In the past, business opportunities for foreigners were highly restricted, but this has changed in the last few years. Recognizing the importance of new investments in the country, the Philippine government has liberalized the rules covering foreign investment, giving foreigners more opportunities to set up a business here.
Foreign ownership of businesses
Foreign nationals may own up to 100% of a business, except those covered in the Foreign Investment Act (FIA) Negative Lists A & B. These lists restrict foreign ownership in economic activities that affect national security and the greater interest of Filipinos.
Here are the criteria for up to 100% foreign business ownership:
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A minimum investment of US$200,000
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A minimum investment of only P5,000 if the business exports at least 60% of its output
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A minimum investment of US$100,000 if the business is considered a pioneer, and employs at least 50 Filipino nationals
An alternative to a 100% foreign-owned enterprise is a domestic corporation with no more than 40% foreign ownership. This set-up allows investments in all areas except those restricted by the FIA Negative List, with a minimum paid-in capital of only P5,000.
Foreigner Starting a Business in the Philippines
Business opportunities with good potential for foreigners
Which type of business should you engage in? For starters, you might want to check the economic activities included in the government’s current Investment Priority Plan (IPP). If your business falls within the list, it can benefit from the many fiscal and non-fiscal incentives offered by the government.
With that said, the Philippines is ripe for entrepreneurial success of almost any kind. As the third best-performing economy in the Asia-Pacific region in 2015, the economic status of many Filipinos have improved in recent times, boosting their spending power.
Here are some ideas for a profitable venture:
Business Process Outsourcing (BPO)
Outsourcing is fast becoming the norm among businesses in the U.S. and other industrialized countries, and the Philippines is one of the top BPO providers in the world. The largest global BPO companies have operations in the country, but there’s still plenty of room for smaller-scale operations.
In addition to voice functions or call centers, other outsourced services that the Philippines can provide are in the areas of web development, animation, medical transcription, data entry, and many more. In addition to the wealth of skills you can find in the Philippines, you can also take advantage of the many incentives offered by the government to BPO companies.
Food business
Filipinos love to eat! And with their wide cultural influences, they are quick to sample and accept new cuisines. The robust economy has also resulted in busier lifestyles and more disposable incomes, making dining out a favorite pastime.
Fine dining and self-service restaurants, food carts, food trucks, kiosks and even home delivery food services offer excellent opportunities to cater to Filipinos’ love for food.
Hotels and lodging
Tourism is one of the Philippines’ sunrise industries, and is also the target of many government incentives. With the government’s efforts to attract more tourists to the country, there’s a parallel need for more lodging options. Many types of tourists come to the Philippines, from luxury to budget travelers, so there are plenty of opportunities for different lodging and accommodation services – from Airbnb listings, to cozy inns, to fully-developed resorts.
Cleaning services
Filipino households have evolved to include working couples, leaving little time for housework. The higher cost of living in urban areas, along with the growing scarcity of supply, has made hiring full-time domestic help more prohibitive. Cleaning services offer an affordable and convenient alternative, particularly for the growing middle class population.
English tutorial
As the third-largest English-speaking country in the world, the Philippines has become a hub for English tutorial centers. Students from countries like Korea and Japan come to the Philippines to learn English under hands-on instruction. Online tutorial centers have also gained popularity in the country.
Real estate
The growing middle class population and overseas Filipino workers have boosted the demand for housing. There’s also a rising need for rental properties, as the increasing student and worker populations seek residences closer to schools or offices. Demand for commercial spaces has also been going up. Under these conditions, a real estate brokerage offers good profit potential, along with investing in rental properties.
Auto rental service
Public transport in the Philippines leaves much to be desired. Car ownership is not something everyone can afford, so when people need their own transport, they often resort to auto rentals. Uber and Grab services are also gaining popularity in Metro Manila.
In addition to individual renters, companies also use rental services not only for passenger vehicles but also for trucks and vans to transport goods and materials. With the right investment, you can tap into the wide auto rental market, both for individuals and businesses.
E-commerce
E-commerce is a fast-growing global trend, and the Philippines is slowly but surely making inroads into this area of retail. The venture requires a fairly small capital, mostly for web development, a secure internet connection, and computer equipment. It does involve plenty of hard work, as you need to source for suppliers, set up a value chain that includes delivery services and customer support, and market your e-commerce site.
Agriculture
The Philippines is a rich source of highly sought-after agricultural products, such as mangoes and other fruits, medicinal herbs, coconut products, and others. While agriculture is not for all, it can be very fulfilling and profitable for someone with a real interest in it. Foreigners are not allowed to own land in the Philippines, but they can lease land for up to 75 years. Anything they build or grow on leased land is their property.
Gym
A gym is a fitness center without the fancy exercise machines. What it has is old-school equipment, like barbells, kettlebells, free weights and pull up bars, so it costs less to set up and to maintain. It attracts fitness enthusiasts who want to adhere to the basics instead of relying on hi-tech equipment. A gym with enough space can also be a good site for trendy exercise regimens like Zumba and Pilates.