An Introduction To The Philippines

An Introduction To The PhilippinesThe Philippines is an island nation located in the Malay Archipelago in S give awayheast Asia. It has 7107 islands. And has a follow bea of 300000 squ be kilometers.At the north stance of Philippine the Taiwan is located. At the east side the Pacific Ocean, Ind anesia and Malaysia at the s bulgeh and South China Sea at the west.The capital city of Philippines is Manila which is located in the island of Luzon at the Federal part. The total population of Philippines is 98 trillion. The climate of Philippines is tropical.The culture of Philippines is influenced by Spanish and Chinese. Most of the tribe having overly Spanish surnames. It has gener tot each(prenominal)yy west European culture, people of Philippines ar Christian. Islam is much popular in island of Mindanao.The Philippines has learning thrift with agricultural and service sector base. The poerty line is 40% it mean 40% of the population remain be poor. The large trading partne rs of the Philippines are the US and Japan.Philippines is a poccupierial unitary republic with the president at the apex, as the head of state, the head of government and the commander in head teacher of the armed forces. He is elected by popular vote, every 6 course of studys. presidential term policies are design to promote industrial development.1.1 ECONOMICAL milieu frugal milieu of handicraft has reference for frugal systems to ope grade the demarcation. The communication channel sectors also continue scotch relations with govt, capital market place, military personnelwide and home bases sector. It would actuate the trends and formation of the prudence. The outer factors that influence with the following points. scotch Conditions -The frugal slew are safe in the unsophisticated. Per capita income, national income, allocation of income and assets, stinting resources, stinting harvesting etc are also affected to prepared the seam strategies. Economic harves t-time and business cycle are easily defined the economic surround.System -The economic system also impact on business endeavor. Economic system of a Philippines also considered socialist, capitalists, mixed or communist.Economic Policies -The government also decided budgets, economic planning, economic industrial regulation, jurisprudence of business. Industrial guidelines to control on price and wages, trade and transportation polices the size of it of national income, demand and supply of different merchandise.Economic Growth -The economic growth impacts the strategies of business. It helps in rising the economic growth and expenses in consumption. It provides opportunities to the industries for the expansion.v. funds Exchange -Current put backs have direct impact on the environment of business. The rupee was de mensurated in1991. The Indian products cheaper in the being market and pull ahead exports of India.ECONOMIC CONDITION2.1 gross interior(prenominal)ated help prod uct of Philippines The gross domestic product growth rate provides an come measure of changes in value of goods and go produced by an thrift.The GDP growth rate of Country from 1998 to 2012 is fair(a) 1.08%. The domestic scrimping accelerated in the consequence quarter of 2012 to 5.9% from 3.6%. The earlier year boosting the initiation-class semester growth to 6.1% from 4.2%. The alive Services sector remained the main driver of growth tide overed by the sustained growth of manufacturing and the return of construction.Philippines is a late(a)ly industrialized unpolished in the Southeastern Asia. The almost grave industries of Philippines are provender processing, textiles and garments, railway car parts and electronics. Philippines have also treasury of chromites, nickel, copper, char and newly spy cover.Philippines GDP Growth RateThis graph is all about the historic data for Philippines growth rate.Source http//www.nscb.gov.ph/sna/2012/2nd2012/2012qpr2.asp2.2 Per Capital Growth in Philippines In 2011, it was at 1.98% in Country and it was published by World Bank distinguish in 2012. The Growth rate of GDP per capital depends on regular local currency. The GDP Divided by Mid Year Population.The GDP of Purchasing Price is total of all resident products in economy (+) product valuateationes (-) any subsidies which is non holdd in value of the product. This is metrical without making deduction for depreciation of fictional assets. It overwhelms a chronological chart, discussion and estimate for GDP. In Southeastern area of Philippines is newly industrialized hoidenish. Philippines Predicting food for thought processing Textiles and Garment, Electronic and automobile parts and also signifi movet restrain of Chromate, Nickel, Copper, Coal and Recently Discovered Oil.Source http//www.kedingeconomics.com/philippines/GDP.Per.Capitagrowth. yearbook.Percentwb.data.html2.3 PPP Philippines Philippine has capacious familiarity with public- clandestine partnership, initiatives and serves as future investment with aggressive PPP promotion. The Government is to attract private partners to invest only in traditional infra construction Projects comparable Power, battery-acid and Water Sectors and in Non-Traditional Infrastructure similar to information and communications technology, health and berth development.The Partnership addressed in 1990s and it help out to