# Business related question



## Joust (Oct 29, 2013)

Hi all, I am investigating the possibility of expanding part of our business to the Philippines and trying to get some guidance on where to start. A lot of the search returns that have popped up seem to be in regards to starting a brand new business in the Philippines, but I don't see much in terms of just placing a "branch" there and the red tape involved in such an en devour. I know one our employees is married to a fillipino woman, but she is not sure about how establishing a foreign entity there is conducted. She does know that they are leary of being taken advantage of, but we are not wal-mart or any other exploitative type of business, average salary would be well above median income and it would it only be offered to locals and stock options would be issued to those who want it. We're not sure if that would be enough to please the government in terms of Filipino ownership having a certain percentage.

We wish to operate in Manilia, if that makes a difference. 


Any leads or advice would be greatly appreciated. I thought about trying the embassy to pick their brain on leads, but google reviews seem to rate them very low on customer service, so I've passed on that idea for now.

Thanks in advance!


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## M.C.A. (Feb 24, 2013)

Nobody wants to touch this....and I don't blame them.... It's so corrupt that words... that my words are at a loss, I feel that you can start a business and make money in the Philippines but get ready for a bumpy road and that's reality here, there are rules but? it's all about money get ready to pay and any ideas to improve things in the Philippines is appreciated, sadly it's a seriously messed place.


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## Joust (Oct 29, 2013)

I appreciate your honesty on the outlook, what are some of the major issues that we may encounter trying to establish something there, if you don't mind me asking? Is it more so government interference or local resistance? I'm guessing the former, as I can't see locals trying to keep good jobs out. Although we see that here stateside all the time too, so not completely out of the realm of reality I guess.


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## Joust (Oct 29, 2013)

Thanks for the insight! Yes we plan to have a local help us, but as you said we have to find someone trustworthy first. Hopefully it won't be so hard to find someone.

Thanks again!


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## DonAndAbby (Jan 7, 2013)

You might consider one of the Freeport Zones, Clark or Subic. I don't know any details, but they encourage foreign investment, so it might be a bit easier, dependent on what type of business.


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## cvgtpc1 (Jul 28, 2012)

*Rumors*



CaptainLarsen said:


> It is not as bad as some like to portray it.


I admittedly have no experience with this but have heard of several things like having to pay "convenience money", unsavory elements (from crooks to cops to govt officicials) wanting a piece of your success, and prejudice against foreign run businesses. You've never experienced this?


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## M.C.A. (Feb 24, 2013)

I have a billiards room, we opened it up again and it's doing well but if sit out there and do it, we won't have customers or very few, in my area it's best to let family take care of business, sometime next year I will be ready for the vulcanizing business, need some more equipment and a experienced worker, once again it won't be me because they won't stop. So basically rule of thumb that I have learned is to stay hidden or out of the way as a westerner.


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## Gary D (Oct 28, 2013)

Employing family and relation can be problematic, especially when you need to sack one of them. Also sometime the work ethic can be a bit lacking, they will expect the money but not expect to do much for it.

Small family run business often fail in the Philippines unless you are there 24/7. If you leave it to run on it's own there's a big chance it won't be there when you return. Also over paying can lead to problems with the surounding business so it's best to pay the local rate.

There's a saying in the Philippines. "You pretend to pay me and I'll pretend to work"


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## JimnNila143 (Jul 23, 2013)

According to the Philippine Immigration Bureau, unless their rules have changed, any business opened in the Philippines has to be 60% Filipino owned. I.e., your wife would own that 60% of the business. PIB also states that if you hire at least 10 Filipinos to work at your business, they will issue you an indefinite visa to stay here. I don't recommend hiring family or friends. In business there is an old saying, 'Friends are friends, family is family, and business is business. In business you have no friends or family.' Also, in the Philippines, there is another old saying. 'No money, no honey, no pay, no play. No pay, no work, no work, no eat, no eat, you go patay.' You have to agree with a certain amount of pay for each employee per day and the work hours have to be specific also. If they don't work, they don't get paid. If they are late for work, they get their pay docked. Let your wife do all the job interviews and the hiring. She has to be very strict and there cannot be any hiring of her friends or family. Most importantly, no advances in pay.


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## Gary D (Oct 28, 2013)

JimnNila143 said:


> According to the Philippine Immigration Bureau, unless their rules have changed, any business opened in the Philippines has to be 60% Filipino owned. I.e., your wife would own that 60% of the business. PIB also states that if you hire at least 10 Filipinos to work at your business, they will issue you an indefinite visa to stay here. I don't recommend hiring family or friends. In business there is an old saying, 'Friends are friends, family is family, and business is business. In business you have no friends or family.' Also, in the Philippines, there is another old saying. 'No money, no honey, no pay, no play. No pay, no work, no work, no eat, no eat, you go patay.' You have to agree with a certain amount of pay for each employee per day and the work hours have to be specific also. If they don't work, they don't get paid. If they are late for work, they get their pay docked. Let your wife do all the job interviews and the hiring. She has to be very strict and there cannot be any hiring of her friends or family. Most importantly, no advances in pay.


I stand to be corrected but it was my understanding that you can't use your wife as the 60% owner. She would have to be a 100% owner, or if you wish to keep the 40% you need six 10% Filipino owners. Some try using silent partners but I believe that has it's problems like being illegal. It's all to do with control as the family code treats man and wife as a single entity so that you in effect get control over your wife's 60% which is prohibited.


