How to start a business in the Philippines for $125

How to start a business in the Philippines for $125
How to start a business in the Philippines with $125 in expat entrepreneur paid-up capital

Expat entrepreneurs who wish to start a business in the Philippines can do so with $125 in paid-up capital – with one caveat

Reporting from: Manila, Philippines

The Philippines has been experiencing solid growth of 6% as it grows along with much of southeast Asia. Yet the Philippines offers unique opportunities for expat entrepreneurs who want to start an offshore business. As I wrote about yesterday, it has a westernized feel to it in many places and is a reasonable choice for expats, retirees, and entrepreneurs.

For many expat entrepreneurs who want to live here, the question is “how to start a business in the Philippines”.

Nouriel Roubini recently came to Manila and called the Philippines “an economic success”. The country now has an investment grade rating and others are expected to come shortly.

Economic liberalization is coming and upcoming elections look positive for business and, I’m told, will empower the powers that be to clamp down more on those who are clinging on to keep corruption alive.

The good news is, starting a business here can be relatively easy if you understand how the government works. You don’t need the $75,000 for an investment visa – far from it. You can start a Philippines business for as little as $125.

The government here has imposed restrictions on foreign-owned businesses. Just like restrictions that prohibit foreigners from owning real estate other than condos, these restrictions are a form of internal protectionism that aim to keep foreigners working with their own.

To start a retail business, for instance, you need paid up capital of US$2.5 million. For that price, you could set up shop in any number of places including some of the world’s wealthiest countries. While the country goes ga-ga for American brands – you can find even small American chains here – you as a small business owner would be advised to go a different route.

Your entrance pass into the country is perhaps the first things westerners think of when they think of the Philippines – outsourcing.

Specifically, business process outsourcing, or BPO. It’s a booming business expected to double. One contact of mine says he sees a bubble there, but also says the industry keeps finding new ways to innovate and expand. For a mere US$125 in paid-up capital, you can be off and running as an employee of your own Filipino company.

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Foreign ownership restrictions don’t exist on these types of companies, which is important since anti-dummy laws are intense, no matter who you talk to who claims you can pay some guy on a jeepney $500 and call him the “owner” of your company.

I think BPO will continue to be one of the global trends in coming years. But the trend will continue to innovate; one possibility is expansion of outsourcing to non-English speaking developed markets. Countries like Japan and Korea don’t rely on call center outsourcing to the same degree as the Americas.

Filipinos are known for being adaptable to a large number of people and situations.

After all, that’s part of why it’s the world’s outsourcing capital (have you ever had a Filipino operator shout back at you?). As such, you’ll see more Filipinos learning languages like Japanese in order to take jobs that will be created to serve those markets. There’s already a decent premium for those who can work with non-English speakers.

The Philippines prefers foreigners to start businesses dealing with their own kind, or at least people outside of the country. If you run an internet business, I believe you may have some latitude to incorporate here, get residence in the country, and run your business as you see fit.

Unlike programs such as Singapore’s Entrepass which place mandates on business spending and staff count, the Filipino program has no employment requirements and no minimum spending. That’s a huge plus for one-person and small businesses who can’t meet such requirements out of the gate.

As I’ve mentioned earlier, the Philippines has a very familiar feel to it for westerners. If concern over culture shock is holding you back from starting or moving your business offshore, you’ll have few issues here. Manila’s central business district in Makati City feels like Los Angeles, with luxury shopping and countless western-style restaurants. You’ll fit right in. And if you choose, you can buy a condo in the prime Makati district for as little as $60,000.

For that reason, and for the bare bones requirements to get a visa to run your company, the Philippines is a jurisdiction worth considering if you want to work internationally. If you want to open a retail store or restaurant, you’ll need to find a legitimate Filipino partner to own 60%.

Forming the corporation takes about a month, and getting your visa another few months. The good news is the government takes actual think tank reports and is studying various processes – such as incorporating – and how they can simplify things.

While corruption here has been hard to root out at the lower levels, Americans are well-known for bypassing that part of the culture. Government seems reasonably flexible and understands where it’s bread is buttered.

And Filipinos are some of the most can-do and pleasant people to employ – for wages in the $400 a month ballpark, 80% are reportedly happy with their lives and a spirit of helpfulness is apparent everywhere you go. The learning curve is certainly shorter here.

For more information on the Philippines, read my reports about Philippines second residence and Philippines real estate.

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Andrew Henderson

Andrew's mission is simple: travel the world to find "boots on the ground" opportunities to share with you. His perpetual travels provide offshore strategies you can apply in your own life to create more wealth, protect what you have, and live more freely. Get his latest intelligence by signing up (it's free).
  • http://businessrocket.net/ Darin

    Thanks for sharing this information, its very valuable information for me. But what place is best for starting the business is not showing in your blog can you tell me what place is better for starting the business? If I know about the place where i can start the business is better for my business.

