The Philippines is a country that is well worth looking at as a place in which to invest or to set up a manufacturing base. Expatriates highly appreciate the (1) Very friendly attitude of Filipinos toward foreigners, (2) Availability of quality primary and secondary education, (3) Housing closest to meeting western standards at very reasonable rental rates, (4) Best sporting and recreational facilities, and (5) Very good quality of healthcare services available to foreigners.

In fact, the Political and Economic Risk Consultancy, Ltd. ("PERC") of Hong Kong rated the Philippines (3.35 Over-All Average Score) as providing "The Best Quality of Life for Expatriates," in the 1st Quarter of 1999, outclassing Singapore and Malaysia. (1 - Best Possible, 5 - Average, and 10 - Worst Possible).

Other compelling reasons to locate in the country are:

FOREIGN OWNERSHIP OF ENTERPRISES

The Foreign Investments Act ("FIA") of 1991 allows up to 100% foreign ownership of industrial enterprises in practically all areas except those contained in the negative list. The negative list includes:

• Enterprises prohibited by the Constitution and Specific Laws such as the exploration, development, and utilization of material resources, operation and management of private utilities, ownership of private lands, advertising, private recruitment, etc.;
• Enterprises related to national security and defense or with risk to public morals and health such as the manufacture, repair, storage and/or distribution of firearms, ammunition, lethal weapons, military ordinance and explosives, manufacture and distribution of dangerous drugs, operation of sauna and steam bathhouses, massage clinics and other similar activities,
• Domestic market enterprises with paid-in capital of less than US$200,000; and
• Domestic market enterprises which involve advanced technology or employ at least 50 direct employees

The law further simplifies investment procedures such that if the investment area is not in the negative list, the foreign investor may immediately proceed to the Securities and Exchange Commission ("SEC") for registration of the company without first having to obtain the approval of the Board of Investments ("BOI").

REMITTANCE OF FOREIGN EXCHANGE

The Philippine government allows the outward remittance of earnings from investments and payments for interest and principal on foreign loans, and for foreign obligations existing from technological assistance contracts. It also allows the repatriation of the entire proceeds of the liquidation of the investment. However, for purposes of assuring subsequent remittance of funds, direct foreign equity investments must be registered with the Bangko Sentral ng Pilipinas ("BSP"). Those registered with the SEC or Bureau of Trade Regulations and Consumer Protection ("BTRCP") shall be deemed registered with the BSP upon the recommendation of either agency.

INCENTIVES AND GUARANTEES

The BOI provides incentives and guarantees to investments in industries listed in the annual Investment Priorities Plan ("IPP") or those which export all or a specified part of their production. In the latter case, if the enterprise is foreign, then a minimum of 70% of production must be exported. PEZA grants special incentives to locators and ecozones.

To simplify the procedure of acquiring such incentives and guarantees, a One-Stop Action Center has been set up at the BOI offices where prospective investors can find out all they need to know about doing business in the Philippines and have their applications processed in the quickest possible time.

All government agencies concerned with investments in trade, tourism, agriculture, natural resources, transportation, communications and services are properly represented in the One-Stop Action Center. These agencies are: Department of Environment and Natural Resources, Department of Transportation and Communications, Philippine Economic Zone Authority, Securities and Exchange Commission, Central Bank, Bureau of Customs and Commission on Immigration and Deportation. The Board of Investments serves as Secretariat of the One-Stop Action Center.

GSP ADVANTAGE

Under the Generalized System of Preferences ("GSP"), the Philippines continues to enjoy tariff preferences when exporting various products to developed countries such as the United States and those in Europe. In contrast, many of the neighboring countries in Asia no longer enjoy this advantage, thus, giving the Philippines an edge in competing for the export market. What is also significant is that the country is still a long way from being graduated from these GSP privileges, so investors can look forward to enjoying them for some time to come.

LABOR COST, AVAILABILITY AND QUALITY

The country's most important competitive advantage is its Filipino workers. They are literate, English-speaking, easy to train, hardworking, and very friendly.

ASIAN LABOR RATINGS