Best Posts in Thread: How to start business in Dumaguete?

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.

 

You're being sarcastic I'm sure.
But they actually are some of the smarter people I know. Much smarter than many Westerners. In fact, here in the States, Filipinos are all wealthy people with really good jobs.
The Filipinos that are in PI are not stupid people at all. They are ignorant, but that doesn't mean they are stupid. There is a difference.

 

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.

 

Yes. my point was you need to have well-trained staff to run a good business - this takes time and so you then cannot afford to lose them. If I were to set up a serious business I would be looking around for similar businesses and 'head-hunt' the best from them if they are not being treated well (pay, perks, time off, respect). I would be looking to give the very best some share of the business over time, to give them an incentive to stay and perform well. In my previous business my best staff wanted to buy it when I retired but had no assets - I wrote a Contract for them to give me a share of profits (I wrote it so the costs were defined or else you find the expenses includes new cars, family on payroll at excessive wages etc) and decreased my profit share annually over a period of ten years. Then after 10 years I felt they were doing all the work and I had been paid enough, so I ripped up the Contract and the business was theirs.

 

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.

 

When I worked here for an US corporation I was required to have a work permit visa, even though I was married.

 

Thank you for the constructive advice.

After doing some research I have learned that the terminology can be confusing.

“Temporary visitor’s visa” is the official name of what is casually referred to as a tourist visa. Although the temporary visitor’s visa does not allow the visitor to work, it does allow the visitor to attend business meetings. This is the visa that business people use to come to the Philippines temporarily. It is also used by tourists.

No matter the name, a visa does not entitle a person to work in the Philippines. Visas are issued by the Bureau of Immigration (“BI”) and only allow a person to stay in the Philippines.

Working in the Philippines is regulated by the Department of Labor and Employment (“DOLE”). They issue an Alien Employment Permit (“AEP”) to foreigners.

So a “Pre-arranged Employment Visa (9G)” issued by the BI does not allow a foreigner to work in the Philippines. It only allows them to stay in the Philippines. Pre-arranged employment is the reason they are issued the visa by the BI to stay in the Philippines. To work in the Philippines a visa holder must get an AEP.

Also a foreigner with a Special Resident Retiree's Visa (“SRRV”) can work if they get an AEP.

A foreigner who marries a Philippine citizen can get a Non-Quota Immigrant Visa and then get an AEP with minimal requirements.

Fundamentally the goal is to protect Filipinos in the domestic market from having to compete with foreigners.

From DOLE

Foreign nationals excluded from obtaining an AEP are those providing/supplying services in the country but their employers are located abroad or those without employer - employee relationship in the Philippines and therefore not covered by Article 40 of the Labor Code.

 

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

 

And if you do decide to start a business, keep in mind that it needs to be promoted and choose a place where people will go at least. Since I recently opened my own business, I know what kind of hemorrhoids and how much effort you need to put in to start earning and get at least a minor plus. And only thanks to my friend, who helped me and advised me to read all the information on the brain dump website, I could adequately organize my business from scratch. And now this business brings me good money, although I initially thought I would go bankrupt.

 

The Philippine Corporations Code was revised last February 20, 2019. The Philippines was dropping on the ease of doing business world ranking so they updated their corporate code to be more like most other countries.

Information on the Internet can be confusing because most of the references are to the old law.

High Points:
1) One person corporation is allowed. Used to be five minimum.
2) No minimum stock requirement.

Link to "FAST FACTS: How the new Corporation Code makes business easier"
https://www.rappler.com/business/22...ut-new-corporation-code-makes-business-easier

Here is the link to the text of the law.
https://www.officialgazette.gov.ph/downloads/2019/02feb/20190220-RA-11232-RRD.pdf