The Highs and Lows of Doing Business in the Philippines

Philippines

Manila, and other cities in the Philippines, offers great opportunities for foreign businessmen. The workforce is more than competent and extremely proficient in English — but certain factors make the country a little less competitive than India or China.

The Good

1. Excellent workers

Filipinos have an excellent command of English — undoubtedly the best in Asia when it comes to grammar and diction. A Filipino college graduate (or a high school graduate if he/she came from a reputable school) will speak English with the fluency of a native speaker — and do so with an extremely neutral accent. Filipino IT workers are extremely proficient with the current programming languages and quick to adapt to new ones. Manufacturing workers are also at par with those from India or China.

2. Wages are comparatively low

The minimum wage in the Philippines is set at less than $10 a day (8 hours) — but workers with expertise expect twice or thrice the amount. The fairly large urban population ensures your company won’t lack in manpower — even if wages are at the low-end of the spectrum. However, it still pays to be competitive regarding wages as your workers won’t hesitate to leave if a better option comes along.

3. Limited regulations

While the country has regulations regarding the environment, finances, and business dealings — they don’t come close to the levels of the ones in the US or the EU. Philippine laws and regulations are a bit slack when it pertains to businesses to encourage and draw in entrepreneurs and foreign investors.

The Bad

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1. Electricity costs are a bit high

The Philippines ranks second only to Japan when it comes to high electricity costs. At $0.18 per kWh, the country’s electrical cost is double that of China and India. Aside from the higher cost, urban centers don’t have any other electricity-related issues. The Philippines is also one of the greener countries in Asia — especially when compared to China and India. It relies heavily on geothermal and hydroelectric plants for its energy — and comes nowhere near the amount of coal used in the two countries mentioned previously.

2. Traffic is ever-present

Manila traffic can be frustrating — but it’s still better to rent a car in Manila than opting for public transport. A 25-minute drive can take more than 2 hours if you get caught in rush hour traffic (6-8 AM and 6-8 PM). Driving is still better as the country’s public transport is outdated and overburdened. The metro runs at less than 20 mph and wait times for trains can last 15 minutes.

3. The political climate can be daunting

Politics is usually inconsequential when it comes to businesses in the Philippines. However, the current administration is a bit vocal — even threatening established businesses with cancellation or non-renewal. While most businesses will probably remain unaffected — those that rely on the financial market should expect a more volatile environment.

The Philippines has some of the best workers in the region — whether the job consists of manual tasks or requires expertise. Certain factors make it more costly to run businesses there — but it should still be an option if your company values quality of work.

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