improve road topwork quality, transport linkages and social Services.Source http//www.ppp/gove.ph/2.4 International support Countys beginning gross global coldness is importantly increased up to US $79.3 Billion in July.BSP Governor Amando Letangco said that conflicting reserve were US $3.2 Billion high gearer than GIR of US $76.1 Billion,The Level of GIR Increased in end of July, Due to Foreign exchange operations. The funds of the Country are deposited in unlike currency. The Philippines acquire income from investment in a foreign country of the BSP a nd gain revolution on BSP gold holdings arising from increase in price of Gold in global Market.The trade of goods and payment of services and income adequately cover in 11.7 months and also corresponding 10.7 sentences. Philippines short bound outer debt based on original maturity.Source http//www.sunstar.com.ph/breadkingnews/201208/ECONOMY OF PHILIPPINESPopulation 95.9 gazillionGDP (PPP) $351.4Billion 6.1% growth in 2012 5.5% 5-year compound annual growth $4,700 per capitaUn date 7.3% rising prices (CPI) 3.60%FDI Inflow $1.7 cardinal for 1st Half Quarter1 peso 1.3134 Rupee and 0.0243 DollarThe Philippines ranks 19thout of 41countries in the Asia Pacific neighborhood. And 44th the biggest economy on the earth. According to HSBC estimates. The stock market is one of the beat out performers in the region. The peso reached a 4 year high against the dollar about the said(prenominal) time.Economy has been on a solid path of economic expansion. The govt. has act a series o f governmental clear ups to increase the industrial environment and constitute up private sector for edit un vocation. But regulatory faculty has been not improved. And over run short 5 year the economy has been develop at clean annual rate of 5%.Rule of impartiality The rule of law is not on level and authorized structure is poor in independence and efficiency. The judiciary is independent barely on that point is political interference. There is some throw out due to government anti corruption parkways to eliminate corruption and fix efficiently.Limited Government Government spend Spurs on 6.4% growth in 1st Quarter.tax incomeableIncomeTax RateMore thanBut slight than0P10,0005%P10,000P30,000P500 + 10% of the surplusage over P10,000P30,000P70,000P2,500 + 15% of the Excess over P30,000P70,000P140,000P8,500 + 20% of the Excess over P70,000P140,000P250,000P22,500 + 25% of the Excess over P140,000P250,000P500,000P50,000 + 30% of the Excess over P250,000P500,000P125,000 + 32 % of the Excess over P500,000 in 2000 and onwardCorporate tax rate is 30% and Regional are taxed at 10% on taxable income. The VAT an environmental tax with overall tax is 12.8% of total domestic income. If any taxpayer fail to pay VAT component in the sales invoice or official receipts shall be penalized as Fine of not less then P1,000 but not more than than P50,000 andSuffer custody of not less than 2 but not more than 10 years.Regulatory Efficiency The business regulatory environment has improved considerably. Although launching a business still takes more than the world averages of seven offices and 30 days, the overall process has become less costly. The time and cost involved in dealing with licensing requirements have been notably reduced. The restriction market remains structurally rigid, but existing regulations are not particularly burdensome. Inflation is modest.Open Market The trade weighted average tariff rate is 4.8 per centum, and layers of non-tariff barriers ra iseinhibit more dynamic gains in trade. Despite a strong desire to attract longer-term foreigninvestment, systemic inefficiency exacerbated by heavy bureaucracy discourages dynamicgrowth in investment. The monetary sector, which is gradually modernizing, remains comparativelystable and sound.http//www.heritage.org/index/pdf/2012/countries/philippines.pdfECONOMIC POLICIES4.1 financial insurance policyThe international Monetary Fund leave look into the countrys progress on the monetary and fiscal policy and assess the 2 year old Aquino brass instrument by short staff visit which is commence. The most accurate forecasters agree on that Monetary authorities are attempt to control foreign investment in the Peso arguing that Asias best performing currency has strengthened too much.The economic momentum has built up from decreasing of monetary policy may boost the country is growth in2012 is 5.8% and up to 7 % is 2013. And the govt.s success in containing the budget shortage has b een given monetary authorities considered liberty. In 2011 the govt. incurred a budget deficit of 197.8 gazillion which was less than two third of 2010.The size of economy in overspending in 2011 comprised only 2% less than 3.5% pointed in2010. The debt stock of 2011 colonized at P4.95% trillion or 50.9% of gross domestic.http//business inquirer-net/49369/bsp-monetary-policy- anticipate-to-push-up-ph-economy4.2 Fiscal Policy The Philippines long term foreign currency credit rating raised(a) from BB to BB+. It kept rating outlook at stable.According to Presidential spokesman Ricky Carandang the Philippines can still afford to on a lower floortake public spending without put in to danger its overall financial position. And the govt. doesnt want a strong peso to delay competitiveness of exports. The Philippines economy grew by 6.4% in 1st quarter, it is