Alternative Handelssystem In Den Philippinen

U. S. Department of State Die Philippinen sind ein zunehmend attraktives Ziel für ausländische Direktinvestitionen (FDI). Die bürgerlich wachsende Mittelschicht verbringt schnell ihr verfügbares Einkommen in einem stabilen politischen Umfeld, was dazu beiträgt, dass das Bruttoinlandsprodukt in den letzten fünf Jahren ein durchschnittliches Wachstum von 6,3 erreicht hat. FDI erreichte ein Rekordhoch von USD 6,2 Milliarden im Jahr 2014 und es wird voraussichtlich weiter in naher Zukunft wachsen. Die Vereinigten Staaten trugen die meisten FDI jedes Landes im Jahr 2014 (USD 1,2 Mrd. USD). Dank einer großen, gebildeten, englischsprachigen Belegschaft haben die Business Process Outsourcing (BPO) und die Tourismusbranche in den letzten Jahren ein enormes Wachstum erlebt, ohne Anzeichen einer Verlangsamung. Unter der Leitung von Präsident Benigno Aquino III haben die Philippinen das Investitionsklima verbessert und Fortschritte bei guter Regierungsführung, Transparenz und Rechenschaftspflicht erzielt. Die drei großen internationalen Ratingagenturen hoben die Philippinen erstmals ab 2013 auf ein Investment-Grade-Rating an. Beschränkungen für ausländisches Eigentum, schlechte Infrastrukturen, einschließlich sehr hoher Energiekosten und Korruption sind nach wie vor große Anliegen für Investoren. Verkehr und Hafenüberlastung sind ein regelmäßiger Teil des Geschäfts. Manilarsquos Hauptflughafen arbeitet mit voller Kapazität. Mit seinem hohen Wirtschaftswachstum wird die Belastung nur noch steigen. Stärkung der Rechtsstaatlichkeit ist wichtig, weil die countryrsquos komplexen und langsamen Rechtssystem hemmt die rechtzeitige und faire Auflösung von kommerziellen Streitigkeiten. Die Philippinen hinter ihren asiatischen Nachbarn bei der Anziehung von ausländischen Direktinvestitionen, weil der Grenzen für ausländische Investitionen in vielen Sektoren der Wirtschaft. Die Philippinen haben vor kurzem ihre Bankgesetze liberalisiert, um Investitionen zu stimulieren. Invest Philippines (investphilippines. gov. ph) ist das GPHrsquos Hauptportal für Investoren. Investoren berichten, dass die philippinische Bürokratie schwierig und undurchsichtig sein kann, Handelsregistrierung und Verfahren sind langsam und belastend. Viele Investoren berichten über ein vorhersehbareres Geschäftsumfeld in den speziellen Wirtschaftszonen, insbesondere jenen, die von der philippinischen Wirtschaftszonenbehörde (PEZA) betrieben werden, die für ihre regulatorische Transparenz, keine Bürokratiepolitik und ldquoone-stop shoprdquo-Dienstleistungen für Investoren bekannt ist. Insgesamt hat sich das Investitionsklima der Philippinen in den letzten Jahren verbessert. Wenn das Land seine Reformdynamik beibehalten kann, vor allem nach dem Amtsantritt eines neuen Präsidenten im Jahr 2016 und der weiteren Verbesserung seiner Infrastruktur, werden sich die Aussichten für Investitionen in die Philippinen weiter erhellen. 1. Offenheit und Restriktionen auf ausländische Investment-Haltung gegenüber ausländischen Direktinvestitionen Die Philippinen suchen aktiv nach ausländischen Investitionen, um die wirtschaftliche Entwicklung zu fördern. Die philippinische Investitionslandschaft hat bemerkenswerte Vorteile, wie ihre Freihandelszonen, einschließlich Zonen, die von der philippinischen Wirtschaftszonenbehörde (PEZA) (peza. gov. ph) verwaltet werden, und ihre großen, gebildeten, englischsprachigen philippinischen Arbeitskräfte. Das philippinische Recht behandelt ausländische Investoren dieselben wie ihre inländischen Pendants, außer in den Sektoren, die für philippinische Staatsangehörige von der philippinischen Verfassung und dem ausländischen Investitionsgesetz (nachstehend detailliert) vorbehalten sind. Allerdings behindern unzureichende öffentliche Investitionen in die physische und soziale Infrastruktur und mangelnde Transparenz ausländische Investitionen. Die philippinischen Regulierungssysteme bleiben in vielen Bereichen der Wirtschaft zweideutig und Korruption ist ein erhebliches Problem. Eine komplexe und langsame Justiz ist auch ein großes Investitionshemmnis. Andere Anlagepolitikberichte Die Welthandelsorganisation führte im März 2012 eine Handelspolitische Überprüfung der Philippinen durch. Sie ist erhältlich unter: wto. orgenglishtratopetpretp361e. htm. GesetzeRegulierungen ausländischer Direktinvestitionen Der Board of Investments (BOI) (boi. gov. ph) reguliert und fördert Investitionen in die Philippinen. Der vom BOI verwaltete Investitionsprioritätenplan (IPP) identifiziert bevorzugte Wirtschaftsaktivitäten, die vom Präsidenten genehmigt wurden. Regierungsbehörden werden aufgefordert, Politiken zu verabschieden und Programme zu implementieren, die mit dem IPP übereinstimmen. Das 1991 verabschiedete Auslandsinvestitionsgesetz (FIA) von 1991 verlangt die Veröffentlichung der Foreign Investment Negative List (FINL), in der Sektoren ausgewiesen werden, in denen ausländische Investitionen beschränkt sind. Das FINL besteht aus zwei Teilen. Teil A Details Sektoren, in denen ausländische Beteiligung durch die philippinische Verfassung oder Gesetze beschränkt ist. In Teil B sind Bereiche aufgelistet, in denen das ausländische Eigentum aus Gründen der nationalen Sicherheit, der Verteidigung, der öffentlichen Gesundheit, der Moral und des Schutzes kleiner und mittlerer Unternehmen (KMU) begrenzt ist (in der Regel auf 40). Der aktuelle FINL wurde im Oktober 2012 veröffentlicht und eine Revision wird in diesem Jahr erwartet. Das Sonderwirtschaftszonengesetz von 1995 erlaubt es PEZA, Investitionen in exportorientierte Produktions - und Dienstleistungseinrichtungen innerhalb der Sonderwirtschaftszone, einschließlich der Gewährung von steuerlichen und nicht-fiskalischen Anreizen, zu regulieren und zu fördern. Der Investitionsprioritätenplan (IPP) zählt vorrangige Investitionsbereiche auf, die Anreize haben. Das IPP 2014-2016 strebt Investitionen in Infrastruktur, Landwirtschaft, Bildung und Gesundheit an. Die IPP-Liste umfasst: Herstellung (z. B. Kraftfahrzeuge, Schiffbau, Luft - und Raumfahrt usw.), Agrar - und Fischereidienstleistungen (z. B. Kreativwirtschaft, integrierter Schaltungsentwurf, Ladestationen für E-Fahrzeuge usw.) öffentliche Infrastruktur und Logistik (Flughäfen, Seehäfen) , Verkehr, etc.) Public Private Partnership (PPP) Projekte Energie (Entwicklung von Energiequellen, Stromerzeugungsanlagen und Nebenleistungen) Low-Cost-Gehäuse und Krankenhäusern. Der BOI überprüft Projekte und ermittelt dann Anreize. Das PPP-Programm zielt darauf ab, die Beteiligung des privaten Sektors an staatlichen Entwicklungsprojekten, insbesondere in der Infrastruktur, zu fördern. Das Build-Operate-Transfer (BOT) Gesetz sieht den rechtlichen Rahmen für das Programm vor, und ein Public Private Partnership (PPP) Center (ppp. gov. ph) arbeitet an der Förderung der Transparenz und der Projektentwicklung und - abnahme. Die PPP-Programm wurde nur langsam, um Verträge zu genehmigen, obwohl das Tempo für Genehmigung und Vergabe hat sich von spät. Ab Mai 2015 waren nur 9 von 61 PPP-Projektverträgen vergeben worden, wobei 16 Verträge für ein Angebot abgegeben wurden. Im Februar 2015 unterzeichneten das US-amerikanische Handelsministerium und die philippinische National Economic Development Authority (NEDA) (neda. gov. ph) ein Memorandum of Cooperation zur Infrastruktur-Kooperation, in dem potenzielle US-Investoren Informationen und Informationen über bevorstehende PPP-Infrastrukturprojekte erhalten werden. Grenzen der Auslandskontrolle Ausländische Staatsangehörige sind verboten, Grundstücke im Rahmen der Verfassung von 1987 zu besitzen, obwohl das Investorsrsquo Lease Act von 1993 es den ausländischen Investoren erlaubt, eine aneinandergrenzende Parzelle von bis zu 1.000 Hektar für 50 Jahre zu leasen, die einmal für weitere 25 Jahre verlängert werden kann. Das Dual-Citizenship Act von 2003 ermöglicht es Dual-Bürgern, volle Rechte zu besitzen, Land zu besitzen. Dennoch sind Eigentumsurkunden nach wie vor schwer zu ermitteln, und das Gerichtssystem ist nur langsam, um Landstreitigkeiten zu lösen. Die FINL verbietet ausländisches Eigentum in den folgenden Bereichen: Massenmedien (außer Aufzeichnungen) Kleinbetriebe private Sicherheit Meeresressourcen, einschließlich der geringen Nutzung der natürlichen Ressourcen in Flüssen, Seen und Lagunen und die Herstellung von Feuerwerkskörpern und pyrotechnischen Geräten. Nur philippinische Staatsbürger können die folgenden lizenzierten Berufe ausüben: Ingenieurwesen, Medizin, Buchhaltung, Architektur, Innenarchitektur, Chemie, Umweltplanung, Soziale Arbeit, Lehre, Recht, Immobiliendienstleistungen, Atemtherapie und Psychologie. Zu den anderen Bereichen, in denen unterschiedliche ausländische Eigentumsobergrenzen bestehen, gehören: Private Radiokommunikationsnetze (20) Private Recruiting von Mitarbeitern (25) Verträge für den Bau und die Reparatur von lokal finanzierten öffentlichen Arbeiten (25) Werbeagenturen (30) Erschließung, Entwicklung und Nutzung von natürlichen Ressourcen (40, mit Ausnahmen) Bildungseinrichtungen (40) Betrieb und Verwaltung von öffentlichen Versorgungsbetrieben (40) Betrieb von kommerziellen Hochseefischereifahrzeugen (40) Philippinische öffentliche Auftragsvergabe (40 Lieferungen von Waren und Waren) Bau von öffentlich geförderten öffentlichen Gebäuden (40) Besitz von privaten Grundstücken (40) Reis - und Getreideverarbeitung (40, mit einigen Ausnahmen) Finanzierung von Unternehmen und Investitionshäusern (60) aufweist. Aus Gründen der nationalen Sicherheit, der Verteidigung und der öffentlichen Gesundheit beschränkt die Philippinen das ausländische Eigentum auf 40 in den folgenden Industrien: Herstellung von Sprengstoffen, Schusswaffen, militärischer Ausrüstung und Massagekliniken. Einzelhandelsunternehmen mit einem Kapital von weniger als USD 2,5 Millionen oder weniger als USD 250,000 für Einzelhändler von Luxusgütern sind für Filipinos reserviert. Ausländische Investoren sind aus dem Besitz von Aktien an Kreditinstituten, Finanzierungen oder Investmentgesellschaften verboten, es sei denn, dass das Investorrsquos Heimatland die gleichen wechselseitigen Rechte für philippinische Investoren bietet. Ausländisches Eigentum ist bei 60 für Unternehmen in der Finanzierung und Wertpapiere Underwriting engagiert, die durch die Securities and Exchange Commission (SEK) (sec. gov. ph) geregelt sind. Ein am 15. Juli 2014 unterzeichnetes Gesetz hat den Einzug ausländischer Banken auf den philippinischen Markt liberalisiert. Wenn sie bestimmte Anforderungen erfüllen können, sind ausländische Banken berechtigt, Zweigniederlassungen zu gründen oder bis zu 100 der stimmberechtigten Aktien lokal einbezogener Tochtergesellschaften zu besitzen. Banken können jedoch nicht mehr als sechs Zweigniederlassungen eröffnen. Das neue Gesetz legt auch fest, dass mindestens 60 der Bilanzsumme des philippinischen Bankensystems jederzeit von mehreren philippinischen Banken kontrolliert werden sollten. Das Gesetz über die Kreditvergabegesetzgebung von 2007 erfordert mehrheitliche philippinische Eigentumsrechte für Kreditunternehmen, die nicht eindeutig unter die bestehenden Gesetze fallen. Das Privatisierungsprogramm GPHrsquos wird vom Privatisierungsamt (PMO) (pmo. gov. ph) unter der Abteilung Finanzen (DOF) (dof. gov. ph) verwaltet. Abgesehen von Beschränkungen im FINL gibt es keine Regelungen, die gegen ausländische Käufer diskriminieren und der Bieterprozess scheint transparent zu sein. Unternehmen oder Personengesellschaften, die auf den Philippinen investieren möchten, müssen sich bei der Securities and Exchange Commission (SEC) registrieren lassen. Einzelunternehmen müssen sich mit dem Bureau of Trade Regulation und Consumer Protection (BTRCP) im Ministerium für Handel und Industrie (DTI) (dti. gov. ph) anmelden. Ein ausländisches Unternehmen, das im Rahmen der OIC Anreize sucht, muss sich bei der BOI anmelden, während exportorientierte Produktions - und Dienstleistungsunternehmen in den Wirtschaftszonen sich bei PEZA oder einem anderen zugelassenen Wirtschaftszonenadministrator registrieren müssen (siehe Abschnitt 17 ndash Foreign Trade Zones). Darüber hinaus müssen sich ausländische Investoren bei der philippinischen Zentralbank (bsp. gov. ph) registrieren, wenn die Devisen für die Rückführung des Kapitals und die Überweisung der Einnahmen von autorisierten Banken oder ihren verbundenen Devisengesellschaften stammen. Die Philippinen haben kein allgemeines Wettbewerbsrecht, aber es gibt mehrere Gesetze, die sich mit Wettbewerb befassen. Im Kongress ist ein faires Wettbewerbsrecht anhängig, das voraussichtlich bis zum 12. Juni verabschiedet wird. Das Justizministerium (DOJ) (doj. gov. ph) ist für die Durchsetzung und die Ermittlung von Fällen von Wettbewerbsgesetzen verantwortlich. Das philippinische Investitionsklima verbessert sich durch die Reformen der derzeitigen Regierung weiter. Im Jahr 2014 erreichten die ausländischen Direktinvestitionen auf den Philippinen USD 6,2 Milliarden, ein Anstieg von 65,9 Prozent von 3,7 Milliarden US-Dollar im Jahr 2013 und die bisher höchsten. Der Großteil der Investitionszuflüsse erfolgt in den Bereichen Finanzen und Versicherungen, Fertigung, Immobilien, großtechnische Bergbau und Gewinnung von Steinen und Erden sowie Groß - und Einzelhandel. In 2013 und 2014, Fitch, Standard amp Poorrsquos und Moodyrsquos verbessert die philippinesrsquo souveräne Kreditratings zu Investment Grade, unter Berufung auf robuste wirtschaftliche Leistung, weiterhin steuerliche und Schuldenkonsolidierung und verbesserte Governance. Die Philippinen verzeichneten im World Bankrsquos Do not Business Report im Jahr 2014 13 Spots und erreichten damit fast die Top 50. Verfassungsrechtliche und rechtliche Einschränkungen, unzureichende Infrastrukturen, aufsichtsrechtliche Inkonsistenzen, Korruption und ein langsamer und komplexer Rechtsweg sind nach wie vor nach wie vor erheblich. Die Philippinen haben eine schlechte Bilanz der Anziehung von ausländischen Investitionen im Vergleich zu seinen ASEAN-Kollegen. Nach Angaben der UN-Konferenz für Handel und Entwicklung (UNCTAD) nahmen die Philippinen im Jahr 2013 den sechsten Platz unter den ASEANrsquos zehn Ländern in Bezug auf FDI-Flüsse ein. Millennium Challenge Corporation Country Scorecard Die Millennium Challenge Corporation, eine US-Regierung, Ländern, die eine Reformverpflichtung bewiesen haben, produziert Scorecards für Länder mit einem Bruttonationaleinkommen (BNE) pro Kopf von USD 4,125 oder weniger. Eine Liste der Länder mit MCC Scorecards und Links zu diesen Scorecards finden Sie hier: mcc. govpagesselectionscorecards. Details zu den einzelnen MCCrsquos-Indikatoren sowie eine Anleitung zum Lesen der Scorecards finden Sie hier: mcc. govpagesdocsdocreport-guide-to-the-indicators-and-the-selection-process-fy-2015. 2. Umwandlungs - und Transferpolitik Seit 2007 hat die Zentralbank die Bemühungen zur Entspannung und Straffung des philippinischen Devisenrechts beschleunigt. Es bestehen keine Beschränkungen für die vollständige und sofortige Übertragung von Mitteln, die mit ausländischen Investitionen, Fremdwährungsdienstleistungen oder Zahlung von Lizenzgebühren, Leasingzahlungen und ähnlichen Gebühren verbunden sind. Die Zentralbank verfolgt eine marktbestimmte Wechselkurspolitik, mit Interventionsmöglichkeiten, um überschüssige Devisenvolatilität zu glätten. Die Zentralbankvorschriften sehen spezifische Anforderungen für Devisenkäufe von Banken und Devisenhändler, Geldwechsler und Geldüberweisungsstellen vor. Keine obligatorische Devisenrückkaufsverpflichtung wird gegenüber Ausfuhrern oder anderen Devisenverdienern, wie ausländischen Arbeitnehmern, auferlegt. Im Juni 2013 hat die Financial Action Task Force (FATF) die Philippinen aus ihren ldquowatch listrdquo der Länder mit strategischen Mängeln bei der Bekämpfung der Geldwäsche und der Finanzierung des Terrorismus entfernt. Die FATF fordert weiterhin Regulierung der countryrsquos wachsenden Casino-Industrie für Anti-Geldwäsche-Terrorismus Finanzierung Zwecke und überwacht den Fortschritt der anhängigen Gesetzgebung in den Philippinen. 