GENERAL POLICY ON INVESTMENTS

Anyone is welcome to invest in the Philippines. Foreign direct investments (FDI) are needed by the Philippines to support its objective of bringing the country to the ranks of industrializing economies and to remain competitive in the global market.

1.1 WHY THE PHILIPPINES

The advantages of doing business in the Philippines are the following:

a. Strategic Location

The Philippines is located at the southern rim of the Asia Mainland in the Asia Pacific region, with Hongkong, Shanghai and Taipei to the north, Jakarta to the south, Kuala Lumpur and Bangkok to the west and southwest, respectively; and Australia and New Zealand to the southeast. Its proximity to these capitals and countries offers access to a very large regional market and places it at the crossroads of eastern and western business, trade and culture. The country is a natural choice as an ASEAN Gateway of international shipping and airlanes, particularly European and North American businesses.

b. Rich Natural Resources

The Philippines is endowed with rich and abundant natural resources, from land to marine to mineral resources. Its soil is suited to growing all forms of food and commercial crops for domestic consumption and export and its numerous inter-island bodies of water offer much potential for island or culture fishing. It boasts as being the biggest copper producer in Southeast Asia and being among the worlds top ten gold producers. The 7,100 islands also make for beautiful beaches and breathtaking scenery that offer soothing leisure and relaxation spots for vacationers and tourists.

c. Large Pool of Highly-Educated Professionals and Workers

The Philippines has a growing labor pool of highly-educated professionals and trainable, skilled, English-speaking workers. In a report from the 2000 World Competitiveness Yearbook, the Philippines was considered the most competitive in Asia when it comes to skilled labor and places third after the United States and Chile for competent senior managers. The unique edge comes from a high level of proficiency in English (the Philippines is the 3rd largest English-speaking country in the world). The Philippines is also the top source of knowledge workers worldwide, according to the Global New Economy Index (GNEI) which measures the state of IT-readiness and capability of countries using several indicators.

d. A Democratic and Politically Stable Government

Political stability has been restored. The three branches of government- executive, legislative and judiciary, together with the private sector, continue to show strong commitment in sustaining economic recovery and in accelerating economic development. The Philippines stands out among other countries within Asia Pacific region with respect to stability and sophistication of its democratic institutions.

e. Hospitable lifestyle

According to the March 2000 survey of Hong Kongs Political and Economic Risk Consultancy, Ltd. (PERC), the Philippines is the best Asian country in overall quality of expatriate life. It ranked third among all countries surveyed-next only to Australia and the U.S.- and was ahead of Singapore and Japan. Rated highly were its cultural compatibility with expatriates; its housing, sporting and recreational facilities; quality healthcare and first rate educational institutions.

f. Low cost of doing business

The relatively low cost of operating businesses in the Philippines makes it one of the most attractive investment locations in the Asian region.

g. Business-friendly policies

The Philippines has redefined governments role through privatization and allowed private sector participation in developing infrastructure and some services which used to be government's domain. It now makes use of the innovative Build-Operate-Transfer scheme, a model now being followed by other countries due to its success.

The country has opened up its economy by allowing 100% foreign ownership in almost all sectors of the economy. It has strengthened its capital markets and deregulated the banking, insurance, as well as the shipping and telecommunications sectors, removing most monopoly structures in the Philippines market economy.

Attractive incentive packages are available to qualified enterprises in the countrys numerous Special Economic Zones (SEZs) and Industrial Estates. The SEZs are being nurtured to become balanced agricultural, industrial, commercial and recreational hubs of activity.

From 38% in 1998, corporate income tax has been reduced to 32% with companies located in economic zones, export zones subject to only a 5% overall tax rate. Certain enterprises enjoy full tax holidays.

h. Unlimited business opportunities

As ASEAN economies integrate within the framework of the ASEAN Free Trade Area agreement (AFTA), the Philippines is the natural and most strategic location for firms that want access to the large ASEAN market and its vast trade opportunities. It has complied with WTO, APEC, and AFTA agreements and has reduced tariff rates on its manufactured goods. The Philippines has enhanced and primed up various areas of business for investors. It also offers a dynamic consumer market accustomed to an array of product choices created by a competitive domestic economy.