one of the highest in Asia and upgrade is a vote of confidence for the country.According to finance secretary Cesar V Purisima, t hat this gives more confidence to continue with the work towards macroeconomic stability, fiscal sustainability and inclusive economic growth.http//www.philstar.com/Artical.aspx?article Id=824407 publication Sub household Id=4.3 Deficit Policy The Financial Secretary Cesar Purisima said that the govt. spent P19.90 cardinal and the deficit was manageable, expressing, confidence the full year fund shortfall would staying inwardly 2.6% of GDP or P279 billion.The govt. continued rise in revenue collections so that the fiscal position remains under control. So this wide fiscal space will gives the advantage to finance infrastructure projects and social programs that operate poverty and promote equality.Jan-May deficit P22.79 billion. The govt.s self imposed 1st one-half(a) ceiling of P109.34 billion and it spent P668.43 billion in 1st v month of year up 13.1% compared to last year. And revenues reached P645.64 billion.For May revenue grew 9.4% to 131.4 billion succession spending reached P151.3 billion. Purisima said that the govt. is committed to reach its 5.6% growth in 2012 and save 6.4% expansion in 1st three month.The Philippines suffered a P 197.8 billion budget deficit last year which is equivalent to 2% of GDP.http//business-inquirer-net /67459/Philippine-budget-deficit-shoots-up4.4 Foreign job Policy According to the Global Enabling Trade Report 2012, the rank of Philippines is 72nd out of 132 countries. It measured the factors, policies, services, areas of market access, border administration transport and communication infrastructure and business environment.In the area of market access the Philippines jumped 14 from 64 and in terms of efficiency of import-export procedure it looks 48 spot from 55. And access to imported inputs at competitive prices identifying electric potential market and buyers corruption at the border and new(prenominal) concerns it places 62 out of 132 countries.The trade chief attributed the countrys improvement in rank ing to the debt of Trade and Industrys effort to facilitate trade across borders homogeneous the Doing business in assuage Trade Areas an awareness campaign has aimed to help stakeholders into understand new markets and instruments like free trade agreement.It reforms to improve the ease of doing business in country through the Philippines. Business Registry (PBR) and Business permits and license streamlining (BPLS) programs for local govt.http//businessinquirer-net/63369/Philippines-climbs-20-nitches-up-in-business-destination-ranking4.5 correspondence of Payment The inflow of foreign currency exceeded than the outflow in Feb and Philippines eternal rest of payments hitting a surplus of $588 million.BOP is recorded of the countrys commercial work with the rest of world. It helps beef up the countrys total reserves of foreign exchange or gross international reserves (GIR).It stands at a record high of $78 billion.According to economic expert the un comfortable global economy th at investors have tendency to pull out funds from emerging markets like Philippines. So it create depreciation pressures on local currencies. But with replete reserves of foreign exchange the Bangko Sentral ng philipines can buy pesos and reduce its depreciation and it will hit a surplus of at last $2.8 billion by end of 2011.Due to increase in employment in US an economist said that it would lead to increase in demand for imported goods from Philippines.http//bus.inquirer.net/50127/bsp-balance-of-payment-stood-at-surplus-in-febGLOBAL transnational ECONOMICAL GOVERNMENT5.1 Import Philippines import were worth 5101 million USD in June of 2002 until 2012,Philippines averaged imports 4155.20 million USD reaching an all time high of 5848.00 million USD in July of 2008 and low record of 2226.00 million USD in January of2002. Philippines imports mostly considered electronic products, mineral fuel, industrial machinery and equipment, transport equipment, lubricants, brand name and iron . Mostly import partners are Japan, china, Singapore, South Korea, United States. Here we include the chart with historical data for Philippines import.Philippines Importshttp//www.tradingeconomics.com/philippines/importsExport Philippines exports were worth 4314 million USD in June of 2012. From 2002 until 2012, average export of Philippines 3681.10 million USD reaching an all time high of 5325.00 million USD in September of 2010 and record low of 2506.00 million USD in February of 2009. Major exporter of electronic products like processors, chips, and hard drives (more than 50% of total exports revenue) and other major exports include apparel and clothing accessories, wood crafts, coconut oil and furniture. Philippines major export partners are United States, Singapore, Japan, Hong Kong, china. This page includes a chart with Philippines historical data of Philippines exports.Philippines Exportshttp//www.tradingeconomics.com/philippines/exports5.2 Corporate Income Tax The domestic and foreign resident corporations income tax rate in Philippines is 30%, based on net taxable income. Domestic company payable company tax on all income derived from sources outside and within the Philippines. Foreign corporations, whether resident or non-resident are taxable