3. Enteignung und Entschädigung Das philippinische Recht erlaubt die Enteignung von Privateigentum für die öffentliche Nutzung oder im Interesse der nationalen Wohlfahrt oder Verteidigung und bietet eine angemessene Marktwertentschädigung. Im Falle der Enteignung haben ausländische Investoren das Recht, die Entschädigung in der Währung zu erhalten, in der die Investition ursprünglich geleistet wurde, und sie zum entsprechenden Wechselkurs zu überweisen. Allerdings kann der Prozess der Vereinbarung eines gegenseitig annehmbaren Preises in den philippinischen Gerichten verlängert werden. Es gibt keine aktuellen Fälle von tatsächlicher Enteignung mit US-Unternehmen in den Philippinen. Rechtssystem, Fachgerichte, gerichtliche Unabhängigkeit, Urteile ausländischer Gerichte Das philippinische Justizwesen ist ein eigenständiger und unabhängiger Zweig der Regierung, der sich aus dem Obersten Gerichtshof (sc. judiciary. gov. ph) und den unteren Gerichten zusammensetzt. Der Oberste Gerichtshof ist das höchste Gericht und die einzige verfassungsgebende Körperschaft, wie in der philippinischen Verfassung festgelegt. Die unteren Gerichte bestehen aus a) Gerichtsbezirksgerichten mit beschränkten Gerichtsbarkeiten (zB Stadtgerichtshöfe, Metropolitan Trial Courts usw.) (b) Regionale Gerichtsbarkeit (RTC) (c) Bezirksgerichte Sharirsquoah (muslimische Gerichte) und d) Gericht (Berufungsgerichte). Zu den Spezialgerichten gehören der ldquoSandiganbayanrdquo (Anti-Graft-Gericht für Beamte) und Court of Tax Appeals. Mehrere RTCs wurden als Special Commercial Courts (SCC) bezeichnet, um IP-Fälle zu hören, wobei vier SCCs befugt sind, Recherchen und Beschlagnahmen über IP-Verstöße, die bundesweit durchsetzbar sind, zu erlassen. Nach dem philippinischen Recht muss eine gesonderte Klage erhoben werden, wenn ausländische Urteile anerkannt oder vollstreckt werden. Das philippinische Recht anerkennt oder erzwingt auch keine ausländischen Urteile, die gegen die geltenden Gesetze, insbesondere gegen die öffentliche Ordnung, die öffentliche Ordnung und den guten Zoll, verstoßen. Das philippinische Insolvenz - und Insolvenzgesetz von 2010 bietet einen vorhersehbaren Rahmen für die Rehabilitation und Liquidation von notleidenden Unternehmen. Die Rehabilitation kann von Schuldnern oder Gläubigern unter gerichtlich überwachten, vorverhandelten oder außergerichtlichen Verfahren eingeleitet werden. Das Gesetz legt die Bedingungen für freiwillige (Schuldner-initiierte) und unfreiwillige (Gläubiger-initiierte) Liquidation. Darüber hinaus erkennt es grenzüberschreitende Insolvenzverfahren gemäß dem UNCTAD-Mustergesetz über die grenzüberschreitende Insolvenz an und ermöglicht es den Gerichten, Verfahren in einer ausländischen Gerichtsbarkeit anzuerkennen, an der ein ausländisches Unternehmen mit Vermögenswerten auf den Philippinen beteiligt ist. Die vom Obersten Gerichtshof benannten regionalen Gerichte sind für Insolvenz - und Konkursfälle zuständig. Nach Angaben der International Finance Corporation (IFC) rsquos 2015 Ease of Doing Geschäftsbericht, die Philippinen zählt 50. der 189 Volkswirtschaften bei der Lösung Insolvenz und Insolvenz Fälle doingbusiness. orgdataexploreeconomiesphilippinesresolving-insolvency. Ausländische Investoren beschreiben die Ineffizienz und Ungewissheit des Justizwesens als erhebliche Investitionszerstörung. Viele Investoren wollen nicht vor Gericht Gerichtsverfahren wegen langsamen und komplexen Prozess Prozesse und Korruption unter einigen Personal. Stakeholder berichten auch über eine unerfahrene Justiz, wenn sie mit komplexen Fragen wie Technologie-, Wissenschafts-, Handels - und geistigem Eigentum konfrontiert werden. Zur Abmilderung der verstopften Hafenanlagen wurden mehrere Gesetze über alternative Streitbeilegungsmechanismen (d. H. Schiedsverfahren, Schlichtung, Verhandlung und Schlichtung) genehmigt. Darüber hinaus müssen PPP-Verträge ADR-Bestimmungen enthalten, um Streitfälle, insbesondere für umfangreiche kapitalintensive Infrastruktur - und Entwicklungsverträge, kostengünstiger und zeitintensiver zu gestalten. ICSID-Übereinkommen und New Yorker Übereinkommen Die Philippinen sind Mitglied des Internationalen Zentrums für die Beilegung von Investitionsstreitigkeiten (ICSID) und verabschiedeten das Übereinkommen über die Anerkennung und Vollstreckung ausländischer Schiedssprüche oder das ldquoNew York Convention. rdquo Ausländische Schiedssprüche sind Vollstreckbar auf schriftlichen Antrag an das regionale Gerichtsverfahren. Die Petition kann jederzeit nach Erhalt der Auszeichnung eingereicht werden. Dauer der Streitbeilegung Investitionsstreitigkeiten können aufgrund der systemischen Probleme im philippinischen Justizsystem Jahre in Anspruch nehmen. Mangel an Ressourcen, Unterbesetzung und Korruption machen die bereits komplexen Gerichtsverfahren langwierig und teuer. 5. Leistungsanforderungen und Investitionsanreize Die Philippinen haben derzeit keine Maßnahmen, die angeblich gegen die Verpflichtungen von WTO-TRIMS verstoßen. Es gibt etwa 180 fiskalische Anreizgesetze in den Philippinen. Die IPP listet geförderte Anla - geflächen, die von BOI unterstützt werden. Vorhandene steuerliche Anreize schließen ein: Einkommensteuerfeuer-Steuergutschriften und Abzüge vom steuerpflichtigen Einkommen. Zu den nicht-fiskalischen Anreizen gehören: Beschäftigung von ausländischen Staatsangehörigen vereinfachte Zollverfahren Einfuhr von Konsignationsausrüstung und Betrieb eines gebundenen Produktionslagers. BOI-registrierte Unternehmen, die in weniger entwickelten Gebieten zu finden sind berechtigt, ldquopioneerrdquo Anreize und kann 100 der Kosten für notwendige Infrastruktur-Arbeit und Arbeitskosten von seinem steuerpflichtigen Einkommen abziehen. Der Pionierstatus kann Unternehmen gewährt werden, die neue Produkte herstellen oder neue Methoden anwenden, um Produkte herzustellen, die für das landwirtschaftliche Selbstversorgungsprogramm landrsquos oder für nicht konventionelle Treibstoffquellen von großer Bedeutung sind. Außerdem kann ein Unternehmen mit mehr als 40 ausländischen Aktien, das mindestens 70 seiner Produktion exportiert, Anreize erhalten, selbst wenn die Aktivität nicht im IPP aufgeführt ist. Exportorientierte Unternehmen mit mindestens 50 ihrer Einnahmen aus Exporten können sich für zusätzliche Anreize nach dem Export Development Act 1994 registrieren. Das philippinische Recht bietet auch Anreize für multinationale Unternehmen, regionale oder regionale Hauptquartiere auf den Philippinen zu gründen. Multinationale Unternehmen, die regionale Lager für die Lieferung von Ersatzteilen, gefertigten Komponenten oder Rohstoffen für ausländische Märkte errichten, genießen auch Anreize für Einfuhren, die wiederausgeführt werden, einschließlich der Befreiung von Zöllen, internen Steuern und lokalen Steuern. Forschung und Entwicklung Die Beteiligung von ausländischen Einrichtungen in Forschung und Entwicklung ist durch mehrere Gesetze und Verordnungen begrenzt, die sich aus der Begrenzung der Praxis von Berufen, einschließlich Ingenieurwesen und Lehre, auf philippinische Staatsbürger ergeben, sofern es nicht gesetzlich vorgeschrieben ist. Ein Beispiel ist das ldquoBalik Scientistrdquo Programm des Department of Science and Technology (DOST) (bsp. dost. gov. ph), in dem philippinisch geborene Wissenschaftler, die eine ausländische Staatsbürgerschaft erworben haben, ermutigt werden, auf die Philippinen zurückzukehren, um den wissenschaftlichen, agro zu beschleunigen - industrielle und wirtschaftliche Entwicklung des Landes. Die DOST sichert eine spezielle Genehmigung von der Professional Regulatory Commission (PRC) (prc. gov. ph), damit diese ldquoforeignrdquo Wissenschaftler ihren Beruf in den Philippinen zu üben. Im Allgemeinen sind nur philippinische Staatsbürger berechtigt, zugelassene Berufe ausüben zu lassen, aber Unternehmen, die bei BOI und PEZA registriert sind, können für fünf Jahre ab dem Datum der Eintragung ausländische Staatsangehörige in aufsichtsrechtlichen, technischen oder beratenden Positionen beschäftigen (gegebenenfalls auf Verlängerung verlängern). Top-Positionen und Wahlbeamte der mehrheitlich im Besitz von BOI registrierten Unternehmen (d. H. Präsident, Generaldirektor und Schatzmeister oder deren Äquivalente) sind von der fünfjährigen Begrenzung befreit. Ausländer, die vor Ort arbeiten wollen, müssen eine von der Abteilung für Arbeit und Beschäftigung (DOLE) (dole. gov. ph) abgeleitete Alien Employment Permit (AEP), die jedes Jahr erneuert werden kann, oder eine Co-Terminus mit der Dauer der Beschäftigung (die auf keinen Fall erfolgen soll) sichern Mehr als fünf Jahre). Die BOI und PEZA können helfen, ein spezielles Non-Immigrant Visa mit Mehrfacheingabe Berechtigungen zu erleichtern und Visa Facilitation Assistance für Ausländer, ihre Ehegatten und Angehörigen zu erweitern. Das Regierungsbeschaffungsreformgesetz (GPRA) von 2003 fordert vom öffentlichen Sektor, Waren, Lieferungen und Beratungsdienste von Unternehmen mindestens 60 Filipino-Unternehmen und Infrastrukturdienste von Unternehmen mit mindestens 75 Filipino-Interessen zu beschaffen. Im Rahmen des philippinischen Rechts gibt es für die Transparenz und Effizienz der Beschaffungsverfahren ein einziges elektronisches elektronisches Beschaffungssystem (das philippinische Elektronische Beschaffungssystem philgeps. gov. ph), in dem die USA und andere Länder weiterhin Bedenken hinsichtlich der Unregelmäßigkeiten und der uneinheitlichen Durchführung des öffentlichen Beschaffungswesens aufwerfen . Die Philippinen sind kein Unterzeichner des WTO-Übereinkommens über das öffentliche Beschaffungswesen. Die Philippinen haben kein Datenlokalisierungsgesetz und beschränken grenzüberschreitende Datenübertragungen nicht. Empfindliche personenbezogene Daten sind unter dem Datenschutzgesetz von 2012 geschützt, das Strafen für die unbefugte Verarbeitung und unangemessene Entsorgung von Daten bereitstellt, auch wenn sie außerhalb der Philippinen verarbeitet werden. 6. Recht auf Privateigentum und Errichtung Das philippinische Recht erkennt das Privatrecht an, Eigentum oder geschäftliche Interessen zu erwerben und zu veräußern, vorbehaltlich der in der Verfassung und anderen Gesetzen festgelegten ausländischen Staatsangehörigkeitskappen. 7. Schutz der Eigentumsrechte Die Landesregistrierungsbehörde (LRA) (lra. gov. ph) und das Register der Urkunden, die die Registrierung und Übertragung von Eigentumstiteln erleichtert, sind für die Landverwaltung zuständig. Die Philippinen anerkennen und schützen die Eigentumsrechte, aber die Gesetze sind schwach umgesetzt. Mehrere Agenturen sind an der Immobilienverwaltung beteiligt, was zu übergreifenden Verfahren für Landbewertungs - und Titelprozesse führt. Immobilienregistrierung ist langwierig und teuer. Das Rekordmanagement ist aufgrund fehlender Mittel und geschultem Personal schwach. Korruption ist auch weit verbreitet bei der Landverwaltung Personal und das Gerichtssystem ist langsam auf Landstreitigkeiten zu lösen. Die Philippinen Rang 108 von 189 Volkswirtschaften in Bezug auf die einfache Registrierung von Immobilien im 2015 Weltbank Doing Business Report. Intellectual Property Rights Die Philippinen bleiben von der US-amerikanischen Trade Representativersquos (USTR) Special 301 Watch List, und hat keine physischen Märkte im 2014 Notorious Markets Report aufgeführt, aufgrund der anhaltenden Bemühungen der philippinischen Regierung zur Verbesserung der IPR-Schutz und zivile und administrative Durchsetzung. Herausforderungen bleiben jedoch bestehen, denn die US-amerikanischen Rechteinhaber berichten über die Verfügbarkeit von gefälschten Gegenständen wie Arzneimitteln, Bekleidung und Software sowie gerichtliche Unerfahrenheit bei der Durchsetzung der Rechte des geistigen Eigentums. Dennoch gilt die Philippinen als ein Führer in der ASEAN für ihre IP Durchsetzung Bemühungen. Der Intellectual Property (IP) Code bietet den rechtlichen Rahmen für den Schutz geistigen Eigentums, insbesondere in den Schlüsselbereichen Patente, Marken und Urheberrecht. Das Amt für geistiges Eigentum (IPOPHL) (ipophil. gov. ph) ist die Implementierungsagentur des IP-Codes. Die Philippinen haben in der Regel starke Patent-und Markenrecht. IPOPHL will die Zusammenarbeit zwischen der Regierung und den Rechten verstärken, um die Durchsetzung zu stärken. Im Jahr 2014 berichtete der Nationale Ausschuss für Rechte des geistigen Eigentums (NCPIR) über 302 Millionen Dollar im Wert von beschlagnahmten Gütern, die bislang mit dem höchsten Stand waren. Darüber hinaus schuf der geänderte IP-Code eine IP-Durchsetzungsbehörde (IP Enforcement Office, IEO) unter IPOPHL, die IPR-bezogene Beschwerden überprüft und Besuche von Betrieben durchführt, von denen Berichten zufolge IPR-bezogene Verstöße betroffen sind. Die Stakeholder berichten, dass das IEO die Straffung des Prozesses der Einreichung von Beschwerden, die Koordinierung zwischen den Vollstreckungsorganisationen und die Verringerung der Möglichkeiten korrupter Beamter zur Bestechung geltend gemacht hat. Bei Durchsetzungsmaßnahmen werden jedoch häufig keine erfolgreichen Strafverfahren verfolgt. IP-Verletzung wird nicht als ein großes Verbrechen auf den Philippinen angesehen und hat eine geringere Priorität in Gerichtsverfahren. Viele Stakeholder entscheiden sich für außergerichtliche Vergleiche (wie ADRs), anstatt eine Klage einzureichen, die Jahre dauern kann, um in philippinischen Gerichten zu lösen. IPOPHL ist zuständig für die Beilegung bestimmter Streitigkeiten über mutmaßliche Verletzung und Lizenzierung durch sein Schiedsgerichts - und Vermittlungszentrum (AMC). IPOPHIL berichtet, 51 von Fällen im Jahr 2014 erhalten hatte erfolgreiche Vermittlung. Weitere Informationen über Vertragsverpflichtungen und Ansprechpartner bei den örtlichen IP-Büros finden Sie unter WIPOrsquos-Länderprofile unter wipo. intdirectoryen. (632) 301.2000 E-Mail: ManilaEconstate. gov 8. Transparenz des Regulierungssystems Im Allgemeinen ist die Regulierung in den Philippinen schwach, widersprüchlich, Und unvorhersehbar. Regulierungsagenturen sind in der Regel nicht gesetzlich unabhängig, sondern sind den Kabinettsabteilungen oder dem Amt des Präsidenten angegliedert und unterliegen daher dem politischen Druck. Viele US-Investoren beschreiben Business-Registrierung, Zoll, Einwanderung und Visa-Verfahren als belastend und eine Quelle der Frustration. Um dem entgegenzuwirken, haben mehrere Regierungsstellen Expressspuren oder ldquoone-stop-Geschäfte eingerichtet, um bürokratische Verzögerungen zu reduzieren. Alle vorgeschlagenen Gesetze müssen öffentlich kommentiert und überprüft werden. Wenn Gesetze verabschiedet werden, sind betroffene Regierungsstellen auch erforderlich, um Durchführungsregeln und Regelungen (IRRs) durch Anhörungen der öffentlichen Anhörungen zu entwickeln. Neue Regelungen müssen in der Zeitung oder im Governmentrsquos-Amtsblatt veröffentlicht werden, bevor sie wirksam werden. Die Philippinen folgen den Philippine Financial Reporting Standards, die nach den International Financial Reporting Standards (IFRS) des International Accounting Standards Board (IASB) erstellt wurden. Diese Standards gelten auch für kleine und mittlere Unternehmen. Die philippinische SEK erfordert einen Entityrsquos Vorsitzender des Vorstands, Chief Executive Officer und Chief Financial Officer zu übernehmen Management Verantwortung und Rechenschaftspflicht für die Jahresabschlüsse. Die Jahresabschlüsse werden von unabhängigen Abschlussprüfern gemäß den Philippine Standards on Auditing geprüft, die auf internationalen Prüfungsgrundsätzen beruhen. Bestimmte Regulierungsagenturen wie die Zentralbank, die Versicherungskommission (insurance. gov. ph) und das Bureau of Internal Revenue (BIR) (bir. gov. ph) erzwingen separate Akkreditierungsregeln. 