Guidance

Overseas business risk: Philippines

Updated 23 February 2021

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This publication is available at https://www.gov.uk/government/publications/overseas-business-risk-philippines/overseas-business-risk-philippines

Information on key security and political risks which UK businesses may face when operating in Philippines.

DBT’s Exporting to Philippines Guide provides useful information on developing your overseas trade in the Philippines.

1. Political

President Rodrigo Duterte assumed office in June 2016. He first gained popularity as a tough-talking Mayor from Davao City in Mindanao.

President Duterte’s leadership style has caught international attention. The violent crackdown against illegal drugs, including the high associated death toll, has been condemned by many, including local and international human rights groups. Despite this, the President’s domestic popularity has remained high since he assumed presidential office.

The Duterte administration has declared an ‘independent foreign policy’ for the country. The President has been outspoken, often in blunt terms, against perceived foreign interference in domestic affairs.

Terrorist activity continues to pose a threat across the Philippines. There is a high threat of kidnap and foreign nationals have been targeted by both criminal and terrorist groups.

2. Economic

The Philippine economy is a top regional performer but took a hard hit on growth in 2020 due to the pandemic—contracting by -9.5%. However, institutions like the Asian Development Bank and the International Monetary Fund retain an optimistic view, forecasting up to a 6.5% economic rebound in 2021 and 6% in 2022.

The country’s increasing population of over 108 million people consists of an emerging middle class and a labour force with a sizeable youth demographic. A largely English-speaking population further eases international business communication in the country. The Duterte administration’s 10-point socioeconomic agenda, inter alia, prioritises infrastructure development, aiding the ease of doing business and regional development.

The UK continues to be one of the Philippines’ biggest European investors, particularly in energy and pharmaceuticals. Many opportunities exist for British companies in this growing market, including in infrastructure, technology, healthcare, education, defence and retail.

Areas of economic risks are linked to the political and security conditions in the country. Restrictive economic provisions on foreign ownership, corruption and high cost of utilities continue to keep foreign investments significantly lower than regional peers. Country competitiveness is improving but still hit by a high regulatory burden and red tape.

Read the World Bank’s Doing Business in the Philippines for an in-depth look at investment conditions: Doing Business 2020 - Philippines (PDF, 1,811KB).

3. Business and human rights

The Philippines has ratified and incorporated into domestic law most UN human rights conventions and treaties. Some associated implementation issues have been widely recognised. Labour rights are also laid out in Philippine legislation, but there are particular concerns about the freedom to exercise these rights especially in Special Economic Zones.

In 2020, the International Criminal Court (ICC), found “reasonable basis” to believe that crimes against humanity were committed in the Philippine government’s war on drugs and in 2019 the UN Human Rights Council adopted a resolution expressing concern about the human rights situation in the Philippines. In 2019, the Philippines left the ICC in response to its investigation into the war on drugs. Human rights groups have expressed concerns in the Philippines about: the number of killings allegedly committed by security forces and vigilantes in relation to the campaign against illegal drugs; calls to bring back the death penalty; an overburdened criminal justice system; overcrowded prisons; and red-tagging (labelling individuals as communist terrorists) and threats of violence against journalists, human rights defenders and land rights defenders. Furthermore, human rights abuses have also been reported in the extractive industries, power generation, agribusiness, real estate and tourism.

One of the main concerns among investors and business groups is peace and order, particularly in the Mindanao region. The Bangsamoro Autonomous Region of Muslim Mindanao (BARMM) was established following the peace agreement between the Philippine Government and the Moro Islamic Liberation Front (MILF) and provides some hope for peace in the region that could unlock the potential for longer term economic opportunities in Mindanao.

4. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or as Scottish partnership to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case, it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

The Duterte administration has created the 8888 Citizens’ Complaint Hotline which serves as a platform for citizens to report complaints and grievances against government officials and agencies. The Philippines ranked 113thst (out of 180 countries) in Transparency International’s corruption perception index (CPI) 2019.

The Department for Business and Trade (DBT) can further provide advice and assistance to companies concerned about corruption.

Read the information provided on the Bribery and corruption page.

5. Terrorism threat

Read the latest Travel Advice for the Philippines from the Foreign, Commonwealth & Development Office.