on income derived from sources within the Philippines.Non resident foreign corporations are ,in original circumstances, subject to a final withholding tax on unresisting (investment) incomes at rates higher(prenominal)(prenominal) than the applicable tax rates applying to domestic and foreign resident corporations. Resident companies are created or organized under the law of Philippines or foreign companies licensed to engage in business or trade in the Philippines.The incarnate income tax rate for domestic and foreign resident corporations is 30%, income tax excluded from are dividend received from domestic corporations, interest on Philippines currency bank deposits and other monetary welfare from deposit s substitutes and trust funds and arrangements and final taxes, interest income derived from the foreign currency deposits is include final tax of 7.5% ,other interest earned by domestic and foreign resident corporations is included 20% final withholding tax.Special economic tones enterprises registered with economic tone authority are taxed at the rate of 5% on gross income in lieu of national and local taxes and existent property tax. Gross sales or gross revenue derived from the business activity within the Ecozens, sales returns, net of sales discount and allowances less the cost of sales or direct costs but forward deduction made for expenses of administrative and losses during the taxable period.http//www.quezoncity.gov.ph/index.php?option=com_contentview=articleid=226Itemid=347India2005-36.59 2006-33.66 2007-33.99 2008-33.992009-33.99 2010-33.99 2011-32.44 2012-32.44The corporate tax rate is 32.445% .Domestic companies tax rate is 30%, profits from carriage insurance busin ess in India are taxed at the rat of 12.5%.foreign companies are taxed at the rate of 40%. A minimum alternate tax (MAT) is levied at 18.5% of adjusted profit of companies. The tax payable is less than 18.5% of hold back profits. Dividend distributed from domestic company. Surcharge and education cess is above taxes is applicable.5% surcharge in racing shell of foreign companies is applicable. The total income is in excess of INR 10 million. Education cess of 3% is applicable on income tax plus surcharge wealth tax is imposed at a rate of 1% on the value of specified assets held by the tax payer in excess of sanctioned exemption of INR13million.transaction tax of securities transactions in equity shares and units of equity orient funds.http//www.kpmg.com/global/en/whatwedo/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspxHOW ECONOMIC ENVIRONMENT OF PHILIPPINE AFFECTS INTERNATIONAL BUSINESS?The Philippines has certainly had a steady flow of positive economic news r ecently. On July 4, Standard Poors raised the countrys debt rating to just downstairs investment grade, the highest rating for the country since 2003 and equivalent to that of Indonesia.The Philippines is the 44th-largest economy in the world today, gibe to HSBC estimates. But if current trends hold, it can leap to the No. 16 spot by 2050. The Philippine stock market, one of the best performers in the region, closed at a record high after the recent S. P. rating upgrade, and the countrys currency, the peso, reached a four-year high against the dollar at about the same time.With $70 billion in reserves and lower interest payments on its debt after recent credit rating upgrades, the Philippines p conductged $1 billion to the International Monetary Fund to help shore up the assay economies of Europe.The gross domestic product of the Philippines grew 6.4 per centum in the first quarter, tally to the countrys central bank, outperforming all other growth rates in the region except C hinas. Economists expect similarly strong growth in the second quarter.We have made a very bold forecast for the Philippines, but I think justifiably so, said Frederic Neumann, a senior economist at HSBC in Hong Kong.A high population growth rate, long considered a hindrance to prosperity, is now often seen as a hotheaded force for economic growth. About 61 percent of the population in the Philippines is of working age, between 15 and 64. That figure is expected to continue increasing, which is not the case for many of its Asian neighbors, whose populations are aging.6.1 Trade Economy The GDP per capita growth (annual %) in Philippines was last reported at 1.98 in 2011, according to a World Bank report published in 2012. Annual percentage growth rate of GDP per capita based on changeless local currency. GDP per capita is gross domestic product divided by midyear population. GDP at purchasers prices is the sum of gross value added by all resident producers in the economy plus any product taxes and damaging any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. This page includes a historical data chart, news and forecats for GDP per capita growth (annual %) in Philippines. Philippines is a newly industrialized country in the Southeastern Asia. The nations most important industries are food processing, textiles and garments, electronics and automobile parts. Philippines also has epoch-making reserves of chromite, nickel, copper, coal and recently discovered oil. In addition, the Philippians economy relies on remittances as a source of foreign currency.philippines gdp per capita growth annual percent wb data6.2 Domestic Price The Philippine domestic economy