9. Effiziente Kapitalmärkte und Portfolioinvestitionen Die Philippinen unterstützen die Einbringung von ausländischen Portfolioinvestments, auch in in - und ausländische Aktien, die an der Philippine Stock Exchange (PSE) (pse. ph) notiert sind. Es bestehen minimale Anforderungen an die Veräußerung von Portfolioinvestitionen und die anschließende Repatriierung des Kapitals. Es gibt in der Regel keine Beschränkungen für Investitionen im Ausland durch philippinische Einwohner, die nicht philippinische Staatsbürger einschließen, die seit mindestens einem Jahr im Land wohnen, nach philippinischen Gesetzen organisierte ausländische Körperschaften sowie Zweigniederlassungen von ausländischen Unternehmen, die nach ausländischem Recht organisiert sind Die im Land arbeiten. Fremdwährungskäufe von Banken und Devisengeschäften betragen jedoch über USD 60 Mio. pro Anleger oder pro Fonds pro Jahr eine vorherige Zustimmung der Zentralbank. Obwohl wächst, ist die 260-börsennotierte philippinische Börse hinter vielen seiner Nachbarn in Größe, Produktangebot und Handelstätigkeit zurück. Bis Mitte 2015 plant das PSI, ein neues, branchenführendes Handelssystem zu eröffnen, das von NASDAQ OMX beschafft wurde. Der Wertpapiermarkt wächst, bleibt aber von Staatsanleihen dominiert. Die Zentralbank schränkt keine Zahlungen und Transfers für laufende Transaktionen ein, vorbehaltlich der Vorlage bestimmter dokumentarischer Anforderungen. Kredit ist in der Regel auf Marktbedingungen gewährt und ausländische Unternehmen sind in der Lage, Kredit auf dem heimischen Markt zu erhalten. Jedoch verlangen einige Gesetze Finanzinstitute, Kredite für bevorzugte Sektoren aufzuheben. Um die Kreditvergabe zu wettbewerbsfähigen Preisen an MSME zu fördern, verabschiedeten die Philippinen das Credit Information System Act, das den rechtlichen und regulatorischen Rahmen für ein zentralisiertes Kreditinformationssystem festlegte, das Informationen über die Erfolgsbilanz von Kreditnehmern und die Kreditaktivitäten von Unternehmen in Deutschland sammelt und verbreitet Das Finanzsystem. Das System ist vorhanden, aber noch nicht betriebsbereit. Geld - und Bankwesen, feindliche Übernahmen Das Bankensystem ist stabil. Since 2011, the Central Bank has broadly revised its risk-based capital framework in step with adjustments in the Basel Committee on Banking Supervision capital adequacy rules. Capital adequacy ratios are well above the 8 international standard and the Central Bankrsquos 10 regulatory requirement. The non-performing loan ratio was under 2.5 as of end-2014. There is ample liquidity, with the liquid assets-to-deposits ratio estimated at more than 56. Commercial banks constitute more than 90 of the total assets of the Philippine banking industry. As of 2014, the five largest commercial banks represented about 53 of the total resources of the commercial banking sector. Foreign residents and non-residents may open foreign exchange and local currency bank accounts. Although non-residents may open local currency deposit accounts, they are subject to conditions on the funding sources specified under Central Bank regulations. Hostile takeovers are not common because most companiesrsquo shares are not publicly listed and controlling interest tends to remain with a small group of parties. Cross-ownership and interlocking directorates among listed companies also decrease the number of hostile takeovers. 10. Competition from State-Owned Enterprises State-owned enterprises, known in the Philippines as government-owned and controlled corporations (GOCC), are predominant in the power, transport, infrastructure, communications, land and water resources, social services, housing and support services sectors. There were 142 operational GOCCs as of November 2014 (see list at gcg. gov. phsitegoccclassification). The Philippine government derives substantial revenues from GOCCs, which are required to remit at least 50 of their annual net earnings (e. g. cash, stock or property dividends) to the national government. In 2013, the total assets of all GOCCs were 5.7 trillion Philippine pesos (about USD 125.7 billion). GOCCs remitted 32.3 billion pesos (about USD 751 million) in dividends to the national government in 2014. Private and state-owned enterprises generally compete equally, with some clear exceptions. In 2002, the National Food Authority (NFA) (nfa. gov. ph) first allowed the private sector to import rice. The Government Service Insurance System (GSIS) (gsis. gov. ph) is the only agency, with limited exceptions, allowed to provide coverage for the governmentrsquos insurance risks and interests, including those in BOT projects and privatized government corporations. Since the national government acts as the main guarantor of loans, stakeholders report that GOCCs often have an advantage in getting financing from government financial institutions and some private banks. Also, most GOCCs are not statutorily independent, but attached to cabinet departments, and, therefore, subject to political interference. OECD Guidelines on Corporate Governance of SOEs The Philippines is not an OECD member country. Problems experienced by GOCCs, including poor financial performance, weak governance structures, and unauthorized allowances, led to the passage in 2011 of the GOCC Governance Act. The law allows unrestricted access to GOCC account books and requires strict compliance with accounting and financial disclosure standards establishes the power to privatize, abolish, or restructure GOCCs without legislative action and sets performance standards and limits on compensation and allowances. The law also created the GOCC Commission on Governance (GCG) (gcg. gov. ph) to formulate and implement GOCC policies. GOCC Board Members are now limited to one-year terms, subject to reappointment based on a performance rating set by the GCG, with final approval by the President of the Philippines. Sovereign Wealth Funds The Philippines does not have sovereign wealth funds. 11. Corporate Social Responsibility Corporate social responsibility (CSR) is regularly practiced in the Philippines, although no domestic laws require it. The Philippine Tax Code provides CSR-related incentives to corporations, such as tax exemptions and deductions. Various non-government organizations and business associations also promote CSR. The Philippine Business for Social Progress (PBSP) (pbsp. org. ph) is the largest corporate-led social development foundation involved in advocating corporate citizenship practice in the Philippines. U. S. companies report strong and favorable responses to CSR programs among employees and within local communities. OECD Guidelines for Multinational Enterprises The Philippines is not an OECD member country. While the Philippine government strongly supports CSR practices among the business community, it has not endorsed the OECD Guidelines for Multinational Enterprises to its stakeholders. Terrorist groups and criminal gangs operate in some regions of the country. The Department of State publishes a consular information sheet and advises all Americans living in or visiting the Philippines to review this information periodically. A travel warning is in place for those U. S. citizens contemplating travel to the Philippines: travel. state. govcontentpassportsenglishalertswarningsphilippines-travel-warning. html . The State Department strongly encourages Americans in the Philippines to register with the Consular Section of the U. S. Embassy through the State Department39s travel registration website found at the Smart Traveler Enrollment Program (STEP) at step. state. govstep . The Philippinesrsquo most significant human rights problems continued to be extrajudicial killings and disappearances at the hands of security forces a dysfunctional criminal justice system notable for poor cooperation between police and investigators few prosecutions and lengthy procedural delays and improving but still widespread official corruption and abuse of power. The Philippines will hold a national election in May 2016 for president, vice president, Senate, House of Representatives, provincial governorships and a range of local offices. Unofficial campaigning will begin in late 2015 and some election-related violence may occur. In 2014, the Philippine government and the Muslim insurgency group Moro Islamic Liberation Front (MILF) signed the Comprehensive Agreement on the Bangsamoro (CAB) that seeks to create a new, autonomous political entity by 2016 replacing the existing Autonomous Region in Muslim Mindanao (ARMM). A draft Bangsamoro Basic Law implementing the CAB is still pending at Philippine Congress as of the reporting period. The New Peoplersquos Army (NPA), the military arm of the Communist Party of the Philippines, is responsible in some parts of the country, mostly in Mindanao, for civil disturbances through assassinations of public officials, sporadic attacks on military and police forces, bombings, and other attacks. It frequently demands ldquorevolutionary taxesrdquo from local and, at times, foreign businesses. To enforce its demands, the NPA attacks infrastructure such as power facilities, telecommunications towers, and bridges. Terrorist groups, including the Abu Sayaaf Group (ASG), Jemarsquoah Islamiyah (JI), and including an MILF splinter group called the Bangsamoro Islamic Freedom Fighters BIFF, periodically attack civilian targets in Mindanao, kidnap civilians ndash including foreigners ndash for ransom, and engage in armed skirmishes with government security forces. So far these groups have mostly carried out these activities in the western and central regions of Mindanao, including the Sulu Archipelago and its surrounding waters. Corruption is a pervasive and long-standing problem in the Philippines. Recent government efforts have improved the countryrsquos ranking in Transparency Internationalrsquos Corruption Perceptions Index from 94 in 2013 to 85 in 2014. Nevertheless, the World Economic Forumrsquos 2014-2015 Global Competitiveness Report ranked corruption as the top problematic factor for doing business in the Philippines. Although President Aquino has made fighting corruption a central part of his presidency, the problem is too endemic to change in a short time. The Bureau of Customs, known widely as the most corrupt agency in the Philippines, is a particular concern. The previous commissioner, who resigned in late April, took steps to decrease opportunities for employees to take bribes, such as fully automating many of the procedures. The Philippines continues to implement anti-corruption reforms outlined in the Philippine Development Plan 2011-2016. Its 2012-2016 Good Governance and Anti-Corruption Cluster Plan further identifies specific measures to curb corruption through greater transparency and accountability in government transactions. Several bills supporting anti-corruption efforts are currently pending in Congress. A private-sector group has pushed an quotIntegrity Initiativequot for the past four years, seeking a system of certification for businesses that adhere to ethical standards. Since President Aquino took office in 2010, corruption charges have been filed against several high-profile public officials, with no convictions to date. The Philippine Revised Penal Code, the Anti-Graft and Corrupt Practices Act, and the Code of Ethical Conduct for Public Officials aim to combat corruption and related anti-competitive business practices. The Office of the Ombudsman (ombudsman. gov. ph ) investigates and prosecutes cases of alleged graft and corruption involving public officials. Cases against high-ranking officials are brought before the special anti-corruption court, the ldquoSandiganbayanrdquo, while cases against low-ranking officials are filed before regional trial courts. The Office of the President can directly investigate and hear administrative cases involving presidential appointees in the executive branch and government-owned and controlled corporations. Soliciting, accepting andor offeringgiving a bribe are criminal offenses punishable by imprisonment, a fine, andor disqualification from public office or business dealings with the government. UN Anticorruption Convention, OECD Convention on Combatting Bribery The Philippines ratified the United Nations Convention against Corruption in 2003. It is not a signatory to the OECD Convention on Combatting Bribery. Resources to Report Corruption Contact at government agency: Office of the Ombudsman Ombudsman Building Agham Road, North Triangle, Diliman Quezon City, Philippines 1101 Telephone: (632) 479.7300 Email: pabombudsman. gov. ph ombudsman. gov. ph Contact at Watchdog Organization: Transparency International Philippines, Inc. 4F Libran House Building 144 Legazpi St. cor. V. A. Rufino and Bolanos Sts. Legazpi Village Makati City, Philippines Telephone: (632) 869.9702 Email: infotransparency-ph. org transparency-ph. org 14. Bilateral Investment Agreements The Philippines has neither a bilateral investment nor a free trade agreement with the United States. The Philippines has bilateral investment agreements with 38 countries: Argentina, Australia, Austria, Bangladesh, Belgium and Luxembourg, Cambodia, Canada, Chile, China, the Czech Republic, Denmark, Finland, France, Germany, India, Indonesia, Iran, Italy, Japan, Republic of Korea, Kuwait, Mongolia, Myanmar, Netherlands, Pakistan, Portugal, Romania, Russian Federation, Saudi Arabia, Spain, Sweden, Switzerland, Syria, Taiwan, Thailand, Turkey, United Kingdom, and Vietnam. The Philippines is a member of four ASEAN free trade agreements that include an investment chapter with trading partners Australia, New Zealand, Republic of Korea and China. Bilateral Taxation Treaties U. S. ndash Philippines Tax Treaty The Philippines has a tax treaty with the United States to avoid double taxation, provide procedures for resolving interpretative disputes, and enforce taxes in both countries. The treaty encourages bilateral trade and investment by allowing the exchange of capital, goods and services under clearly defined tax rules and, in some cases, preferential tax rates or tax exemptions. U. S. recipients of royalty income qualify for preferential tax rates (currently 10) under the most favored nation clause of the United States-Philippines tax treaty. A preferential tax treaty rate of 15 applies to dividends and interest income. An entity must obtain a tax treaty relief ruling from the BIR to qualify for preferential tax treaty rates and treatment tax practitioners find the requirements burdensome. Although the Supreme Court ruled in October 2013 against stricter regulations issued by the BIR in 2010 disqualifying late filings from preferential tax rates, issues reportedly can arise during tax audits. The volume of tax treaty relief applications also has resulted in processing delays, with most applications reportedly pending for over a year. Concerns also exist about inconsistent taxation rulings. The BIR rules and regulations for tax accounting have not been fully harmonized with the Philippine Financial Reporting Standards. The disparities between reports for financial accounting and tax accounting purposes are common issues in tax assessments and are an irritant between taxpayers and tax collectors. The BIR requires taxpayers to maintain records reconciling figures presented in financial statements and income tax returns. 15. OPIC and Other Investment Insurance Programs Pursuant to the U. S.