Southeast Asia is one of the most promising locations for businesses, mainly because of its stable economy and its vibrant and diverse workforce.
The Philippines is one of the countries in the region that is especially attractive to foreign investors. This is largely due to the archipelago’s status as the one of the fastest-growing economies in the region. It has a highly educated population, large deposits of natural resources, and is generally business-friendly to new businesses.
However, how easy is it to register a corporation in the Philippines compared to other Southeast Asian nations?
Much like other countries in the region, the Philippines is open to businesses having foreign ownership — provided, of course, that they meet certain criteria. If you intend to operate in the domestic market, there will be an equity cap. This means that you can only own 40% of the business. However, this cap can be lifted, if your paid capital is or exceeds $200,000. This grants full ownership even if you are a foreign national.
If your business falls under the export enterprise category, then it is not subject to the $200,000 requirement. Your business will need to utilize 60% of its resources from outside the Philippines. This will allow you to own more than the 40% equity.
Another thing to note is that 100% foreign ownership of a business is only allowed in the Philippines if the products and services are not included in Lists A and B of the Foreign Investment Negative List.
This means that — at least for certain industries — setting up a foreign company is relatively easy in the Philippines compared to its neighboring countries in the region, such as Thailand which is said to be the strictest when it comes to approving permits for foreign investors.
As with all workers, foreigners are required to have a Pre-Arranged Employee or 9G Visa before they can start working or doing business in the Philippines. This visa — which carries a maximum cost of around USD 500 — has a validity of up to three years, and allows foreigners to work and conduct business in the country.
This makes it relatively cheaper and more practical when compared to Singapore’s Entrepreneur Pass.
Also known as the EntrePass, this document is specifically geared towards foreign investors, and commands total fees of around SGD 220 or USD 165. Despite the relatively low initial payout needed however — the amount covers the fees needed for the application (SGD 70) and the collection of the pass itself (SGD 150) — the EntrePass also requires applicants to have a minimum monthly salary of SGD 3,600 (USD 2,700). This is compounded by the pass’ one-year validity, which necessitates frequent — and costly — updates.
Foreign investors looking to start a business will be delighted to know that the process of registering a corporation in the Philippines is no longer a painful and uncertain process. Overhauls in regulations have significantly cut down the cost and time needed to register a corporation.
For instance, while domestic corporations are still the most popular legal entity type among foreign investors in the Philippines, the country — through Republic Act No. 11232, also known as the Revised Corporation Code of the Philippines (RCC) — now actually allows foreigners to set up one-person corporations without the need for a board of directors or shareholders.
This removes the requirement to hire unnecessary staff, and instead allows entrepreneurs and investors to immediately focus on running their companies and developing their products and services.
This is in stark contrast to the likes of, say, Indonesia, which asks foreign investors to prepare and submit a 6-month business plan to the Capital Investment Coordinating Board as a requisite for an in-principle business license.
Whether you are looking towards creating the next tech giant, or a startup focusing on sustainable textiles and fashion, setting up a company in a country such as the Philippines is an endeavor that is worth pursuing.
Setting up a company in the Philippines is something that FilePino can help you with.
FilePino offers a comprehensive range of business services.. From assisting your company’s registration to operating your businesss, our solutions allow you to get your company up and running smoothly and hassle free.
Contact us today at +1.806.553.6552 or send us a message here to learn more.