shrunk to 3.7 percent in 2011, after a stellar growth of 7.6 percent in 2010. Growth was mainly undermined by the severe state under spending as headspring as the frai l external environment. Outlook for 2012 is relatively sanguine with the government hinging its optimism on robust consumer demand and a more vigorous public spending. However, downside risks to growth persist with the global recovery equanimous to remain slow and uncertain.2011 domestic economy tepid at 3.7%. The Philippine domestic economy grew by 3.7 percent in 2011, almost half of its 7.6 percent growth in 2010. The growth is within the latest forecasts of the study Economic and Development Authority (3.6-4.0 %) and the International Monetary Fund (3.7%). However, the growth figure is well below that assumed by the Development reckon Coordination Committee (4.5-5.5%), Asian Development Bank (4.7%), and the World Bank (4.2%) and is significantly off the growth target of the Philippine Development Plan (7.0%). remarkable is the countrys poor economic performance relative to its neighbors. Except for Thailand, most Asian economies registered higher gross domestic product (GDP) growth rates than the Philippines in 2011.Gross national income (GNI)1 likewise slumped to 2.6 percent from 8.2 percent in 2010. This resulted from the significant contraction of net primary income (NPI),2 which slowed to a negative 0.9 percent, a blow from the 10.0 percent growth in 20106.3 Labor Force Unemployment down to 7%. The countrys labor party force numbered at 61.9 million in 2011. Of this number, 2.8 million were unemployed people registering an unemployment rate of 7.0 percent. Moreover, the service sectors share of total employment increased from 51.8 percent in 2010 to 52.1 percent. Agriculture accounted for 33.0 percent of the employed while industrys share was 14.9 percent. Although the economy managed to generate more than one million jobs in 2011, the quality of employment is still a concern given the substantial increase in the underemployment rate as well as in the number of recreational family workers. Latest data showed that the underemployed numbered at 7.2 million6.4 Inflation publicise ostentatiousness is within target. Headline inflation averaged 4.8 percent in 2011, well within the 3.0-5.0 percent inflation target for 2011 but higher than the 3.8 average recorded in 2010. A rise in the prices of food items had been recorded mainly due to the adverse effect of typhoons on agricultural food supplies. Core inflation,3 on the other hand, averaged 3.6 percentThe government is particularly optimistic on having higher investments in 2012 as investment pledges registered with the Philippine Economic Zone Authority surged by 47 percent in the first two months of the year. The PSEis breaching of the 5,000 mark for the first time in March 2012 is also said to bode well for the equities market.Likewise, private construction, particularly in the property subsector, is anticipated to remain robust given the upward momentum in office demand and investments in low-cost housing. Demand for commercial spaces will continue to be buoyed by the BPO sector, the revenues of which are slated to grow even further this year by 20 percent. The residential sector is also expected to receive continued support by the robust demand from families of abroad Filipinos. Consumer spending will similarly be sustained by the favorable inflation outlook and the continuous inflow.6.5 Unemployment Rate Unemployment means the number of people actively looking for a job divided by the labor force. Unemployment depends on the number of non-employed people who found the job and the people who mazed their current job. Unemployment related to labour force, participation rate and employment rate.The unemployment rate of Philippines is 7.2 % which we can show that in the graph.6.6 Private Sector Development The input signal box presented by Gloria Macapagal Arroyo is known as the economic resiliency plan. The package included personal income-tax relief for low- and middle-income earners, reduction in corporate income tax, higher social spending on c ash transfers and job-creation schemes, as well as a series of infrastructure projects. Although the reforms were not entirely new, the package led the Philippines to being acknowledged as Asias more socially responsible input signal plans thanks to its focus on agriculture and social services that at one time benefit the poor population. The fall in agricultural commodity prices helped support personal disposable income. As a result personal household budgets were minimally effected. The social component in their reforms may be attribute with the largest impact due to the focus on poverty.The Philippines must sustain the reform movement in order to spur investments, increase growth, generate higher employment, and alleviate poverty for the fast growing population. Their reforms have already generated 34 consecutive growth quarters, created 8 million jobs, and maintained the lowest inflation in a generation. Most importantly poverty has decreased while revenue increased and has a llowed the nation to invest in human and somatogenetic infrastructure. With sustained reform and their economic resiliency the Philippines may soon be a prime investment opportunity in uncertain world economic and financial conditions.