-Philippines Investment Incentive Agreement, the Overseas Private Investment Corporation (OPIC) is able to offer the following: Investment Insurance: The Philippine government does not provide guarantees against losses due to inconvertibility of currency, expropriation, or damage caused by war. OPIC can provide U. S. investors with political risk insurance. Financing: OPIC financing is available for creditworthy projects and companies with substantial U. S. investment or participation and where sufficient or appropriate financing is not available from local or other private sector financial institutions. Managers of U. S.-based companies report that Philippine labor costs are low, and the workers are highly motivated with strong English language skills. In 2014, the Philippine labor force reached 41.3 million, with an unemployment rate of 6 at the end of the year. This figure includes employment in the informal sector and does not capture the substantial rates of underemployment in the country. Youths between the age of 15 and 24 made up nearly 50 of the unemployed. More than half of all employed persons worked in services, with about 30 in agriculture and 15 in industry. Multinational managers report that compensation packages in the Philippines tend to be comparable with neighboring countries. Regional Wage and Productivity Boards meet periodically in each of the countryrsquos 16 administrative regions to determine minimum wages. The non-agricultural daily minimum wage in Metro Manila is PhP493 (approximately USD 11), although some private sector workers receive less. Most regions set their minimum wage significantly lower than Metro Manila. Violation of minimum wage standards is common, especially non-payment of social security contributions, bonuses, and overtime. Philippine law also provides for a comprehensive set of occupational safety and health standards. The Department of Labor and Employment (DOLE) (dole. gov. ph) has responsibility for safety inspection, but a shortage of inspectors has made enforcement difficult. The Philippine Constitution enshrines the right of workers to form and join trade unions. The trend among firms of using temporary contract labor continues to grow. The DOLE Secretary has the authority to end strikes and mandate a settlement between parties in cases involving the national interest. In 2013, the DOLE amended its rules concerning disputes, specifying industries vital to national interest: hospitals, electric power industry, water supply services (excluding small bottle suppliers), air traffic control, and other industries as recommended by the National Tripartite Industrial Peace Council (NTIPC). Economic zones often offer on-site labor centers to assist investors with recruitment. Although labor laws apply equally to economic zones, unions have noted some difficulty organizing inside the zones. The Philippines is a signatory to all International Labor Organization (ILO) core conventions but has faced challenges enforcing them. Unions allege that companies or local officials use illegal tactics to prevent them from organizing workers. The quasi-judicial National Labor Relations Commission reviews allegations of intimidation and discrimination in connection with union activities. Meanwhile, the Philippines National Tripartite Industrial Peace Council (NTIPC) monitors the application of international labor standards. There have been some reports of forced labor in the Philippines in connection with human trafficking in the commercial sex, domestic service, agriculture, and fishing industries. 17. Foreign Trade ZonesFree PortsTrade Facilitation Businesses enjoy preferential tax treatment when located in export processing zones, free trade zones, and certain industrial estates, collectively known as economic zones, or ldquoecozones. rdquo Businesses located in ecozones are considered outside customs territory and are allowed to import capital equipment and raw material free of customs duties, taxes, and other import restrictions. Goods imported into ecozones may be stored, repacked, mixed, or otherwise manipulated without being subject to import duties and are exempt from the Selective Preshipment Advance Classification Scheme. While some ecozones are designated as both export processing zones and free trade zones, individual businesses within them are only permitted to receive incentives under a single category. Philippine Economic Zone Authority (PEZA) PEZA currently operates 300 ecozones, primarily in the manufacturing, IT, tourism, medical tourism, logisticswarehousing, and agro-industrial sectors. PEZA manages three government-owned export-processing zones (Mactan, Baguio, and Cavite) and administers incentives to enterprises located in the other 297 privately owned and operated ecozones. Any person, partnership, corporation, or business organization, regardless of nationality, control andor ownership, may register as an export, IT, tourism, medical tourism, or agro-industrial enterprise with PEZA, provided that the enterprise physically locates its activity inside any of the proclaimed ecozones. PEZA administrators have earned a reputation for maintaining a clear and predictable investment environment within the zones of their authority. Bases Conversion Development Authority (BCDA) and Subic Bay Metropolitan Authority (SBMA) The ecozones located inside former U. S. military bases were established under the 1992 Bases Conversion and Development Act. The BCDA (bcda. gov. ph) operates the Clark Freeport Zone (Angeles City, Pampanga), the John Hay Special Economic Zone (Baguio), the Poro Point Freeport Zone (La Union), and the Bataan Technology Park (Morong, Bataan). The SBMA operates the Subic Bay Freeport Zone (Subic Bay, Zambales). Clark and Subic have their own international airports, power plants, telecommunications networks, housing complexes, and tourist facilities. These ecozones are independent of PEZA, though they offer comparable incentives. Enterprises already receiving incentives under the BCDA law are disqualified to receive incentives and benefits offered by other laws. The Phividec Industrial Estate (Misamis Oriental, Mindanao) is governed by the Phividec Industrial Authority (PIA) (piamo. gov. phpia), a government-owned and controlled corporation. Two lesser-known ecozones are the Zamboanga City Economic Zone and Freeport (Zamboanga City, Mindanao) (zambofreeport. ph) and the Cagayan Special Economic Zone and Freeport (Santa Ana, Cagayan Province) (ceza. gov. ph). The incentives available to investors in these zones are similar to PEZA incentives but administered independently. In addition to offering export incentives, the Cagayan Economic Zone Authority (CEZA) is authorized to grant gaming licenses. 18. Foreign Direct Investment and Foreign Portfolio Investment Statistics Table 2: Key Macroeconomic Data, U. S. FDI in Host CountryEconomy Table 3: Sources and Destination of FDI The Philippine Central Bank does not publish or post inward and outward FDI stock broken down by country. Total stock figures are reported under the ldquoInternational Investment Positionrdquo data that the Central Bank publishes and submits to the International Monetary Fundrsquos (IMF) Dissemination Standards Bulletin Board (DSBB) using BPM6 concept. As of 2013, inward direct investments (i. e. liabilities) are USD 51,497 million, while outward direct investments (assets) are USD 27,617 million. Host Country Statistical Sources: Direct Investment fromin Counterpart Economy Data From Top Five SourcesTo Top Five Destinations (US Dollars, Millions) Inward Direct Investment Outward Direct Investment British Virgin Islands China, P. R. Mainland China, P. R. Hong Kong China, P. R. Hong Kong quot0quot reflects amounts rounded to - USD 500,000. Table 4: Sources of Portfolio Investment While it disaggregates data into equity and debt securities, the Philippine Central Bank does not publish or post the stock of portfolio investment assets broken down by country. Total foreign portfolio investment stock figures are reported under the ldquoInternational Investment Positionrdquo data that the Central Bank publishes and submits for the International Monetary Fundrsquos (IMF) Dissemination Standards Bulletin Board (DSBB) using BPM6 concept. As of 2013, outward portfolio investments (i. e. assets) are USD 7,851 million, of which USD 151 million are in equity securities and USD 7,699 million are in debt securities. Host Country Statistical Sources:U. S. Department of State Philippine law generally treats foreign investors the same as their domestic counterparts, with important exceptions outlined in the Foreign Investment Act (detailed below). Corporations or partnerships must register with the Securities and Exchange Commission (SEC) and sole proprietorships must be registered with the Bureau of Trade Regulation and Consumer Protection (BTRCP) in the Department of Trade and Industry (DTI). Investors generally report that the Philippine bureaucracy is nondiscriminatory but slow to process these requirements. The Foreign Investment Negative List is actually two lists, which outline sectors that are restricted or limited in terms of foreign investment under the 1991 Foreign Investment Act. The Foreign Investment Act also requires the Philippine government to publish an updated negative list every two years to reflect changes in law the eighth negative list was promulgated in February 2010 and release of the ninth is expected in early 2012. This relatively long list of foreign investment limitations contribute to the poor Philippine record in attracting foreign investment. List A enumerates investment sectors and activities for which foreign equity participation is restricted by mandate of the Constitution and specific laws. List B enumerates areas where foreign ownership is restricted or limited (generally at 40 percent) for reasons of national security, defense, public health, safety, and morals. The restrictions stem from a constitutional provision permitting Congress to reserve to Philippine citizens certain areas of investment and limit foreign participation in public utilities or their operation. No mechanism exists for a waiver under the negative lists. Only Philippine citizens can practice licensed professions such as engineering, medicine, and allied professions accountancy, architecture, interior design, chemistry, environmental planning, social work, teaching, and law. Top positions and elective officers of majority foreign-owned enterprises (i. e. president, general manager, and treasurer or their equivalents) are exempt from these restrictions. Companies that register with the Board of Investments (BOI) may employ foreign nationals in supervisory, technical, or advisory positions for five years from registration, extendable for limited periods at the discretion of the BOI. The 1987 Constitution prohibits foreign nationals from owning land in the Philippines. The Investors39 Lease Act of 1994 allows foreign investors to lease a contiguous land parcel of up to 1000 hectares for 50 years, renewable once for 25 years. In mid-2003, the Dual-Citizenship Act allowed natural-born Filipinos who became naturalized citizens of a foreign country to re-acquire Philippine citizenship. Philippine dual citizens now have full rights of possession of land and property. Ownership deeds continue to be difficult to establish, poorly reported and poorly regulated. Furthermore, the court system is slow to resolve cases. Other investment areas reserved for Filipinos include: mass media (except recording) small-scale mining private security utilization of marine resources, including small-scale utilization of natural resources in rivers, lakes, and lagoons and the manufacture of firecrackers and pyrotechnic devices. The retail trade industry is highly restricted to foreign investment. Retail trade enterprises with paid-up capital of less than 2.5 million, or less than 250,000 for retailers of luxury goods, are reserved for Filipinos. Foreign ownership of retail trade enterprises with paid-up capital of 2.5 million and above is now allowed, with initial capitalization requirements. Enterprises engaged in financing and securities underwriting that are regulated by the SEC are limited to 60 percent foreign ownership. Other specific limits on foreign investment include: private radio communications networks (20 percent) employee recruitment and locally-funded public works construction and repair (25 percent) advertising agencies (30 percent) natural resource exploration, development, and utilization (40 percent, with exceptions) education institutions (40 percent) operation and management of public utilities (40 percent) operation of commercial deep-sea fishing vessels (40 percent) Philippine government procurement contracts (40 percent for supply of goods and commodities 25 percent for construction of locally-funded public works, with some exceptions) adjustment companies (40 percent) operations of BOT projects in public utilities (40 percent) ownership of private lands (40 percent) rice and corn processing (40 percent, with some exceptions). The Philippines also limits foreign ownership for reasons of national security, defense, public health, safety, and morals, including explosives, firearms, military hardware, and massage clinics, which are all generally limited to 40 percent foreign equity. Foreign ownership in small - and medium-sized enterprises is also limited to 40 percent in non-export firms. Although outside of the coverage of the Foreign Investment Act, foreign ownership restrictions also apply to the banking sector. In 1994, the banking liberalization law capped the number of new foreign banks that could open full-service branches in the Philippines all 10 licenses have been issued and these foreign banks are limited to six branch offices each. In addition, four foreign banks that were operating in the Philippines prior to 1948 were allowed to open up to six branches each. Foreign banks that qualify under the law ndash publicly-listed and with national or global rankings ndash may own up to 60 percent in a locally-incorporated subsidiary. Foreign investors that do not meet these requirements are limited to a 40 percent stake. Since 1999, the Bangko Sentral ng Pilipinas (Central Bank) has imposed a moratorium on the issuance of new bank licenses, limiting investments to existing banks, although micro-finance institutions are exempt. Philippine law also requires that majority Filipino-owned banks must, at all times, control at least 70 percent of total banking system resources in the country. The insurance industry is open to 100 percent foreign ownership, but with a sliding scale of minimum capital requirements depending on the degree of foreign ownership. As a general rule, only the state-owned Government Service Insurance System (GSIS) may provide coverage for government-funded projects and government corporations undergoing privatization process. Build-Operate-Transfer (BOT) projects may only secure insurance and bonds issued by the GSIS andor surety or insurance companies duly accredited by the Office of the Insurance Commissioner. Offshore companies not incorporated in the Philippines may underwrite Philippine issues for foreign markets, but not for the domestic market. The Lending Company Regulation Act of 2007 requires majority Philippine ownership for such enterprises, to establish a regulatory framework for credit enterprises that do not clearly fall under the scope of existing laws. Current law also restricts membership on boards of directors for mutual fund companies to Philippine citizens. In addition to the restrictions detailed in the Foreign Investment Negative List, firms with more than 40 percent foreign equity that qualify for BOI incentives must divest to the 40 percent level within 30 years from registration date or within a longer period determined by the BOI. Foreign-controlled companies that export 100 percent of production are exempt from this requirement. Certain non-luxury retail establishments must offer at