How to start business in Dumaguete?

Hello Everybody,

I would appreciate any advice on starting a business here in the Philippines. I plan on starting a outsourcing business.

I will be able to own 100% of the business with minimal capital requirements because at least 60% of the revenue will be from sources outside the Philippines.

Please respond with any and all comments beyond the question I have below. Feel free to PM me if your comment is not fit for public viewing.

What is the quickest way I can get a work permit?
Can I start a business as a sole proprietor then petition for a work permit based on my importance to the business?

Thank you in advance,

 

Obviously you have not followed due diligence or any research into running a business in the Philippines, first comment a foreigner cannot own a business in the Philippines but need a Filipino partner then begins the receipt for disaster

 

what you mean, outsourcing your savings in the philippines?

 

You are the one has has not done any research before sharing their thoughts. Your comment shows lazy ignorance. You could have simply done an Internet search on foreign owned business in the Philippines to see that I was correct. I see that your post has received up votes so there are others who think as you do.

I will explain in as simple terms as possible so that you may understand.

The Foreign Investments Act of 1991 states:

As a general rule, there are no restrictions on extent of foreign ownership of export enterprises.

the term “export enterprise” shall mean an enterprise wherein a manufacturer, processor or service (including tourism) enterprise exports sixty percent (60%) or more of its output, or wherein a trader purchases products domestically and exports sixty percent (60%) or more of such purchases;

To understand the law you need to understand some business terminology:

“Foreign ownership” and “foreign equity” is the percentage ownership of a business by foreigners.

“Paid-up capital” is the amount of money an investor invests into the business.

The foreign investment negative list (“FINL”) is a list of activities that the Philippine government exerts additional regulation. Except for the ownership of cockpits, these activities fall into two types of activities. Domestic market enterprises that need protection and those activities that can be dangerous to the community no matter where the product is sold. (ex: explosive manufacture, etc.)

“Domestic market enterprise” vs “export enterprise” is where the business generates its income (revenue). Both of these business enterprises are located in the Philippines. The difference is from where they generate their income. For example, the hypermart generates all of its revenue from the local Filipino population. The hypermart is a “domestic market enterprise”.

Some businesses export products like sugar. In the age of the Internet many businesses export services. Qualfon is an exporter of Filipino services. The Qualfon call center located in Dumaguete generates its revenue from sources in the US. US companies “outsource” their call center services to Qualfon in the Philippines. Qualfon is a business processing outsourcing (“BPO”) company. The Qualfon call center that is physically located in Dumaguete is an “export enterprise” because it generates its revenue from the US. Qualfon is majority owned by foreigners. The majority owner is a Mexican citizen.

Export enterprises benefit Filipinos because they bring money from foreign economies into the Philippines. They provide jobs for Filipinos without the Filipinos having to go overseas. This is much better than OFWs who have to leave their families for employment. This is very good for the Philippines and they want as much of this as possible. For this reason there is no foreign ownership restrictions on “export enterprises”. Furthermore, foreign ownership is often required because it is the foreign owners who have connection to foreign markets.

This is the end of my story because I intend to create an export enterprise that I can own 100%. I will continue so that you are fully informed.

The challenge is the protection of domestic market enterprises. Here the law tries to balance protection of Filipino business owners with the economic value of foreign investment. There is no point in trading Filipino business owners with foreign business owners without an increase in the economy. Here is where paid-up capital and the foreign investment negative list comes into play.

For example the negative list states:

No foreign equity in retail trade enterprises with paid-up capital of less than US$ 2,500,000.

This protects the local Filipino small shopkeeper from foreign competition. On the other hand 100% foreign ownership is allowed if the investment is more than US$ 2,500,000. For example, a foreigner can start a retail business located in Dumaguete that competes with the local hypermart if the foreigner invests more than US$ 2,500,000. Here the government considers the investment of US$2,500,000 valuable enough to offset the detriment of foreign competition in the domestic economy.

Filipinos are not stupid. Please make an effort to keep up.

 

No it is not my intent to go to the bar and literally p*ss away my savings. If this is what you mean.

 

Thank you for the useful advice.

 

First off, settle down. We aren't experts in starting businesses in the Philippines. Expect replies which are off. Also consider that Dumaguete is a seriously challenging region for making money starting a business.

My advice is that if you are asking for information from anyone other than your lawyer then you aren't asking the right person. This is an investment which will pay off in money and time. If you are serious about this business , then you will seek advice from a legal professional.

 

You seem well-educated and informed. As @TheDude says, I cannot understand why you would come here to ask a group of mostly retired people about this when your skill set only requires professional help in specific areas. Also, as you will be aware, when seeking professional help you may also acquire 'contacts' and 'influence' which can be as important.