The latest issue of ASEAN Briefing Magazine titled, “How to Set Up in the Philippines“, is out now and available to subscribers as a complimentary download in the Asia Briefing Publication Store.
In this issue of ASEAN Briefing
- Political, Economic, and Social Introduction to the Philippines
- Entering the Philippine Market: Comparing Models
- Corporate Establishment in the Philippines: A Step-by-Step Guide
- Using Singapore as a Gateway to the Philippines
By: South-East Asia IPR SME Helpdesk
Although the Philippines has slipped behind other ASEAN nations in automotive market size and though lacking in major domestic brands, the country’s massive exports of electronics and metal goods still make it a significant part of the international automotive supply chain. Currently, over 250 automotive companies operate in the Philippines, with foreign businesses largely represented by Japanese firms. Automotive exports created a net trade surplus of US$ 2.7 billion in 2010 and reached a total market size of US$ 3.5 billion in 2012. For automotive firms, these exports include many humble but critical components such as ignition wiring sets, intake air filters, clutch pedals, and radio receivers. Other exports are more immediately recognizable, including pneumatic tires, lead-acid storage batteries, and transmissions. Alongside these automotive staples are integrated circuits, the electronic brains which will form a critical part of the worldwide automotive industry’s adoption of self-driving cars. Many of these more sophisticated parts are produced not by automakers themselves but rather by smaller specialized contractors.
While the Philippine intellectual property regime stands head and shoulders above some of its other ASEAN counterparts, automakers or automobile component companies which source their products from the Philippines will still encounter challenges. Enforcement in the Philippines lags behind that of more developed markets, and there are always difficulties inherent in negotiating IP contracts with local partners. Nonetheless, with careful IP protection and a smart IP management strategy SMEs can reap the benefits of the Philippines’ comparative advantage in relative safety. To do so, a company must focus on three key elements: patents for key technology, especially in propulsion systems which will play a central role in international fuel efficiency design competition; semiconductor topography designs (integrated circuit layout-designs) for electronics which will give smart cars eyes and ears to manoeuvre safely and control their components; and copyrights for computer codes which will run on those electronics.
Singapore: Economy forecast to register positive growth
According to the Monetary Authority of Singapore (MAS), the island republic’s economy is forecast to grow by 1 to 3 percent in 2017. The MAS Annual Report released on 29 June indicated that while the country’s economic growth has been somewhat uneven across sectors, it is expected to gradually broaden to the rest of the economy over the course of 2017.
According to the report, the manufacturing, transport and logistics, and the wholesale sectors, accounting for 43 percent of GDP, were the major drivers behind the economy’s rebound since the fourth quarter of the previous year. On the other hand, the services sectors comprising finance, business processes, and IT-enabled services, accounting for 30 percent of GDP, recorded mixed outcomes in the last two quarters. These sectors are, however, poised to register higher growth in the latter half of 2017. Retail and food services, and construction sectors, which account for 17 percent of GDP, are expected to remain weak.
Op-ed by Bob Shead
In this article, I will discuss and explain the advantages and potential business opportunities of solar energy in the Philippines. There has been a general expansion in solar power generation in Asia as opposed to Europe and the rest of the world, and ASEAN countries, including the Philippines have a greater growth potential. Current electricity costs in the Philippines are the highest in Asia, including Japan. This makes solar power a much cheaper and economically more advantageous option in the Philippines. The Philippines is a country of 102 million people, and is a relatively fast growing Asian economy, and it is anticipated that 7000MW of power generation will be added over the next five years.
An estimated 16 million people are off the grid with regards to current electricity supply, and this includes approximately 6000 schools. This demonstrates the potential for supplying solar power to the Philippines. Residents in off grid areas, are beginning to arrange the finance to purchase solar panels, batteries etc. A friend recently mentioned to me that his golf caddie, who lives in a local off grid village, near the golf course, had invested in two solar panels with batteries, at a cost of about P5000 (US$100), and this has supplied her house with electricity for lights, fans, a small refrigerator and a TV. The Philippine Government has also committed to a 70% reduction in carbon emissions by 2030 and has a 15.3GW renewable energy target, thus encouraging a large increase in solar power as an energy source.
By Bradley Dunseith
The Philippines is an archipelago comprising of 7,641 islands. The country shares maritime borders with China, Indonesia, Japan, Malaysia, Taiwan, Vietnam, and the island nation of Palau. In 2015, the Philippines exported goods valued at US$77.9 billion and imported products worth US$76.8 billion. The Philippines’ top export destinations are China, Japan, the United States, and Singapore; and the country’s top import partners are China, Japan, Korea, the United States, and Thailand. In this article we explain best practices for importing into and exporting out of the Philippines.