least 30 percent of their equity to the public within eight years from the start of operation. The Philippine Mining Act of 1995 allows a foreign entity full ownership of a company involved in large-scale exploration, development, and utilization of mineral resources, as arranged through Financial and Technical Assistance Agreements with the Philippine government. The Build-Operate-Transfer (BOT) Law provides the legal framework for private sector participation in large infrastructure projects and similar types of government contracts. Franchises in public utilities ndash railways or urban rail mass transit systems, electricity distribution, water distribution, and telephone systems ndash may only be awarded to enterprises with at least 60 percent Philippine ownership. U. S. firms have won contracts under the law and similar arrangements, mostly in the power generation sector. However, more active foreign participation under BOT and similar public-private arrangements can be frustrated by legal administration problems, including: weaknesses in planning, tendering, and executing private sector infrastructure projects regulatory and legal challenges to collecting andor increasing tolls and fees and lingering ambiguities about the level of guarantees and other support provided by the government. To attract investors to its Public-Private Partnership (PPP) infrastructure projects, the Aquino administration established the ldquoPPP Centerrdquo to promote transparency and oversee project development and approval allocated resources for right-of-way and land acquisition and announced a relaxation in single borrower (SB) limits for Philippine banks that finance PPP arrangements, subject to risk management requirements. Addressing limitations on foreign investment will be critical to the Aquino administrationrsquos stated goal of aggressively promoting PPPsBOTs to supplement insufficient public sector resources for vital infrastructure. Conversion and Transfer Policies The Central Bank has worked since 2007 to relax and streamline the Philippine foreign exchange (forex) regulatory framework. There are no restrictions on the full and immediate transfer of funds associated with foreign investments, foreign debt servicing, or payment of royalties, lease payments, and similar fees. Central Bank regulations spell out specific requirements for foreign exchange purchases from banks and their subsidiary foreign exchange corporations and from non-bank foreign exchange dealers, money changers, and remittance agents. There is no mandatory foreign exchange surrender requirement imposed on export earners and other foreign exchange earners such as overseas workers. The Central Bank follows a market-determined exchange rate policy, with scope for intervention targeted mainly at smoothing excessive foreign exchange volatility. Expropriation and Compensation Philippine law allows for expropriation of private property for public use or in the interest of national welfare or defense. In such cases, the GPH offers compensation for the affected property. In the event of expropriation, foreign investors have the right under Philippine law to remit sums received as compensation in the currency in which the investment was originally made and at the exchange rate at the time of remittance. However, agreeing on a mutually-acceptable price can be a protracted process. There are no recent cases of actual expropriation involving U. S. companies in the Philippines. However, BOT contractors in the energy sector, including U. S. firms, have reported disputes on real property tax assessments with local government units (LGUs). In some cases, the LGUs have initiated auction andor confiscation proceedings on the contractorsrsquo assets, which the companies are challenging in the courts. Investment disputes can take years for parties to reach final settlement. A number of GPH actions in recent years have raised questions over the sanctity of contracts in the Philippines and have clouded the investment climate. In the past, high-profile cases include the GPH-initiated review and renegotiation of contracts with independent power producers, court decisions voiding allegedly tainted and disadvantageous BOT agreements, and challenges to the extent of foreign participation in large-scale natural resource exploration activities, such as mining. Many foreign investors describe the inefficiency and uncertainty of the judicial system as a significant disincentive for investment. The judiciary is constitutionally independent of the executive and legislative branches and faces many problems, including understaffing and corruption. The GPH is pursuing judicial reform with foreign donor support, through projects such as the U. S. Country Assistance Strategy 2009-2013 the Asian Development Bankrsquos Governance in Justice Sector Reform Program, and the World Bank Judicial Reform Project. The Philippines is a member of the International Center for the Settlement of Investment Disputes and of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. However, Philippine courts have, in several cases involving U. S. and other foreign firms, shown a reluctance to abide by the arbitral process or its resulting decisions. Enforcing an arbitral award in the Philippines can take years. A long-awaited insolvency law designed to recognize creditor rights and respect the priority of claims replaced the century-old Insolvency Act in July 2010. Subject to certain conditions, rehabilitation may be initiated by debtors or creditors under court-supervised, pre-negotiated, or out-of-court proceedings. The law also sets the conditions for voluntary (debtor-initiated) and involuntary (creditor-initiated) liquidation. The acts recognizes cross-border insolvency proceedings and the United Nations Center for International Trade and Developmentrsquos Model Law on Cross-Border Insolvency, allowing the courts to provide relief arising from insolvency or rehabilitation proceedings in a foreign jurisdiction involving a foreign entity with assets in the Philippines. Regional trial courts designated by the Supreme Court as commercial courts have jurisdiction over insolvency and bankruptcy cases. Although enforcement remains key, the new law seeks to provide a clear, transparent, and predictable legal framework for the rehabilitation and liquidation of distressed enterprises, which used to be governed by outmoded legislation and a cacophony of sometimes ambiguous and inconsistent rulings, procedures, and other jurisprudence subject to challenges and protracted delays. Performance Requirements and Incentives Performance requirements are usually based on an approved project proposal, established by the BOI for those investors who are granted incentives. BOI-registered companies provide a projected yearly production schedule and export performance targets registered projects must maintain at least 25 percent of total project cost in the form of equity and comply with the 25 percent local value-added sourcing requirement Certain industries have been subject to more specific local sourcing requirements. However, provisions requiring foreign retailers to source locally lapsed in March 2010. The Philippines is not a signatory to the WTO Agreement on Government Procurement. The Government Procurement Reform Act of 2003 requires the public sector to procure goods, supplies, and consulting services from enterprises that are at least 60 percent Filipino-owned and infrastructure services from enterprises with at least 75 percent Filipino interest. Although Philippine law outlines objective criteria for selection of a single portal electronic procurement system, U. S. and other foreign companies continue to raise concerns about irregularities in government procurement and inconsistent implementation. Philippine law also gives preference to local products andor Filipino-controlled enterprises in the bid evaluation process for public sector purchases of goods and supplies. When the lowest bid is from a supplier of imported goods andor from a foreign-owned enterprise, the lowest domestic bidder can claim preference and match the offer, provided its original bid was no more than 15 percent higher than that of the foreign bidder or foreign entity. Filipino consultants also enjoy preferential treatment in government projects. If Filipino consultants work for foreigners on such projects due to technical need, the law requires that they are the lead consultants. Where foreign funding is indispensable, foreign consultants must enter into joint ventures with Filipinos. Multilateral donor agencies report that their implementing partners have thus far been able to comply with both donors39 internal procurement guidelines and Philippine law. Foreign bidders may participate in foreign-funded development assistance projects, provided the foreign assistance agreement expressly provides for use of the foreign government or international financing institutionrsquos procurement procedures and guidelines. The Official Development Assistance Act further authorizes the President to waive statutory preferences for local suppliers for foreign-funded projects. The Government Procurement Reform Act does not cover projects under the BOT Law, which allows investors in qualifying projects to engage the services of Philippine andor foreign firms for the construction of infrastructure projects. Procurement by government agencies and government-owned or controlled corporations is subject to a countertrade requirement entailing the payment of at least 1 million in foreign currency. Implementing regulations set the level of countertrade obligations at a minimum of 50 percent of the import price and set penalties for nonperformance of countertrade obligations. Per the Senate Tax Study and Research Office, there are about 180 fiscal incentives laws and issuances in the Philippines as of June 10, 2010. President Benigno Aquino III has stated his support for fiscal incentives rationalization publicly and listed fiscal incentives reform as a priority legislative measure. A number of bills have been filed in the Philippine Congress but the scope and detail of reform remain contentious, including proposals by a key cabinet secretary to phase out income tax holidays in lieu of strategic subsidy programs. Every year, the Investment Priorities Plan (IPP) outlines the list of investment areas entitled to incentives. The 2011 IPP retains priority investment areas such as: agricultureagribusiness and fisheries infrastructure green projects business process outsourcing research and development disaster prevention, mitigation and recovery creative industries and, strategic projects. The Aquino administration added the following to the 2011 Plan: PPP projects shipbuilding mass housing energy motor vehicles and, tourism. Screening for the legitimacy and regulatory compliance of companies seeking investment incentives appears to be nondiscriminatory, but the application process can be complicated since incentives granted by the BOI often depend on action by other agencies, such as the Department of Finance (DOF), including its Bureau of Customs (BOC). Among the significant incentives offered to BOI-registered companies include: 4-6 year income tax holiday tax deductions for necessary and major infrastructure works for companies located in less-developed areas tax and duty exemptions on importation of breeding stocks and imported supplies and spare parts exemption from wharfage dues and any export tax, duty, impost, and fees on non-traditional export products for ten years the ability to employ foreign nationals in supervisory, technical, or advisory positions for five years extendible at the discretion of the Board and, the simplification of customs procedures. To encourage wider distribution of industry across the Philippines, BOI-registered enterprises that locate in less-developed areas and the thirty poorest provinces are automatically entitled to so-called quotpioneerquot incentives. Such enterprises can deduct 100 percent of infrastructure outlays from taxable income. A company may also deduct 100 percent of incremental labor expenses for five years, which is double the rate allowed for BOI-registered projects not located in less-developed areas. In addition to the general incentives available to BOI-registered companies, a number of incentives apply specifically to export-oriented firms. An enterprise with more than 40 percent foreign equity that exports at least 70 percent of its production may still be entitled to incentives even if the activity is not listed in the IPP. These include: tax credit for taxes and duties paid on imported raw materials used in the processing of export products exemption from taxes and duties on imported spare parts and, access to customs bonded manufacturing warehouses. The BOI is flexible with the enforcement of individual export targets, provided that exports as a percentage of total production do not fall below the minimum requirement (50 percent for local firms and 70 percent for foreign firms). BOI-registered foreign controlled firms that qualify for export incentives are subject to a 30-year divestment period, at the end of which at least 60 percent of equity must be Filipino-controlled. Foreign firms that export 100 percent of production are exempt from this divestment requirement. Export-oriented firms with at least 50 percent of their revenues derived from exports may register for additional incentives under the Export Development Act of 1994. Registered exporters may be eligible for both these and BOI incentives, provided the exporters are registered according to BOI rules and regulations and the exporter does not take advantage of the same or similar incentives twice. Specific export incentives include a tax credit ranging from 2.5 to 10 percent of annual incremental export revenue. Philippine law also provides incentives for multinational enterprises to establish regional or area headquarters and regional operating headquarters in the Philippines. Regional headquarters are defined as branches of multinational companies that do not earn or derive income from the country, and which act as supervisory, communications, or coordinating centers. Incentives for regional headquarters include: exemption from income tax exemption from branch profits remittance tax exemption from value-added tax sale or lease of goods and property and rendition of services to the regional headquarters subject to zero percent value-added tax exemption from all taxes, fees, or charges imposed by a local government unit (except real property taxes) value-added tax and duty-free importation of training and conference materials and equipment solely used for the headquarters functions. Regional operating headquarters enjoy many of the same incentives as regional headquarters but, being income generating, are subject to the standard 12 percent value-added tax, applicable branch profits remittance tax, and a preferential ten percent corporate income tax. Privileges extended to foreign executives working at these operations include tax and duty-free importation of personal and household effects, and immigration benefits for executives. Eligible multinationals establishing regional operating headquarters must spend at least 200,000 yearly to cover operations. Multinationals establishing regional warehouses for the supply of spare parts, manufactured components, or raw materials for their foreign markets also enjoy incentives on imports that are re-exported. Re-exported imports are exempt from customs duties, internal revenue taxes, and local taxes. Imported merchandise intended for the Philippine market is subject to applicable duties and taxes. Right to Private Ownership and Establishment Philippine law recognizes the private right to acquire and dispose