In the Philippines, the micro, small, and medium enterprises (MSMEs) remain the backbone of the country’s economy. As we navigate through the endemic COVID-19 disease, the aim for accelerated economic recovery and the need to bolster foreign investment in the country is empirical.

While the growth of MSME in the country continues to strengthen the economy on its much needed recovery, foreign investment is critical to achieving economic growth.

The Philippines being one of the countries in the ASEAN region that has a lot of opportunities to offer to foreign investors for various sectors such as telecoms, transportation, renewable energy, technology, banking and finance, among others.

Given the strong investors’ confidence in the Philippines, the need for the country to have a comprehensive guide on how to do business in the Philippines will pave the way for drawing strong interest from potential foreign investors.

Cognizant of the need for a comprehensive, transparent and forthright process of doing business in the Philippines, the European Chamber of Commerce of the Philippines and Divina Law partner to unveil the Doing Business in the Philippines 2024 Guidebook 5th Edition.

The release of the guidebook provides prospective foreign investors a bird’s view of how they can take advantage of the investment opportunities in the Philippines, including the minute steps of business registration, capitalization, tax, and industries available for foreign investors, among others.

Also covered in the guidebook are industries and specific regulations in the Philippines renewable energy (RE), financial technology, and telecommunications. Other topics include setting up business in the country, taxation, labor & employment, immigration, and Intellectual Property (IP), among others. 

ECCP President Paulo Duarte said that the guidebook aims to empower businesses and attract more investors. Aside from highlighting the key economic reforms such as the amendments to the Public Service Act (PSA),  the Retail Trade Liberalization Act (RTLA), and the Foreign Investment Act (FIA), Duarte mentioned the liberalization of renewable energy and the hope of ECCP in the official resumption on ‘prospect’ of the EU-Philippines Free Trade Agreement (FTA) negotiations.

“While acknowledging these substantial strides, the ECCP remains steadfast in its commitment to fostering increased foreign direct investments (FDIs) in the Philippines,” added by Duarte. 

More EU-Phl investments

It is an optimistic year for the Philippines in attracting more trade and investments through collaborative efforts with the European Union’s (EU) initiatives and participating in their cooperative programmes. 

According to H.E. Luc Veron, Delegation of the European Union in the Philippines, the EU and the Philippines have entered a new era of bilateral relations. Ambassador Veron shared that the Philippines will continue to benefit from the EU GSP+ preferential trade regime until 2027. 

“The EU is encouraged by the efforts of the government to improve the ease of doing business. What we look at is a further streamlining of administrative processes relevant for business, in particular, at the local level,” EU Ambassador Veron added.  

Norwegian Ambassador Christian Halaas Lyster, on the other hand, shared updates on the European Free Trade Association (EFTA), encouraging the Philippines “to identify areas with high potential for more exports” from the country as this would benefit the economy and the people. He also emphasized that in any business in the world, corruption is not good, and thus must maintain the integrity and stability to attract more investors. Ambassador Lyster also hopes that the Philippines “to take a more active approach” such as conducting more market research for export growth and a boost in economic ties.

According to a new release from the Department of Trade and Industry (DTI), Philippine trade with EFTA has only grown stronger with the entry into force of the PH-EFTA FTA five years ago.

The Philippines’ trade accord with the EFTA states, comprised of Iceland, Liechtenstein, Norway, and Switzerland, was signed on April 28, 2016, and came into force on June 1, 2018.

After the FTA was implemented, the Philippines was able to turn around its perennial trade deficit with the European group. In 2019, the Philippines posted a trade surplus of US$47.12 million. This surplus further grew to $101.49 million in 2020 and $129.89 million in 2021 despite the COVID-19 pandemic, said DTI. 

Total bilateral trade increased by 2.40% from $802.150 million in 2018 to $821.407 million in 2019. This further improved by 16% from $821.81 million in 2020 to $953.58 million in 2021.

The Philippines has successfully secured duty-free market access for all industrial and fisheries exports to EFTA and significant concessions for major agricultural products, particularly products such as desiccated coconut, prepared or preserved pineapple, and raw cane sugar as well as those with high potential export interest.

Under the FTA, around EUR24.84 million worth of Philippine agricultural and industrial products were able to enter the EFTA market with reduced or zero tariff rates in 2020.

These products included tuna, desiccated coconut, fruits and nuts, processed foods and other food preparations, pasta, malt products, vacuum cleaners, new pneumatic tires, and hairdressing apparatus.

DTI said implementation of the FTA was officially assessed on January 10, 2023, during the inaugural Joint Committee Meeting (JCM) hosted by the EFTA. 

Both sides confirmed that the FTA has been working well and has had no critical implementation issues since the deal was implemented.  

It was further noted that in 2020, the preferential utilization rates of the Philippines stood at 31% and those of EFTA member states were 30%.

Preferential utilization rates measure the extent to which tariff preferences provided by a particular trade agreement are being used by imports and exports of either side.

Both sides are determined to further improve their preferential utilization rates, said DTI.

A key highlight of the JCM was the official preview of the PH-EFTA FTA online interactive web tool, which is expected to help Filipino and EFTA exporters maximize their preferences under the FTA.

DTI Undersecretary Ceferino Rodolfo, who co-chaired the JCM, said, “We are privileged to be the EFTA’s first recipient partner of this online web tool to promote the PH-EFTA FTA. This will really benefit the Philippines and EFTA business community.”

Asked for an update on the online web tool, the DTI Bureau of International Trade Relations in an exclusive email to PHILEXPORT said: “The online interactive tool for the PH-EFTA FTA is currently being developed by the EFTA Secretariat.

“Per EFTA, the first phase of this interactive web tool is expected to be launched in the first half of this year. This web tool will include information on appropriate tariff rates, applicable rules of origin, and other additional requirements, among others.”

The FTA is part of the Philippine government’s efforts to tap non-traditional markets with high potential for growth in trade and investments, and forms part of the broader strategy to gain a stronger foothold in the European market.

It covers trade in goods, trade in services, investment, competition, the protection of intellectual property rights, government procurement, and trade and sustainable development.

Under this trade agreement, Filipino companies can export to EFTA member countries under more liberal rules of origin requirements.

According to EFTA, the Philippines is its 43rd largest export partner and 39th import partner for goods.