How To Expand Your Businesses into the Philippines

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Atlas Team

Atlas helps innovative companies like yours to expand, onboard, manage and pay international teams in 160+ countries.

Published: 27 Feb 2024

In recent decades, the economy in the Philippines has undergone a major transformation. It isn’t just one of the fastest growing in Southeast Asia with a 5.9% year-over-year growth, it’s extraordinarily diverse with lots of potential for companies looking at global expansion.  

Despite the large opportunity, the Philippines has nuanced tax and employment regulations, along with unique cultural expectations. For this reason, many companies choose to use an Employer of Record (EOR) like Atlas to help launch their international operations.  

Is it the right move for your business? There are a few things you should know before you expand.

Why Expand into the Philippines? 

As it stands, the manufacturing sector in the Philippines is one of the fastest growing among major economies worldwide, but there’s increasing opportunity in a wealth of different sectors including life sciences and IT. Overall, the Philippines is projected to become a trillion-dollar economy by 2033, joining the likes of major economies like mainland China, Japan, South Korea, Australia, Taiwan, and Indonesia.  

 Much of this growth is also being driven by an environment that international businesses and investors find particularly appealing. 

  • Few language barriers: Both Filipino and English are the primary languages of the Philippines, but there are more than 180 languages spoken within the region.   

  • Strong pool of talent: The Philippines has a population of more than 110 million people, and the workforce is young (a median age of 26) and highly educated. There’s also a strong cultural emphasis on skill development, with 40% of Filipino workers having academic credentials beyond what’s required for the job.  

  • Cost savings: Since the cost of living is lower than the United States, many business owners find that they can save on salaries and operating expenses by entering the Philippine market.  

  • Strategic location: Geographically, the Philippines serves as a gateway to markets in Southeast Asia. They’re a current member of the Association of Southeast Asian Nations (ASEAN) which creates roughly 3.4% of the world GDP. 

  • Government incentives: In the last few decades, the Philippine government has made a push for foreign investment with tax breaks, exemptions, and other incentives. One of the most notable is an amendment to the Foreign Investments Act of 1991, which opened up restricted areas of the economy to foreign investors. The government has also established economic zones for foreign investment, managed by the Philippine Economic Zone Authority (PEZA). 

  • Trade deals: The Philippines has signed a number of trade deals that foster business across Asia and Europe. The country also has a close trade relationship with the United States. 

Top Industries in the Philippines 

The Philippines is the second-largest hub for business process outsourcing (BPO)—right behind India, the current frontrunner. In 2022, the sector saw 10.3% revenue growth, bringing in $32.5 billion to the domestic economy. The IT and Business Process Association of the Philippines (IBPAP) projects that this sector will grow by 7% in 2024 to amass 1.7 million full-time employees.   

Needless to say, there’s a lot of room for companies planning a global expansion, but certain areas are driving a large swath of the country’s overall growth. These include finance, healthcare, tech, and telecommunications.  

  • Life sciences: The Philippines has become a hub for innovation in the life sciences sector. Since 2020, there’s been a 4% annual increase in pharmaceutical patent applications. They’ve also become an emerging medical tourism country, with major opportunities in health IT, particularly telemedicine. Since the country is highly dependent on medical device imports, medical device manufacturers are in demand.  

  • Financial services: Consumer demand for financial services (particularly digital financial services) is growing in the Philippines. By 2030, the bankable population is projected to grow by 30% to 85 million people. Historically, the country has underinvested in fintech, widening the gap between demand and offerings, but the government has made a recent push with new reforms. 

  • Information technology (IT): The IT and business process management industry remains one of the largest sectors in the Philippines, but there’s also increasing demand in software and cyber security. The Philippine government has also recently opened up new opportunities for foreign investors in the telecommunications sector with an amendment to its Foreign Investments Act.  


What to Expect with Expansion in the Philippines 

There are a few steps you’ll need to take before you can launch your business in the Philippines. There are certain types of businesses that require a Filipino partner or have equity limits for foreigners. Some businesses (for example, export businesses) allow 100% foreign ownership. Here are some other things to keep in mind: 

  • Business structure: Business structures are similar to those in the United States—like sole proprietorship, partnership, or corporation. You can also have branch offices and representative offices. Different types of business have different capital requirements, though some qualify for an exemption. 

  • Registration and permits: Like all countries, the Philippines has specific laws and requirements. You’ll need to register with agencies like the Bureau of Internal Revenue, Department of Trade and Industry, Philippine Health Insurance Corporation, Social Security System, and Home Development Mutual Fund. You may also need Barangay clearance. This requires very specific paperwork. 

  • Visas and work permits: If you have international employees, they’ll need the appropriate visas and work permits

  • Employment contracts: It is recommended that employment contracts be written and minimum wage varies based on location. Employees typically receive a 13th-month bonus, but some may also receive a Christmas bonus. The typical work week in the Philippines is 40 hours, and overnight work is paid at a higher rate.  

  • Leave: The Philippines does not have mandated sick leave, but female employees can receive up to 105 days of fully paid maternity leave. Employees are entitled to five days of paid vacation after a year of employment, but many employers offer 15 days of paid leave to upper-level employees.  

  • Insurance: The Philippines has universal healthcare, but it’s funded by employees and employers. The rate is a percentage of covered pay. Some employers also offer private healthcare.  

Streamline Global Expansion with an EOR 

The Philippines has complicated regulations for foreign business owners, and many of these regulations have changed in the last few years. To keep up with compliance and streamline the process, it’s a good idea to hire an Employer of Record (EOR) like Atlas. Here are some of the many benefits.  

  • Flexibility and speed: It can take a long time to register with the proper organizations, get the right permits, and hire employees. An EOR can reduce your timeline to a few weeks. It also gives you the ability to test markets with short-term projects. You’ll be able to service international customers quickly and effectively.  

  • Less risk: Since an EOR is the legal employer, they’re responsible for compliance. They’ll handle legal HR functions like payroll, taxes, visas, contracts, and adherence to labor laws. 

  • Better employee experience: In a world of remote and hybrid workplaces, Atlas HXM can give your work site employees more mobility.  

  • Save costs: Though the Philippines typically offers lower operational costs compared to other areas, it can be expensive to start a business. Some business structures (like corporations in particular) require a large amount of capital. Using an EOR can cut these startup costs by as much as half. 

  • Cultural considerations: Cultural awareness can make or break a company during their global expansion. Since the Philippine market is so diverse, you’ll need some insight on local demand. An EOR can help. 


Need a step-by-step guide for going global?

Try Atlas’ comprehensive EOR handbook. 

Download the EOR handbook



The information contained in this article is intended for informational purposes only and is not intended to be construed as legal advice. The content is provided as updated at the time it was published only without any warranty of any kind, expressed or implied. Atlas is not a law firm and the material provided should not be used in lieu of professional legal consultation. It is recommended that readers seek legal advice from a qualified attorney or legal expert for guidance on any legal issues addressed in this article. Atlas shall not be responsible for any damages or problems that may arise from the use of the information provided in this article.