Malaysia: Tourism tax comes into effect from August 1
Malaysia’s customs department has announced that with effect from August 1, foreign visitors as well as domestic tourists will have to pay a tourism tax to operators of different types of accommodation. The tax, which has to be paid regardless of business or leisure travel, has been fixed at RM20 (US$5) for five-star hotels, RM10 (US$2.5) for four-star, RM5 (US$1.25) for three-star, and RM2.5 (US$0.62) for non-rated accommodation.
Accommodations such as traditional kampong stays and homestays as well as premises with less than 10 rooms are exempted from the new tax. The tourism tax will be levied over and above the goods and services tax and service charges.
Philippines: Tax incentives announced for companies going green
The Philippines Board of Investment (BOI) has announced that it is planning to introduce tax incentives for companies going green. The initiative under the Climate Incentives for Manufacturing (CLIMA) program will target firms in the manufacturing sector. To qualify, enterprises should promote energy efficiency and use technology that reduces greenhouse gas emissions. While the exact nature of the incentives are not known, they are likely to be in the form of capital equipment incentives and income tax holidays.
Op-ed by Bob Shead
This article will attempt to describe the economic advantages and environmental efficiencies of biomass power generation in the Philippines. The biomass industry in the Philippines, while still far behind fossil fuel-based power generation, is rapidly advancing. The term biomass normally refers to biological material that can be used as fuel. It can be something as simple as a wooden log or more complex like alcohol. Biomass for millennia has been the primary energy source on the planet. Although it is considered that all fossil fuels such as coal and oil originate from vegetation, they are excluded from the definition of biomass.
Sources of Biomass in the Philippines
The Philippines has large and abundant supplies of biomass resources, including agricultural crop residues, forest residues, animal waste, agro-industrial waste, municipal solid waste and aquatic biomass. The most common agricultural waste are rice hull, bagasse, coconut shell husk and coconut coir. This use of commercially produced agricultural residues converted into biofuels is increasing in the Philippines, as fossil fuel prices continue to rise. Rice husks are perhaps the most important underdeveloped biomass resource that can be fully utilized in a renewable and sustainable manner for generation of electrical power.
By Bradley Dunseith
In April, 2017, the World Bank (WB) released their biannual East Asia and Pacific Economic Update, entitled, “Sustaining Resilience.” As the title suggests, the WB anticipates growth in East Asia and Pacific, including ASEAN states, to remain resilient despite risks from global and regional vulnerabilities. In this article, we go through “Sustaining Resilience” and summarize the WB’s forecast for developing ASEAN states generally as well as their country specific predictions for economic growth.
About the report
The WB predicts that large developing economies will continue to grow moderately while smaller regional economies will benefit from the rapid growth of their neighbors as well as high commodity prices. The WB marked that poverty has continued to decline in most countries and will continue to fall with sustained growth and rising labor incomes. However, the WB report noted that global policy uncertainties means that countries must address macroeconomic vulnerabilities so as to prepare for external shocks to the economy. External shocks – such as changes in US policy – disproportionately affect smaller countries; as such, the WB report strongly recommends small economics to improve the efficiency of their public spending in preparation of needed structural changes.
MALAYSIA: Sarawak, Sabah and Labuan exempted from cabotage policy
With effect from June 1, 2017 the states of Sarawak and Sabah as well as the Federal Territory of Labuan will be exempted from the cabotage policy. As per the erstwhile policy, only Malaysia-flagged ships were permitted to transport cargo from Peninsular Malaysia to these three territories and vice versa. As a result foreign vessels carrying freight bound for the three territories had to stop at the port of Klang in Selangor state in Peninsular Malaysia in order to transfer the goods to domestic ships for onward shipment to Sarawak, Sabah and Labuan.
The Malaysian transport ministry has announced that the exemption will however not apply to freight transport between Labuan and the states of Sarawak and Sabah. While the domestic shipping industry has protested against the government’s move to end the cabotage policy, it has been welcomed by the local administrations. It is believed that the policy had led to higher prices of commodities and as a result a higher cost of living in the three territories. Observers have stated that now it will be possible to ship goods directly to Sarawak, Sabah and Labuan without having to transfer at a Peninsular Malaysian port.