Manila Property To Benefit Form Massive Business Expansion Into The Philippines

In a new survey conducted by The American Chamber of Commerce in Singapore (AmCham Singapore)

, in co-operation with other AmChams in the ASEAN area, the Philippines was named the most popular country for expansion.

The ASEAN (Association of Southeast Asian Nations) region consists of ten countries including Indonesia, Laos, Vietnam, Myanmar, Philippines, Singapore, Thailand, Malaysia, Cambodia, and Brunei Darussalam.

The report, which is now in its 10th year, focuses on business growth in Southeast Asia and highlights local factors which effect businesses in Southeast Asian.

In this report the Philippines was named the most popular country for expansion (32%). Although the fact that this amount is much higher than other ASEAN countries, this number has decreased somewhat from the 43% reported in 2009. However 32% growth is still a noteworthy percentage. As the Philippines have quite a few attractions for international businesses and multinationals.

Government Incentives for Multinationals

The Philippine government is actively encouraging foreign investment in a variety of industries including energy, technology and tourism. Special TIEZA's (Tourism Infrastructure and Enterprise Zone Authority) have been created to provide investment incentives.

The Philippine Government also have an open economy allowing 100% foreign ownership in some sectors and support a BOT (Build Operate Transfer) investment scheme that other Asian countries imitate. Privatisation of government corporations including telecommunications, shipping, banking and insurance as well as deregulation of power industries are drawing foreign investment.

Along with incentive packages like reduced income tax for example, with companies in the Special Economic Zones (ecozones) subject to only 5% overall tax rates, and Multinational companies entitled to tax exemptions including duty-free importation of specific equipment and materials, these are just some of the reasons behind the high percentage growth of business expansion into the Philippines.

The Philippines Strategic Location

The Philippines is also in an ideal location for companies looking to access the huge trade opportunities of the ASEAN markets. Located in the center of Asia and within a 4 hour flight of all the major capital cities the Philippines is the gateway of international shipping and airlines, it is said to be the critical entry point to imore than 500,000,000 people in the Association of Southeast Asian Nations (ASEAN) market.

Also The Philippines has the third highest English speaking population in the world with a big expatriate community and its increasing support infrastructure of course accommodates American and European businesses.

These motivation factors and incentives are leading to a growing number of international companies expanding operations into the Philippines with many choosing to set up regional headquarters in business hubs like Makati, in the capital city Manila. which in having a very positive impact on the Manila property market.

The research suggested several factors for this drop, including the fact that the business envirnoment of the Philippines has become a bit more difficult this year, with nearly a quarter of respondents facing financing restrictions and higher borrowing expenditure.

Furthermore, three quarters of respondents foretell that living expenses in the Philippines will rise, and 85% predict that the same will happen with Philippines property prices. These factors contribute to the fact that some respondents are anxious that housing office leases and labour expenditure will rise. Corruption also is a concern for businesses in the Philippines, though new government guidelines and the fairness of their application have increased in 2011, compared with the previous year.

Regardless of the rise in business and living costs (which is only normal in a growing economy if you ask me) overall, 93% reported overall expatriate satisfaction and with most people extending their time in the Philippines.

The American Chamber of Commerce in Singapore's survey indicated that the majority of participants predict that the Philippine economic growth will rise 2011. The respondents also have a positive view of the Philippines with their own companies, with nearly all anticipating to expand in the Philippines in the next year. Drivers for this expansion include potential for business growth in the area, increasing market share and inexpensive production costs.

To summarise the research has shown that the majority of the survey's respondents will expand in ASEAN within the next few years due to what they consider as great potential for business growth as well as ASEAN's increasing market share. The research also indicated that a third of this expansion and growth will take place in the Philippines.

by: Melvin C. Zook

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