of property or business interests, subject to foreign nationality caps specified in the Philippine Constitution and other laws. The 1987 Constitution grants the government authority to regulate competition and prohibit monopoly, although there is no implementing law. The Aquino administration has described the enactment of an anti-trust law as a top legislative priority. Congress is currently considering several competition-themed bills. Pending passage of anti-trust legislation, President Benigno Aquino III issued an Executive Order in June 2011 designating the Department of Justice (DOJ) as the governmentrsquos competition authority. A few sectors are closed to private enterprise, generally on grounds of security, health, or quotpublic morals. quot For example, the Philippine government operates or licenses all casinos through the Philippine Amusement and Gaming Corporation (PAGCOR) and runs lottery operations through the Philippine Charity Sweepstakes Office (PCSO). Only the state-owned GSIS may insure government-funded projects. BOT projects and partially privatized government corporations must meet insurance and bonding requirements from the government insurance system, in proportion to GPH interests. In addition, government funds, as a general rule, should be deposited in the Central Bank and government-owned banks. Protection of Property Rights Delays and uncertainty associated with a cumbersome court system continue to concern investors, even though the Philippines has established procedures and systems for registering claims on property. Questions regarding the general sanctity of contracts, and the property rights they support, have also clouded the investment climate. Of particular concern in the Philippines is the challenge of intellectual property rights protection, for which the Philippines is listed on United States Trade Representative (USTR) Special 301 Watch List. U. S. distributors continue to report high levels of pirated optical discs of cinematographic, musical works, computer games, and business software, as well as widespread unauthorized transmissions of motion pictures and other programming on cable television systems. Trademark infringement of a variety of product lines is also widespread, with counterfeit merchandise openly available in all major cities. The Intellectual Property (IP) Code provides the legal framework for intellectual property rights protection in the Philippines, especially in the key areas of patents, trademarks, and copyright. The Electronic Commerce Act extends the legal framework established by the IP Code to the Internet. Investor concerns include deficiencies in the IP Code and other IP laws that have unclear provisions relating to the rights of copyright owners over broadcast, rebroadcast, cable retransmission, or satellite retransmission of their works, and burdensome restrictions affecting contracts to license software and other technology. The Philippines has generally strong patent and trademark laws. Its first-to-file patent system grants patents valid for 20 years from the date of filing the holder of a patent is guaranteed an additional right of exclusive importation of his invention. However, the Cheaper Medicines Act of 2008 limits patent protection for pharmaceuticals, and significantly liberalizes the grounds for the compulsory licensing of pharmaceuticals, although this provision has not been implemented to date. Trademark law protects well-known marks, which do not need to be in actual use or registered to be protected under the law, and prior use of a trademark in the Philippines is not required to file a trademark application. The GPH is working its accession to the Madrid Protocol, an agreement that facilitates the protection of trademarks in a large number of countries by obtaining an international registration. In the area of copyright law, the Philippines has not enacted necessary amendments to its IP Code that would fully implement the World Intellectual Property Organization (WIPO) Copyright and Performances and Phonograms treaties, despite being a WIPO member and having acceded to the treaties. However, Philippine law does protect computer software as a literary work, and exclusive rental rights may be offered in several categories of works and sound recordings. Terms of protection for sound recordings, audiovisual works, and newspapers, and periodicals are compatible with the Agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPS). The enactment of the Anti-Camcording Act in 2010 provided stringent penalties for illegal camcording of motion pictures in theaters but the long-term effect of the law remains uncertain. The IP Code also recognizes industrial designs, performers39 rights, and trade secrets. The registration of a qualifying industrial design is for a period of five years and may be renewed for two consecutive five-year periods. While Philippine law recognizes performers39 rights for 50 years after death, the exercise of exclusive rights for copyright owners over broadcast and retransmission is ambiguous. While there are no codified rules on the protection of trade secrets, Philippine officials assert that existing civil and criminal statutes protect trade secrets and confidential information. Other important laws defining intellectual property rights are the Plant Variety Protection Act, which provides plant breeders intellectual property rights consistent with the 1991 Union for the Protection of New Varieties of Plants Convention, and the Integrated Circuit Act, providing WTO-consistent protection for the layout designs of integrated circuits. Generally, the Philippine government enforcement agencies are most responsive to those copyright owners who actively work with them to target infringement. Agencies will not proactively target infringement unless the copyright owner brings it to their attention and works with them on surveillance and enforcement actions. The Intellectual Property Office (IPO) has jurisdiction to resolve certain disputes concerning alleged infringement and licensing. In June 2011, IPO launched its IPR Arbitration Center to receive and facilitate IP disputes presented to the center for review, resolution, and settlement through arbitral proceedings. Although intellectual property owners have sometimes used the IPO39s administrative complaint system as an alternative to the judicial court system, the process can be slow-moving due to limited resources. Joint efforts between the private sector and the National Bureau of Investigation (NBI), Philippine National Police (PNP), Bureau of Customs (BOC), Optical Media Board (OMB), and several local government units have resulted in some successful enforcement actions. Enforcement actions are not often followed by successful prosecutions. Intellectual property infringement is not considered a major crime within the Philippine judicial system and takes a lower precedence in court proceedings. In October 2011, the Philippine Supreme Court approved Rules of Procedure for Intellectual Property Rights Cases, a key judicial reform identified in several recent Special 301 reports. The special rules include: streamlined procedures to expedite cases and rules of evidence for IPR cases provisions for the speedy, summary destruction of seized goods designation of four courts with national jurisdiction to issue search warrants and regional IP commercial courts. The special rules have the potential to improve IPR-related convictions as it shortens lengthy court action that led many cases to be settled out of court. Since 2001, there have been sixty-four convictions for IP violations with no convictions in 2009 or 2010, while data for 2011 is not yet available as of the reporting period. Convicted intellectual property violators rarely spend time in jail, since the six year penalty enables them to apply for probation immediately under Philippine law. Transparency of the Regulatory System Philippine national agencies are required by law to develop regulations via a public consultation process, often involving public hearings. In most cases, this ensures some transparency in the rulemaking process. New regulations must be published in national newspapers of general circulation or in the GPH39s official gazette before taking effect. On the enforcement side, however, regulatory action is often weak, inconsistent, and unpredictable. Regulatory agencies in the Philippines are generally not statutorily independent, but are attached to cabinet departments or the Office of the President and, therefore, subject to political pressure. Many U. S. investors describe business registration, customs, immigration, and visa procedures as burdensome and a source of frustration. To counter this, some agencies, such as the SEC, BOI, and the Department of Foreign Affairs (DFA), have established express lanes or quotone-stop shopsquot to reduce bureaucratic delays, with varying degrees of success. Efficient Capital Markets and Portfolio Investment The Philippines is generally open to foreign portfolio capital investment. Non-residents may purchase domestically-issued securities and invest in money market instruments, as well as peso-denominated time deposits, though foreign exchange purchases face some restrictions. The securities market is growing but remains relatively small and underdeveloped, with a limited range of choices. The securitiesbond market is dominated by government billsbonds. Although growing, long-term bonds and commercial paper are not yet major sources of private financing, except for a few large firms. Philippine Stock Exchange Membership in the Philippine Stock Exchange (PSE) is open to foreign-controlled stock brokerages incorporated under Philippine law. Although growing, the Philippine stock market lags many of its neighbors in size, product offerings, and trading activity. Investments in any publicly-listed firm on the PSE are governed by foreign ownership ceilings stipulated in the Constitution and other laws. The market is highly concentrated. There are less than 260 listed firms and the ten most actively-traded companies account for between 40-50 percent of trading value and domestic market capitalization. To encourage publicly-listed companies to widen their investor base, the PSE introduced reforms in 2006 to include trading activity and free float criteria in the selection of companies comprising the stock exchange index. The 30 companies included in the benchmark index are subject to review every six months. In October 2010, the PSE reinstated a policy for listed companies to maintain at least 10 percent public ownership of their issued and outstanding shares to promote greater market liquidity and fairer and more transparent stock pricing. Hostile takeovers are not common because most company shares are not publicly listed and controlling interest tends to remain with a small group of parties. Cross-ownership and interlocking directorates among listed companies also lessen the likelihood of hostile takeovers. The Securities Regulation Code of 2000 strengthened investor protection by requiring full disclosure in the regulation of public offerings, and implementing stricter rules on insider trading, mandatory tender offer requirements, and the segregation of broker-dealer functions. The Code also significantly increased sanctions for securities violations, and mandated steps to improve the internal management of the stock exchange and future securities exchanges. Moreover, the Code expressly prohibits any one industry group (including brokers) from controlling more than 20 percent of the stock exchangersquos voting rights, though the PSE has yet to fully comply. The enforcement of these strengthened laws is mixed. While there has been some progress from the creation of special commercial courts, the prosecution of stock market irregularities can be subject to delays and uncertainties of the Philippine legal system. As of September 2011, the five largest commercial banks in the Philippines represented nearly 53 percent of total commercial banking system resources, with estimated total assets the equivalent of about US159 billion. The Central Bank has worked to strengthen banks39 capital bases, reporting requirements, corporate governance, and risk management systems. Commercial banks39 published average capital adequacy ratio was 17.4 percent on a consolidated basis as of March 2011, above the ten percent statutory limit and the eight percent internationally-accepted benchmark. Time-bound fiscal and regulatory incentives to encourage the sale of non-performing assets to private asset management companies promoted a resilient post-Asian crisis banking sector in the Philippines. Philippine banks also had limited direct exposure during the global financial crisis to investment products issued by troubled financial institutions overseas. As of September 2011, non-performing loans and non-performing asset ratios of commercial banks were estimated at 2.6 percent and 3.0 percent. The General Banking Law of 2000 paved the way for the Philippine banking system to phase in these internationally accepted, risk-based capital adequacy standards. In 2007, the Philippines adopted the Basel 2 capital adequacy framework, expanding coverage from credit and market risks to include operational risks and enhancing the risk-weighting framework. The Central Bank began the staggered adoption of Basel 3 capital adequacy rules in January 2011. Other important provisions of the General Banking Law strengthened transparency, bank supervision, and bank management. However, some impediments remain to more effective bank supervision and prompt corrective action, including: stringent bank deposit secrecy laws the need to secure the affirmative vote of at least five Monetary Board members before a bank can be examined within a period of less than 12 months from last examination and, inadequate liability protection for Central Bank officials and bank examiners. Credit is generally granted on market terms and foreign firms are able to obtain credit from the domestic market. However, some laws require financial institutions to set aside loans for certain preferred sectors, which may translate into increased costs andor credit risks. According to the Agri-Agra Law, banks must set aside 25 percent of loanable funds for agricultural credit, with at least ten percent earmarked for agrarian reform programs and beneficiaries. In early 2010, a new law tightened alternative modes of compliance ndash which used to include low-cost housing, educational, and medical developmental loans ndash to those directly targeting the agricultural sectors. Recent investor experience with agri-agra eligible bonds raise questions about implied guarantees by the Philippine government, and investors are cautioned to exercise due diligence. Banks are also required to set aside ten percent of their loans for micro-, small - and medium-sized borrowers, 80 percent of which should be earmarked for micro and small enterprises. While most domestic banks are able to comply with these mandatory lending requirements, operating and branching restrictions make it more difficult for foreign banks to comply. Direct lending by non-financial government agencies is limited to the Department of Social Welfare and Development, focusing on the poorest areas not being served by micro-finance institutions. Anti-Money Laundering and Information Exchange The Paris-based Financial Action Task Force (FATF) continues to monitor implementation of the Philippine Anti-Money Laundering Act through the Anti-Money Laundering Council. Covered institutions include foreign exchange dealers and remittance agents, which are required to register with the Central Bank and must comply with various Central Bank regulations and requirements related to the implementation