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Short Guide to Foreigners about Investing in the Philippines

February 28, 2014 | Valerie Wong

Right from the get go, let's address the red flags many foreign investors come across with investing in the Philippines. First, foreigners can't own land in the Philippines (and it's not the only ASEAN country to do this). Second, courts tend to favor locals instead of foreign corporations when it comes to complaint handling. Third, the country's charter restrictions had historically in the past (as well as in the present and probably the future) has led it to miss out on much-needed major investment opportunities, but the 1987 Philippine constitution that instituted all these laws isn't about to change anytime soon as far as the general populace is concerned.

Philippine Stocks Are the Likeliest Place Foreigners Can Invest in the Philippines

Unbeknownst to even Filipinos themselves, it's possible to make major investments by both locals and foreigners through the stock exchange, hence the existence of the Philippine Stock Exchange (PSE). For investors who want to get immediate returns through the Philippines without having to go through a gamut (arguably, a gauntlet) of paperwork when it comes to setting up shop and creating their own company or company branch in the country, stocks are their best bet. It's been available for investment since 1927, in fact. As far as foreign investors are concerned, it's their best bet when it comes to maximizing their money on Philippine soil.

The Binondo Business District had the Manila Stock Exchange set up shop in 1927, in fact. Meanwhile, in the same year, the Makati Financial District had the Makati Stock Exchange open itself up as well. At any rate, investors should definitely invest in Philippines stock because it's the path of least resistance in terms of maximizing the earning potential and returns of their capital. A foreign investor need not worry about partnering with a liaison in order to set up his business (on rental) of the local's land. The stock exchange in the Philippines also works about the same way as the global stock exchange, so investors don't necessarily require broker help if they have prior experience in the arena.

For Investors Who Want to Invest in Their Own Startups Instead

Stock exchange investments are preferable for foreign investors because the investments offered provide returns that are more profitable than bank products. In one day, you could acquire 50% profit (granted, you can also lose as much or more in light of the risks of such deals). If you're willing to go through the trouble of setting up shop in the Philippines through startups instead of stock investments, then a liaison, in-depth research into Philippine culture, and understanding the Filipino market is definitely called for, since there are restrictions to keep in mind when it comes to foreign investment.

The second-most viable investment opportunity for you aside from the PSE is online shopping and information technology firms. They're low-cost, easy to setup, and you don't actually have to establish a Philippine office aside from the usual outsourcing solution if you have a preexisting company you wish to expand and take root on the Philippines. Other popular investment deals for foreigner investors include hotel and restaurant management, electronics distribution, personalized T-shirt printing, CAD plotting, fruits and vegetable grocery, dry goods, imported goods distribution (be aware of the taxes and fees for these), meat shop, tarpaulin printing, and electronics distribution.

Do you wish to begin a Philippine-based business? Then let Servcorp help your endeavors with its virtual office and corporate registration offerings. The company is one of the most dependable organizations out there when going about Philippine startups.