# Starting a business in the Philippines, is it a bad idea?



## Thomas85 (Aug 6, 2016)

Im considering starting a business in the Philippines a year or two down the line, like a hostel, but whats turning me off is the fact I have to give 51% of it to a Filipino/Filipina.. Im also hearing of foreign buisness paying a lot more tax, especially if your not married to a Filipino, or having to bride government officials, etc. ...
Is it hard to make money in the Philippines with all this? Any advice would be great.
Plus, if this was discussed in another thread, then i apologise. I couldn't find. If it has been discussed i would love to be referred to it


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## Datchworth (Jul 5, 2015)

Yes, Thomas, tales of Expats being ripped off by local business partners are commonly read on forum posts here. A few people counter this by by reporting a good experience. Partnership is an inherently risky business structure anywhere, but in my dealings with a couple of businesses as a long term customer I have known about the problems even Filipinos can have with other Filipinos as partners. Basically, people with connections and money can easily pervert the legal system and, for example, seize the business on a pretext.

There are a whole range of permits and registrations to make, from the Barrangay level up to the national level. "Under the counter" payments are definitely in existence when getting various house permits, we had to pay some, and the payments will certainly be higher for an Expat. Where we reside it is rumoured that such payments are needed for City business permits, and I think that is quite likely to be true. Expats, generally, are viewed as being able to pay more. Unless one has connections, of course.

Just a guess, but I think the tax people could be the least of your worries - even so, there are some stories counter to that which I have read on forums.

Like many things here, experiences of the same organisation can be wildly different depending on the place and area of the country. Places next to each other can be very different in the way they deal with businesses. For example, I have been told that many businesses do not set up here in Tagaytay, but rather in an adjoining area, due to the cost and difficulty of getting permits here. When one drives through that area one sees what they mean.

Regarding profit potential, apart from all that, from my observations here I would say that the Philippines is a intensely competitive business environment. Open up any new business here and someone nearby will probably start to compete with you. One can observe this at all levels. So, you might start well with plenty of students boarding from a local university - then, someone working in the University might use their influence to divert students to a boarding house owned by a relative.

Last, as a foreigner with a business one may encounter some envy - there is a view here held by some that foreigners should keep out of some areas of business and limit themselves to areas like tourism.

All of the above leads to the most commonly read about successful businesses here for Expats being on-line, although they may be subject to more regulation in the future.


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## expatuk2016 (Mar 20, 2016)

I agree with Datchworth an Expat here starting any business is a target for Barangay and local city
officials , you need a permit here for basically anything !just go to the city hall and ask what permits you need to build a home !!
I did personally think of starting a coffee Machine business but they are everywhere !
so that idea was a no go and the paperwork involved
basically was a seperate permit for each Machine ! asked around and those with machines already
told me " we no have permit we pay the mayor !!"
Even a couple of sari-sari stores now is a bad idea as Alfamart build convienence stores every where
there are currently 4 in Los Banos alone .
Best business these days is online if you do it something like Lazada !


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## Simon1983 (Jun 6, 2016)

I've heard this advice somewhere, when someone was talking about opening a restaurant in Philippines - work for a year in the area/industry you want to have a business - get to know the local area/politics/market, get an understanding of the ins and outs and ups and downs of running a hostel in that area - learn from the owners' mistakes.
That way you can save a lot of headaches and a lot of cash if you decide it isn't for you after 12 months.


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## Asian Spirit (Mar 1, 2010)

The main thing here is that as a foreign business owner you are in a lose-lose situation no matter what. Exception to this is if you have a business with you spouse that you have been married to for enough years to know it's safe.
No matter what - in any court dealings with any business, they will side with the Filipino. For me, it would never be worth the risk.


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## fmartin_gila (May 15, 2011)

I made a comment on another thread about this and here it is again. At one time in my past I was a "silent" partner in a food concession at a northern Calif airport and in the end lost it all. I have also been a equal partner in airplane ownership. The "School of Hard Knocks" has taught me never to enter a partnership in anything to do with monetary income or ownership. I may be a bit jaded as a result of what has happened, but my recommendation is if you can't do it alone then don't do it.

Fred


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