of the Philippines39 anti-money laundering law. The Philippines is a member of the Egmont Group, the international network of financial intelligence units and the Asia Pacific Group on Money Laundering. The Asia Pacific Group on Money Laundering conducted a comprehensive peer review of the Philippines in September 2008. In October 2010, FATF included the Philippines in a list of jurisdictions with ldquostrategic deficienciesrdquo that posed potential risks to the international financial system. FATFrsquos International Cooperation Review Group and the Philippine government agreed on an action plan to address these deficiencies, which was presented during FATFrsquos October Plenary. Legislation to address remaining major deficiencies is pending before the Philippine Congress. Following the signing into law of the Exchange of Information on Tax Matters Act in March 2010 and the issuance of implementing rules and regulations in September 2010, the Organization for Economic Cooperation and Development (OECD) upgraded the Philippines from its tax standards ldquoblacklistrdquo to the list of jurisdictions that ldquohave substantially implemented the internationally agreed tax standardrdquo for the exchange of information. In 2005, the Philippines adopted accounting and financial reporting standards, with limited exceptions, patterned after International Financial Reporting and Accounting Standards issued by the International Accounting Standards Board (IASB). Effective January 1, 2010, the Philippines also adopted the International Financial Reporting Standards for Small - and Medium-sized Entities which, except for limited circumstances, apply to enterprises which do not have public accountability and with total assets from 3 million to 350 million pesos or liabilities from 3 million to 250 million pesos. Philippine auditing standards are based mainly on the International Standards on Auditing issued by the International Auditing and Assurance Standards Board. The Philippine SEC requires an entityrsquos Chairman of the Board, Chief Executive Officer, and Chief Financial Officer to assume management responsibility and accountability for financial statements. The SEC reviews and revises guidelines, as necessary, on the accreditation of auditing firms and external auditors to promote quality control and discipline in the financial reporting environment. Certain regulatory agencies, such as the Central Bank, Insurance Commission, and Bureau of Internal Revenue, enforce separate accreditation rules. The SEC requires listed companies to disclose to the SEC any material external audit findings within five days of receipt. Material findings include fraud or error, losses or potential losses aggregating 10 percent or more of company assets, indications of company insolvency, and internal control weaknesses that could result in financial reporting problems. A number of local accountancy firms are affiliated with the ldquoBig Fourrdquo international accounting firms, namely KPMG, PricewaterhouseCoopers, Ernst amp Young, and Deloitte Touche. Outward capital investments from the Philippines do not require prior approval from the Central Bank under the following conditions: the outward investments are funded by withdrawals from foreign currency deposit accounts the funds to be invested are not purchased from the banking system or foreign exchange corporations that are subsidiaries of banks or, the funds to be invested do not exceed 60 million per investor or per fund per year (if sourced from the banking system or bank-affiliated foreign exchange corporations). Outward investments exceeding 60 million that are funded with foreign exchange purchases from banks and their subsidiary foreign exchange corporations are subject to prior Central Bank approval. Qualified investors, such as mutual funds, pension or retirement funds, investment trust funds, and insurance companies may apply for a higher annual outward investment limit. All outward investments of banks in subsidiaries and affiliates abroad require prior Central Bank approval. Revised regulations approved in November 2011 lifted a requirement for residents to inwardly remit and sell for pesos earnings from profitsdividends or divestment proceeds from outward investments which were funded with foreign exchange purchased from banks or their subsidiary foreign exchange corporations. Competition from State-Owned Enterprises Private and state-owned enterprises (SOEs) generally compete equally, with some clear exceptions. The governmental National Food Authority (NFA) has, at times, been the sole legal importer of rice, though in 2011 the GPH ceded about 77 percent of all rice importation to the private sector . In the insurance sector, only the state-owned GSIS may provide coverage for the governmentrsquos insurance risks and interests, although the industry was opened up to 100 percent foreign ownership in 1994. All BOT projects and privatized government corporations must fulfill all insurance and bonding requirements from the GSIS, at least in proportion to GPH holdings. The GPH has also intervened to directly cap or control pricing in some additional private markets. In the wake of the 2009 typhoons, the Philippine government imposed temporary price controls on gasoline and a basket of basic goods and services. Under Philippine law, the President may freeze prices on basic goods and services for a period of 90 days under a state of emergency. The Philippine government39s privatization program is managed by the Privatization Management Office under the Department of Finance. Apart from restrictions under the Foreign Investment Negative List, there are no regulations that discriminate against foreign buyers. The bidding process appears to be transparent, though the Supreme Court has twice overturned high profile privatization transactions to foreign buyers. The Power Sector Assets and Liabilities Management Corporation is mandated to sell 70 percent of the government-owned National Power Corporationrsquos (NPC) generating assets and transfer 70 percent of NPC-Independent Power Producer contracts to private companies. The Philippine government has opened access and retail competition through several measures, including: the unbundling of rates removal of cross-subsidies establishment of the Wholesale Electricity Spot Market and, privatization of 92 percent of NPCrsquos generation assets (as of mid-2010). Corporate Social Responsibility Corporate social responsibility (CSR) constitutes a basic aspect of most significant business operations in the Philippines. U. S. companies report strong and favorable response to CSR programs among employees and within local communities. Many CSR programs focus on poverty alleviation efforts, promotion of the environment, health initiatives, and education. Under the 2011 IPP, registered enterprises with pioneer incentives must undertake CSR activities in accordance with the development plans of the community where the project is located. Said enterprises must submit proof of their CSR program to be eligible for their last two years of income tax holiday grant. In some cases, the GPH has compelled its own entities to engage in CSR. For example, the Philippine Bases Conversion and Development Authority is mandated to declare portions of its property in Fort Bonifacio and surrounding areas as low-cost housing sites. Terrorist groups and criminal gangs operate in some regions of the country. The Department of State publishes a consular information sheet at travel. state. gov and advises all Americans living in or visiting the Philippines to review this information periodically. The Department of State has issued a travel warning to U. S. citizens contemplating travel to the Philippines at: travel. state. govtravelcispatwtwtw2190.html . The Department strongly encourages visiting and resident Americans in the Philippines to register with the Consular Section of the U. S. Embassy in Manila through the State Department39s travel registration website: travelregistration. state. gov . Arbitrary, unlawful, and extrajudicial killings by national, provincial, and local government actors continue to be serious problems. The justice system is constrained by limited resources and staffing that result in limited investigations, few prosecutions, and lengthy trials. Corruption, impunity, and abuse of power remain endemic. On May 10, 2010, approximately 75 percent of registered citizens voted in elections for president, both houses of congress, and provincial and local governments. The election was generally free and fair, but was marked by some violence and allegations of vote buying and electoral fraud. Peace talks between the government and the Mindanao-based insurgent group Moro Islamic Liberation Front (MILF) are ongoing. The peace process had stalled in August 2008 after the Supreme Court placed a temporary restraining order on the signing of a preliminary peace accord and some MILF members attacked villages in central Mindanao and killed dozens of civilians in response. The ensuing fighting between government and insurgent forces caused both combat and civilian deaths and the displacement of hundreds of thousands of people. In 2009, both sides instituted ceasefires and resumed formal peace talks. The New People39s Army (NPA), the military arm of the Communist Party of the Philippines, is responsible for general civil disturbance through assassinations of public officials, bombings, and other tactics. It frequently demands quotrevolutionary taxesquot from local and, at times, foreign businesses, and business people. To enforce its demands, the NPA sometimes attacks infrastructure such as power facilities, telecommunications towers, and bridges, mostly in Mindanao. In October 2011, the NPA launched significant attacks on mining facilities in Mindanao, causing millions of U. S. dollarsrsquo worth of damage. The National Democratic Front, an umbrella organization that includes the Communist Party and its allies, has engaged in intermittent peace talks with the Philippine government. It has not targeted foreigners in recent years, but could threaten U. S. citizens engaged in business or property management activities. Terrorist groups, including the Abu Sayaaf Group and Jemarsquoah Islamiyah, periodically attack civilian targets in Mindanao, kidnap civilians for ransom, and engage in armed skirmishes with the security forces. Corruption is a pervasive and longstanding problem in the Philippines. In his first 18 months in office, President Aquinorsquos good governance program has resulted in the filing of corruption cases against several high-profile public officials. The ldquo2012-2016 Good Governance and Anti-Corruption Cluster Plan, rdquo further identifies specific measures to curb corruption through greater transparency and accountability in government transactions. Efforts to reign in corruption have, in general, improved public perception though achieving successful prosecutions remains to be a serious challenge to the Aquino administration. The Philippines is not a signatory of the Organization for Economic Cooperation and Development Convention on Combating Bribery. It has ratified the UN Convention against Corruption in 2003. The Philippine Revised Penal Code, Anti-Graft and Corrupt Practices Act, and Code of Ethical Conduct for Public Officials aim to combat corruption and related anti-competitive business practices. The Office of the Ombudsman investigates and prosecutes cases of alleged graft and corruption involving public officials, with the quotSandiganbayan, quot or anti-graft court, prosecuting and adjudicating those cases. In view of streamlining government bureaucracy, President Aquino abolished the Presidential Anti-Graft Commission in November 2010 and transferred its investigative, adjudicatory, and recommendatory functions directly under his office. This enabled the Office of the President to directly investigate and hear administrative cases involving presidential appointees in the executive branch and government-owned and controlled corporations. Solicitingaccepting and offeringgiving a bribe are criminal offenses, punishable by imprisonment (6-15 years), a fine, andor disqualification from public office or business dealings with the government. Bilateral Investment Agreements As of September 2011, the Philippines had signed bilateral investment agreements with Argentina, Australia, Austria, Bahrain, Bangladesh, Belgium and Luxembourg, Burma, Cambodia, Canada, Chile, China, the Czech Republic, Denmark, Equatorial Guinea, Finland, France, Germany, India, Indonesia, Iran, Italy, Japan, Republic of Korea, Kuwait, Laos, Mongolia, Netherlands, Pakistan, Portugal, Romania, Russian Federation, Spain, Sweden, Switzerland, Syria, Taiwan, Thailand, Turkey, United Kingdom, and Vietnam. The Philippines does not have a bilateral investment agreement with the United States. TaxesBilateral Tax Treaty The Philippines has a tax treaty with the United States for the purpose of avoiding double taxation, providing procedures for resolving interpretative disputes, and enforcing taxes of both countries. The treaty also encourages bilateral trade and investments by allowing the exchange of capital, goods and services under clearly defined tax rules and, in some cases, preferential tax rates or tax exemptions. Pursuant to the most favored nation clause of the Philippine-United States tax treaty, U. S. recipients of royalty income qualify for the preferential rate provided in the Philippine-China tax treaty. Accordingly, a ten percent tax rate applies with respect to most royalties. A 15 percent tax applies on the remittance of profits by Philippine branches of U. S. companies to their head office and dividends remitted by Philippine subsidiaries of U. S. companies to their parent companies. Philippine courts reportedly have denied a number of claims for refund of tax payments in excess of rates prescribed under applicable tax treaties for failure to secure tax treaty relief rulings. An entity must obtain a tax treaty relief ruling from the BIR in order to qualify for preferential tax treaty rates and treatment. However, according to several tax lawyers, the requirements for tax treaty relief applications are burdensome. Even stricter regulations issued in 2010 disqualify late filings from availing of the preferential tax rates. The volume of tax treaty relief applications also has resulted in processing delays, with most applications reportedly pending for over a year. Some publicly-listed companies reportedly have opted to withhold a final 30 percent withholding tax on dividend payments to foreign investors rather than go through the tedious process of securing tax treaty relief rulings for preferential tax rates. The BIR appears to be altering its position on tax gains through liquidation. Previously, it had consistently applied Philippine-United States Tax Treaty provisions exempting foreign companies from capital gains and corporate income tax on profit from the redemption and sale of shares by Philippine affiliatessubsidiaries being liquidated. However, a 2009 ruling involving a foreign company held that such gains were subject to corporate income tax, but not to capital gains tax in another case, the BIR ruled that the gains were subject to tax on dividends. The companies and other interested parties have filed position papers with the Department of Finance to contest these rulings. A number of transactions involving partial liquidations through shares redemption reportedly are on hold because of this unresolved issue. Tax lawyers maintain that any gains from liquidation should be exempt under the Philippines-Unites States Tax Treaty. The BIR has issued rulings involving non-U. S. investors asserting that the stock transfer tax is an ad valorem, transactional