December 23, 2014

Published last December by the World Bank Group, “ Doing Business – Beyond Efficiency ” report ranked Philippines as the 95th easiest country to do business in a scope of 189 nations worldwide. Released in a yearly basis, the series of reports evaluate countries from the 5 continents by measuring and tracking changes in 11 areas of the life cycle of an enterprise, such as starting a business, getting electricity, dealing with construction permit and labor market regulation.

The tops countries of the southeast region – and the whole world – continue to be Singapore in 1st place and Hong Kong, in 3rd. Despite of the clear improvements done by Philippines, there is still a long and tough path to reach its direct competitor neighbors, Malaysia (18th), Thailand (26th) and Vietnam (78th).

In 2014, the Philippines had been ranked number 108, previously to the methodology changes applied in this latest version, which included new accounting and computing standards. The move resulted in a reclassification of the country’s position from 108th to 86th in 2014, showing a decrease of 9 positions in the following year. The change wasn’t taken positively by the local authorities as it made seem that the business environment in the Philippines became worse from a year ago to 2015 at first glance.

Indeed, there were few remarks stated in the report that didn’t favor the country to gain positions. For instance, a truck ban imposed during day time within Metro Manila in 2013 was considered the main cause for the fall in the sector “Trading across Borders”.

Aside from the longstanding infrastructure related issues, starting a business remains to be the most complicated topic among all areas. It takes 34 days, costs 16.6% of income per capita and requires 16 steps – more than double compared to East Asia & Pacific countries – from the step number 1 until an entrepreneur is able to start operating his business.

Typical of a developing country, the bureaucracy is also one of the main challenges that shall be faced by whoever plans to set up a business in the Philippines. The red tape has been used by Aquino’s administration relentless campaign to fight against corruption and implement good governance by increasing the number of procedures and signatures to release licenses and registration.

Setting up a corporation in the Philippines requires registration on national and local levels. While the Securities and Exchange Commission (SEC) is responsible for the first one, the Local Government Unit (LGU) deals with the Barangay clearance and the Business Permit. It is required to appoint at least 5 directors – the majority must be local resident holding at least 1 share each – a Corporate Secretary, a Corporate Treasurer and a Treasurer-in-Trust. The corporation allows the directors to have limited liability and be almost 100% foreign owned.

If you wish to register your company or understand more about the possible business structures, Triple i Consulting can provide assistance in setting up different types of entities in the Philippines. Contact us

Larissa Ogusico
Account Executive

Unit 616 Tower One Stock Exchange
Makati City, Philippines 1226
T: +632 856 9631
E: info@tripleiconsulting.com

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