employment generation is the goal of the regulations… If you employ lots of people, then there is always a way.
Hi John.
I was reading your article with great interest. I am about to get married to a filipina. And getting to know more and more about her family, how they think and how they earn their money, gives me ideas about my future relationship to the Island Nation, adding to the prospect of one day retire from the cold north to a nice island in the sun 🙂
We (my girlfriend and me) have to and from, talked about investing some money in the Ph, first for the purpose of making life easier for some of the relatives which are rural workers, but also in Manila, where more business-like investments can be made.
In that regard, if i invest in a transport business with my brother in law, will i be able to be a legally partner in such a “company”?
In short term, i will invest part of the start-up money for a type of minibus, which will be operated by a hired driver in a set route. It is a small investment for me, which currently draws my salary in scandinavia, but if sucessful, will earn my brother in law a decent year`s “salary” and might return the initial investment in just a year. For me, this is more like a test run, to get live training and info about exactly what kind of revenue such a venture will create. If it is as good as hoped, my girlfriend and I have slightly discussed putting up a business plan together with her brother, which will enable us to expand rather quick, if the demand is favourable.
Will i be allowed to formally be part of this venture, or will i have to be a “silent” partner/investor where my wife to be and her brother will be the registered owners? This goes for other small businesses as well, her sister runs a small shop, have set up a pool table and a volleyball court outside her house, and are talking about a webcafe, again, a small investment for me will set her up to hopefully increase her business revenue and thus make life better for the family as a whole. I can imagine investing in such things, setting the family up with work they will not be able to start up without my financial muscles. Of course, with the expectation of getting the initial investment back, and also be entitled to a percentage of the revenue.
What do you think about my thoughts about getting financial legs under me if, or more likely when i retire from my home country? I can add that i always build things one stone at the time, and never invest anything i can`t afford to loose,, 🙂
Cheers,, and thanks for a lot of intresting articles here in this site,, 🙂
Ivan:
You are limited to 40% ownership unless the investment is substantial. Rebecca and I invested in fish ponds for her family, and we ran into serious problems (see some of my other articles on here).
Business is different here… and transportation is cutthroat competition. If you invest, I strongly suggest:
1. Don’t do it until you are here for a while and see the business climate.
2. Silent partner may be best.
3. Invest only money you can afford to lose.
4. Realize that even as a partner, the word “loan” will be interpreted as “gift”.
I know several foreigners who have made money with buses, etc. here, and it can be done, but it will be a tough road… My opinion only for whatever it’s worth.