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## Phil_expat (Jan 3, 2011)

JimnNila143 said:


> According to the Philippine Immigration Bureau, unless their rules have changed, any business opened in the Philippines has to be 60% Filipino owned. I.e., your wife would own that 60% of the business. PIB also states that if you hire at least 10 Filipinos to work at your business, they will issue you an indefinite visa to stay here. I don't recommend hiring family or friends. In business there is an old saying, 'Friends are friends, family is family, and business is business. In business you have no friends or family.' Also, in the Philippines, there is another old saying. 'No money, no honey, no pay, no play. No pay, no work, no work, no eat, no eat, you go patay.' You have to agree with a certain amount of pay for each employee per day and the work hours have to be specific also. If they don't work, they don't get paid. If they are late for work, they get their pay docked. Let your wife do all the job interviews and the hiring. She has to be very strict and there cannot be any hiring of her friends or family. Most importantly, no advances in pay.


Maybe I am wrong: my understanding was a non-Philippine citizen(s) could own 40% of a corporation that owns the business. He cannot directly own any of the business. Correct me if this is wrong.


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## overmyer (Aug 15, 2013)

Gary D said:


> I stand to be corrected but it was my understanding that you can't use your wife as the 60% owner. She would have to be a 100% owner, or if you wish to keep the 40% you need six 10% Filipino owners. Some try using silent partners but I believe that has it's problems like being illegal. It's all to do with control as the family code treats man and wife as a single entity so that you in effect get control over your wife's 60% which is prohibited.


I know of a number of Philippine Spouse 60%/Foreign Spouse 40% businesses! It doesn't seem to be an issue!


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## Gary D (Oct 28, 2013)

overmyer said:


> I know of a number of Philippine Spouse 60%/Foreign Spouse 40% businesses! It doesn't seem to be an issue!


Ah but is it legal?

What you need to consider is where the 60% of the finance to set up the business has come from. It must come from the filipino partner. If you effectively pass the 60% under the table to the filipino partner you are breaking the Anti dummy law.

So what legally defines a “dummy corporation”? as written by actual Philippine government lawyers:

Badges of “dummy status”

The Department of Justice Opinion No. 165, Series of 1984, laid down the following “significant indicators” or badges of “dummy status”

That the foreign investor provides practically all the funds for the joint investment undertaken by Filipino businessmen and their foreign partner.

That the foreign investors undertake to provide practically all the technological support for the joint venture.

That the foreign investors, while being minority stockholders, manage the company and prepare all economic viability studies.


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## Glen48 (Jul 6, 2012)

I know a local who can help you set up he has helped me and has lots of contacts in the right place let me know and I will pass on the details.


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## G knight (Oct 4, 2012)

Hi Glen, sounds great! Please send me details...


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## M.C.A. (Feb 24, 2013)

*Work staff*



Gary D said:


> Employing family and relation can be problematic, especially when you need to sack one of them. Also sometime the work ethic can be a bit lacking, they will expect the money but not expect to do much for it.
> 
> Small family run business often fail in the Philippines unless you are there 24/7. If you leave it to run on it's own there's a big chance it won't be there when you return. Also over paying can lead to problems with the surounding business so it's best to pay the local rate.
> 
> There's a saying in the Philippines. "You pretend to pay me and I'll pretend to work"


 
Hiring non family members is not much better, we have family members that work in restaurants (Manila) the food is not free for employee's and they get a 60 peso allowance so they can buy their own food but they brag about eating at the work and keep the money as part of their pay.

When I purchase things in the grocery store like chocolate milk boxed in cases I now need to check them before purchasing I have come home only to find several have been opened and consumed by employee's, other boxed items have the same issue, items have been opened by consumers.


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## overmyer (Aug 15, 2013)

mcalleyboy said:


> Hiring non family members is not much better, we have family members that work in restaurants (Manila) the food is not free for employee's and they get a 60 peso allowance so they can buy their own food but they brag about eating at the work and keep the money as part of their pay.
> 
> When I purchase things in the grocery store like chocolate milk boxed in cases I now need to check them before purchasing I have come home only to find several have been opened and consumed by employee's, other boxed items have the same issue, items have been opened by consumers.


Several years ago, there was a story in the papper here (Bacolod City) involving two Canadian expats that had a 2 store pizza restaurant biz. Each had family members working in their respective locations. Each had managed to piss off their family employees. The employees got together and decided to beat the two for perceived mistreatment. The family/employees of Canadian #1 attacked Canadian #2 while the family/employees of Canadian #2 attacked Canadian #1. Caused quite a stir at the time!


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## M.C.A. (Feb 24, 2013)

*Employees family or ?*



overmyer said:


> Several years ago, there was a story in the papper here (Bacolod City) involving two Canadian expats that had a 2 store pizza restaurant biz. Each had family members working in their respective locations. Each had managed to piss off their family employees. The employees got together and decided to beat the two for perceived mistreatment. The family/employees of Canadian #1 attacked Canadian #2 while the family/employees of Canadian #2 attacked Canadian #1. Caused quite a stir at the time!


LOL.... yea the family it don't take much to upset them and you never hear the other side of the story, mistreatment ... that could mean anything, no seconds on dessert no extra money from the till, don't give away the pizza's and soda's to your buddies, be respectful to the customers, it wasn't enough that the brothers created jobs for the family, they probably took advantage and very little profit was being made so the abuse was in the form form of chewing them out in front of their buddies, not a good practice here...unsure of what really happened, stories at times can be real one sided.


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