6. Protective security advice

The Philippines has high incidence of violent crime, including gun crime. While British Nationals have been victims, there is no evidence that they are specifically targeted. Gun ownership, legal and illegal, is extremely widespread but foreign nationals are not permitted to carry firearms. Street ‘crime’ and robberies, such as bag snatching or pick pocketing, are prevalent, even in well-lit and busy city areas. Visitors should also be wary of drugged drinks. Public transport is also subject to distraction theft and armed robberies from time to time.

Although mostly assumed to be wealthy, foreigners are not normally singled out as targets. The majority of crimes against foreigners involve petty thefts and robberies. British visitors to the Philippines should not feel particularly exposed, provided certain common sense precautions are taken, particularly when travelling with large amounts of currency, jewellery or other high value items such as PCs, laptops, mobile phones and other electronics, etc. Visitors should also be aware that strict limits on bringing in or taking out currencies are in place.

Read the information provided on our Protective security advice page.

7. Intellectual property

The Philippines is a member of the World Intellectual Property Organisation (WIPO) and a signatory to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) signed under the auspices of the World Trade Organisation (WTO). The country is also a signatory to a number of international intellectual property (IP) treaties administered by the WIPO including:

See a full list of WIPO references to the Philippines.

When exporting to the Philippines, it is important to register your IP rights in the Philippines immediately in order to be able to defend and enforce them. Since IP rights are territorial in nature, registrations in the UK or another country’s jurisdiction are not automatically enforceable in others.

In October 2011 the Supreme Court cleared guidelines for special commercial courts to hear both civil and criminal cases involving violation of rights under the IP Code, with powers of search and seizure. Since then, the Philippines has streamlined procedures and enhanced inter-agency cooperation to develop and strengthen IP protection particularly relating to the current technological environment and to enhance enforcement capabilities. In 2014, the Philippines had been removed from the United States IP watch list, signifying improved efforts on IP protection.

However, concerns remain about the level of consistent, effective and sustained enforcement. Counterfeiting is large-scale and organised. Nothing is immune from abuse in either counterfeiting or pirating: computer games, business software, DVDs, clothing, high value consumer goods, pharmaceuticals, industrial products, among others, are all readily available in both legitimate and illegitimate outlets.

7.1 IP top tips for businesses

  • the Philippines recognises Geographical Indications (GIs). However businesses should be aware that bad faith registration is common among GI trade mark registrations
  • registration of copyright is voluntary in order to establish the right of the owner for purposes of seeking remedies against the copyright infringers
  • patent infringement cases are not common in the Philippines and as a result in cases of infringement, judges may not be familiar with patent matters
  • the IP office review new trade mark applications against prior marks but will not always take notice of famous marks. Applicants do deliberately file bad faith registrations in order for them to be approached by the real owners to either abandon their application or buy their rights in the Philippines. Do your due diligence research on your trade marks before registration
  • criminal cases for violation of laws on trade secrets are rarely enforced in the Philippines. You should specify contractual obligations to all parties involved in your business and consider civil action for breach of contract and damages
  • the Bureau of Customs in the Philippines has the authority to seize goods and there is a registration system for IPRs. However there is currently a lack of systemised enforcement programmes meaning seizures can be inefficient
  • the Philippines is part of the ASEAN Patent Examination Co-operation (ASPEC), a regional patent work-sharing programme among 9 participating ASEAN Member States (AMS). The purpose of this programme is to share search and examination results between the participating offices to allow applicants in participating countries to obtain corresponding patents faster and more efficiently. ASPEC is free of charge and operates in English

Businesses are generally encouraged to learn more about IP issues relevant to their specific industry sector and to consider defensive measures early in their plans to enter the Philippines. The UK Intellectual Property Office has IP attachés based in Singapore with specific focus on providing support and advice to UK companies in the Philippines.

8. Organised crime

Organised criminal activity is linked to the trade in illegal narcotics, trafficking in persons, trafficking in weapons, extortion, kidnapping, and murder-for-hire. There is high incidence of violent crime, although British nationals are not normally targeted. Extortion activities against business are widely reported. A campaign against illegal drugs is being pursued by the Philippine authorities.

9. Contact

For information regarding conducting business in Philippines, contact the DBT team in the country.

DBT’s exporting to Philippines guide provides useful information on developing your overseas trade in the Philippines.

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