tax ndash different from the capital gains tax ndash and therefore applies on the sale of publicly-listed shares in the stock exchange. These rulings contradicted previous exemptions from the stock transfer tax by virtue of bilateral tax treaty provisions exempting foreign nationals from tax on capital gains. This interpretation could complicate the processing and resolution of similar tax treaty relief applications by U. S. and other foreign investors. A foreign company without a branch office that renders services to Philippine clients is considered a permanent establishment, and is liable to pay Philippine taxes if its personnel stay in the country for more than 183 days for the same or a connected project in a twelve-month period. However, BIR rulings on the taxation of permanent establishments have been inconsistent on whether to treat them as resident or non-resident foreign corporations. The BIR has yet to finalize long-pending draft regulations on transfer pricing but declared its policy is to subscribe to the OECD39s transfer pricing guidelines. Currently, the Tax Code authorizes the BIR to allocate income or deductions among related organizations or businesses, whether or not organized in the Philippines, if such allocation is necessary to prevent tax evasion. Domestic and foreign resident companies subject to regular income tax may claim an optional standard deduction of up to 40 percent of gross income, in lieu of itemized deductions. Companies may opt for either the optional standard deduction or itemized deductions in filing their quarterly income tax returns. However, in the final consolidated return for the taxable year, companies must make a final choice between standard or itemized deductions for the purpose of determining final taxable income for the year. BIR rules and regulations for tax accounting have not been fully harmonized with the Philippine Financial Reporting Standards, which are patterned after standards issued by the International Accounting Standards Board. The disparities between reports for financial accounting and tax accounting purposes are a common issue in tax assessments and an irritant between taxpayers and tax collectors. The BIR requires taxpayers to maintain records reconciling figures presented in financial statements and income tax returns. OPIC and Other Investment Insurance Programs The Philippine government currently does not provide guarantees against losses due to inconvertibility of currency or damage caused by war. The Overseas Private Investment Corporation can provide U. S. investors with political risk insurance against risks of expropriation, inconvertibility and transfer, and political violence, based on its agreement with the Philippines. The Philippines is a member of the Multilateral Investment Guaranty Agency. Managers of U. S.-based companies widely report that Philippine labor is relatively low cost, motivated. In addition, the Philippine labor force possesses strong English language skills. As of October 2011, the Philippine labor force was estimated at 38.5 million, with an unemployment rate at 6.4 percent. This figure includes employment in the informal sector and does not capture the substantial underemployment in the country. Multinational managers report that total compensation packages tend to be comparable with those in neighboring countries. In the call center industry, the average labor cost is between 1.60 and 1.90 per hour. Regional Wage and Productivity Boards meet periodically in each of the country39s 16 administrative regions to determine minimum wages, with the National Capital Board setting the national trend. During the reporting period, the non-agricultural daily minimum wage in the National Capital Region is 426 pesos (approximately 9.84), although some private sector workers receive less. Cost of living allowances are given across the board. Most other regions set their minimum wage significantly lower than Manila. The lowest minimum wage rates were in the Southern Tagalog Region, where daily agricultural wages were 199 pesos (4.59). Regional Boards may grant various exceptions to the minimum wage, depending on the type of industry and number of employees at a given firm. Literacy in both English and Filipino is relatively high, although there have been concerns in the business and education communities that English proficiency was on the decline. The Department of Education, under its National English Proficiency Program, continues its efforts to strengthen English language training, including school-based mentoring programs for public elementary and secondary school teachers aimed at improving their English language skills. Violation of minimum wage standards is common, especially non-payment of social security contributions, bonuses, and overtime. Philippine law provides for a comprehensive set of occupational safety and health standards, although workers do not have a legally-protected right to remove themselves from dangerous work situations without risking loss of employment. The Department of Labor and Employment (DOLE) has responsibility for safety inspection, but a severe shortage of inspectors makes enforcement extremely difficult. The Philippine Constitution enshrines the right of workers to form and join trade unions. The mainstream trade union movement recognizes that its members39 welfare is tied to the productivity of the economy and competitiveness of firms frequent plant closures have made many unions even more willing to accept productivity-based employment packages. The trend among firms of using temporary contract labor continues to grow. During the reporting period, DOLE reported two strikes involving 3,828 workers. The DOLE Secretary has the authority to end strikes and mandate a settlement between the parties in cases involving the national interest, which can include cases where companies face strong economic or competitive pressures in their industries. In 2011, there were 135 registered labor federations and 16,417 private sector unions. The 1.75 million union members represented approximately 4.7 percent of the total workforce of 37.1 million. Mainstream union federations typically enjoy good working relationships with employers. Special Economic Zones (ecozones) often offer on-site labor centers to assist investors with recruitment. These centers coordinate with DOLE and Social Security Agency, and can offer services such as mediating labor disputes. Although labor laws apply equally to ecozones, unions have noted some difficulty organizing inside them. There have been some reports of forced labor in connection with human trafficking in the commercial sex, domestic service, agriculture, and fishing industries. The Philippines is a signatory to all International Labor Organization (ILO) conventions on worker rights, but has faced challenges enforcing them. Unions allege that companies or local officials use illegal tactics to prevent them from organizing workers. The quasi-judicial National Labor Relations Commission reviews allegations of intimidation and discrimination in connection with union activities. In September 2009 the government cooperated with a high-level ILO mission to investigate labor rights violations in the country. The ILO mission noted issues relating to violence, intimidation, threat, and harassment of trade unionists and the absence of convictions in relation to those crimes. It also observed obstacles to the effective exercise in practice of trade union rights. In response to ILO mission recommendations, the government constituted the Tripartite Industrial Peace Council (TIPC) to monitor the application of international labor standards and has proposed several legislative measures to address weaknesses in the Labor Code. Foreign Trade ZonesFree Ports Enterprises enjoy preferential tax treatment when located in export processing zones, free trade zones, and certain industrial estates, collectively known as economic zones, or quotecozones. quot Enterprises located in ecozones are considered to be outside the customs territory and are allowed to import capital equipment and raw material free from customs duties, taxes, and other import restrictions. Goods imported into free trade zones may be stored, repacked, mixed, or otherwise manipulated without being subject to import duties and are exempt from the GPH39s Selective Pre-shipment Advance Classification Scheme. While some ecozones have been designated as both export processing zones and free trade zones, individual businesses within them are only permitted to receive incentives under a single category. Among the most compelling incentives for firms in export processing and free trade zones are: income tax holiday for a maximum of eight years exemption from real estate taxes for certain machinery for the first three years of operation of such machinery a five percent flat tax rate on gross income in lieu of all national and local income taxes, after expiration of the income tax holiday tax - and duty-free importation of capital equipment, raw materials, spare parts, supplies, breeding stocks, and genetic materials simplified import and export procedures remittance of earnings without prior approval from the Central Bank domestic sales allowance equivalent to 30 percent of total export sales permanent resident status for foreign investors and immediate family members exemption from local business taxes and, simplified import and export procedures. Philippine Economic Zone Authority The Philippine Economic Zone Authority (PEZA) manages three government-owned export-processing zones (Mactan, Baguio, and Cavite) and administers incentives to firms in about 248 privately-owned and operated zones, technology parks and buildings. Any person, partnership, corporation, or business organization, regardless of nationality, control andor ownership, may register as an export processing zone enterprise with PEZA. PEZA administrators have earned a reputation for maintaining a clear and predictable investment environment within the zones of their authority. PEZA reported an increase of 41 percent in investments in 2011, compared to the previous year (from 204.395 billion Php in 2010 to P288.34 billion Php in 2011 Information technology parks located in the National Capital Region may serve only as locations for service-type activities, with no manufacturing operations. PEZA defines information technology as a collective term for various technologies involved in processing and transmitting information, which include computing, multimedia, telecommunications, and microelectronics. Bases Conversion Development Authority The ecozones located inside former U. S. military bases are independent of PEZA and subject to the Bases Conversion Development Authority. The principal converted bases are the Subic Bay Freeport Zone (Subic Bay, Zambales) and the Clark Special Economic Zone (Angeles City, Pampanga). Other converted properties include John Hay Special Economic Zone Poro Point Special Economic and Freeport Zone and, Morong Special Economic Zone (Bataan). These ecozones offer incentives comparable to those offered by PEZA. Additionally, both Clark and Subic have their own international airports, power plants, telecommunications networks, housing complexes, and tourist facilities. The Phividec Industrial Estate (Misamis Oriental, Mindanao) is governed by the Phividec Industrial Authority, a government-owned and controlled corporation. Incentives available to investors are comparable to those offered by PEZA and also include special low rates for land lease. Two lesser-known ecozones are the Zamboanga City Economic Zone and Freeport (Zamboanga City, Mindanao) and the Cagayan Special Economic Zone and Freeport (Santa Ana, Cagayan Province). The incentives available to investors in these zones are very similar to PEZA incentives but administered independently. In addition to offering export incentives, the Cagayan Economic Zone Authority is also authorized by law to grant gaming licenses. Foreign Direct Investment Statistics The Philippine SEC, BOI, National Economic and Development Authority (NEDA), and the Central Bank each generate direct investment statistics. SEC, BOI and NEDA record investment approvals. The Central Bank records actual investments based on the balance of payments methodology, readily available in U. S. dollar terms. Central Bank data are widely used as a reasonably reliable indicator of foreign investment stock and foreign investment flows. The figures in Table 1 below refer to foreign direct investment (FDI) stock reported by the Central Bank, based on balance of payments methodology. Disaggregation of net FDI flows by country and by industry is presented in Tables 2 and 3, respectively. Table 4 provides a list of top foreign investors in the Philippines, using the latest available published information from the SEC. Some figures indicated in earlier Investment Climate Statement were revised to reflect updated Central Bank data. Table 1: Foreign Direct Investment Stock (US Millions)Over-the-Counter Market The Financial Industry Regulatory Authority (FINRA) regulates broker-dealers that operate in the over-the-counter (OTC) market. Many equity securities, corporate bonds, government securities, and certain derivative products are traded in the OTC market. The OTC Bulletin Board (which is a facility of FINRA), and OTC Link LLC (which is owned by OTC Markets Group, Inc. formerly known as Pink OTC Markets Inc.), for example, operate within the OTC market, particularly with respect to OTC equity securities. OTC Bulletin Board The OTC Bulletin Board (OTCBB) is an electronic inter-dealer quotation system that displays quotes, last-sale prices, and volume information for many OTC equity securities that are not listed on a national securities exchange. Securities quoted on the OTCBB include domestic, foreign and American depository receipts (ADRs). Only broker-dealers qualified with FINRA as market makers can apply to quote securities on the OTCBB. Under the OTCBBs eligibility rule, companies that want to have their securities quoted on the OTCBB must seek the sponsorship of a market maker as well as file current financial reports with the SEC or with their banking or insurance regulator. For more information, you may view the OTCBBs website at otcbb . OTC Link LLC OTC Link LLC (OTC Link) is an electronic inter-dealer quotation system that displays quotes, last-sale prices, and volume information in exchange-listed securities, OTC equity securities, foreign equity securities and certain corporate debt securities. In addition to publishing quotes, OTC Link provides, among other things, subscribers the ability to send and receive trade messages, allowing them to communicate for the purpose of negotiating trades. All subscribers to OTC Link are broker-dealers that are members of FINRA. Subscribers are permitted to quote any OTC equity security eligible for quoting under Exchange Act Rule 15c2-11 or the applicable exemptions to Rule 15c2-11. OTC Link does not require companies whose securities are quoted on its system to meet any eligibility requirements. With the exception of some foreign issuers, the companies quoted on OTC Link tend to be closely held, very small andor thinly traded. Most issuers do not meet the minimum listing requirements for trading on a national securities exchange. Many of these companies do not file periodic reports or audited financial statements with the SEC, making it difficult for the public to find current, reliable information about those companies. OTC Link is registered with the SEC as a broker-dealer and as an alternative trading system, and is a member of FINRA. For further information on the services offered by OTC Markets Group, Inc. you may view its websites at otcmarkets . See also - SEC Fast Answers: