Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
The top five challenges that U.S. companies experience in the Philippines are:
- Graft and Corruption: Corruption, a constraint to trade and investment, is a pervasive and long-standing challenge in the Philippines. Although the Philippine Government has made major strides in fighting graft and corruption, these were not enough as shown in the Philippines’ declining ranking in Transparency International’s Corruption Perceptions Index. From 95 in 2015, 101 in 2016, 111 in 2017, 99 in 2018, 113 in 2019, the Philippines’ ranking was down to 115 out of 180 countries in 2020, and in 2021, it ranked 117.
- Regulatory System: Product registration, product standards, and environmental and labeling requirements place restrictions on certain products. In addition, some products require special licenses and permits prior to shipment. See the “Customs, Regulations and Standards” section for additional information.
- Infrastructure: The Philippines lags behind many of its neighbors in infrastructure development. Traffic congestion in Metro Manila continues to be a major problem. Prior to the pandemic, overcapacity in international airports across the country presented a significant impediment to development and tourism. Port congestion is regularly raised as a constraint to business. In addition, the country ranks as one of the lowest in the region for internet penetration, connectivity, and speed, but costs are comparable to the American market. Cyber security remains a concern.
- Philippine Government Procurement: There are procurement opportunities in the Philippine Government, but a local partner is generally required. The law on government procurement (Republic Act No. 9184) calls for the lowest calculated and responsive bid and, has cumbersome bureaucratic procedures and significant paperwork requirements. See the “Selling to the Public Sector” section for more information.
- Highly Price-Sensitive Market: U.S. products are generally known for high quality but are also more expensive. U.S. exporters should not expect to apply their U.S. pricing strategy in this market. Distributors and customers request payment terms.