    • Rhoeice Garcia

      Mr darin the places for good start business in Phil’s..like malls which there is a lot of people….in terms of business in Phil’s..you need to consider the BIR,but be carefull..a lot of corrupt staff…

    • Rhoeice Garcia

      Mr Murphy,Angeles city is a good place for business also,but as you have said..be careful with corrupt and whom you had associated with,find a person you can be trusted

    • Francis Bersabal

      Im with the Philippine Marketing Association. You have a very general question here. It really depends on what business you are interested to do…and to avoid possible misleading registering a business and corruption activities. As a start up point, no1. If you are into a BPO call center or virtual secretary type or even setting a virtual office, you can start with the busyiest area such as Alabang North, Ortigas, Eastwood, Makati (Ayala-makati Ave.), or down the south which is in Cebu, davao city. If you would venture into franchising business and set a reputable business or trade brand, you might want to check all SM malls which are scattered every 5kms I think, and is not dependent based on local or native commodities. And if you are into import or export good, try in the laguna and Cavite area provinces where EXPORT zones and tax exemptions are highly available and will benefit your operations. Lastly, if its an IT type, I guess no matter where as long as you consider a good internet provider services, different accessible transportation and market/food. Hope this helps and inspire people to do a right investment in the philippines.

      • http://www.nomadcapitalist.com Andrew Henderson

        Thanks for the insights.

  • Paul Murphy

    Hello, I’m a young entrepreneur and I am desperately thinking of business ideas to employ in the Philippines. I have a daughter in Angeles City and I want to live there. I’m from the states originally. I have 70k to invest total. I know there is a lot of corruption so I have to be careful everywhere and especially with the people I associate with. Any advice would be greatly appreciated. Thank you in advance!

    • Nomad Capitalist

      Do your due diligence on any service provider, including the ones listed here. Corruption is an issue in the Philippines but is improving. Americans are widely known for not dealing with corruption from the government, and may receive slower service as consideration for such. There are numerous programs depending on if you want to start a business, invest in equities, etc. Search for the various programs, find people you can trust, do your homework, and proceed cautiously.

    • InternationalThinker

      Hi Paul! I am an american and I also have a daughter there in the Philippines. I am also researching businesses to create in order to live comfortably and feed the local economy. What is the best way to contact you as I want to share ideas as I believe that we americans need to create a network amongst ourselves to facilitate business throughout the country. I am looking to live in the Mindinao region but I am very familiar with Angeles City as well.

    • nick turner

      I have a job/partership avail in subic for the right individual. tel 0 9 7 4 3 6 3 5 5 1 for a chat in english

  • Tony

    I am sorry, but I have researched thoroughly online and offline and speaking with the gentleman you refer at the bottom of the post, but I can not see how you say you can start a business as a non Filipino for $125? Can you please explain this as I think you are wrong.

    • Nomad Capitalist

      The minimum paid-up capital for a Philippines corporation is PHP5,000 – about US$122. Domestic Market Enterprises are required to remit US$200,000 into the country if their ownership exceeds the 40% foreign ownership cap. However, companies that conduct more than 60% of their gross sales outside of the Philippines can be exempted from this requirement through consideration as Export Enterprises. While most Philippines banks will require a foreign-owned corporation (or most any corporation) to fund their business bank account with more than this requirement (US$1-2,000 is typical), the government requirement is only PHP5,000.

      • Tony

        Can you clarify what kind of business this is? Are you referring to a sole proprietorship, a partnership, a corporation, a Branch office, or a Regional Headquarters (RHQ’s) or Regional Operating Headquarters (ROHQ’s)? Please advise, because I still can not find the type of business you are referring to and I even went to visit them over at the BOI and have not been able to find the strategy you are referring to. Thanks.

        • tony

          Any chance you may respond to this nomadcapitalist?

          • http://www.nomadcapitalist.com Andrew Henderson

            I can’t comment specifically on corporate structures, but Greg Kittelson is a great resource for this and could discuss more specifically. Give him a call and I’m sure he’d be happy to give you a few basics and help if you need it.

  • http://www.facebook.com/Bak2DFuture Roger Charlesworth

    I am married to a Filipina. We started a marble products trading company. Dead easy to register a name, so I did. Then started to plan how I would use it. We got a break at the local sports club who were hosting an International Sports day, and made a few bob, so we went down to the BIR to let them know we had to pay them.

    OMG! They wanted to FINE us a bucket for not registering within 30 days. No-one told us this. Then we had to go to BIR training sessions, and start reporting every month.

    We got out. Took some effort, but we got out. No Thank You Philippines!

  • Bob

    I am a Canadian and would like to set up a business, sole proprietorship, in the Philippines. I worked in China and all of our work was from outside of the Philippines. The nature of the work was photogrammetry/GIS (mapping). And I am also having a problem getting my head around the issue of a $125.00 set-up. I would say that at least 70% to 80% of the business will be from outside of the Philippines. Can I still get away with only $10,000 capital in a bank in the Philippines?

  • RheaLopes

    Yeah, I was so lucky I found that article, but who would expect its nothing more than empty post with misleading title and promoting this guy Greg Kittelson’ services

    • http://www.nomadcapitalist.com Andrew Henderson

      It’s not a promotion at all; we don’t get anything for referring clients there other than many American readers may wish to have someone who speaks their language.

  • Peter Kim Dong-hwan

    I am married to a Filipina and have asked numerous expats in the Phils about doing biz there. The nearly unanimous answer was a resounding NO. Foreigners cannot own anything and many times, they’ll get fleeced for everything they have. I hear that the model to follow is the Chinoys, or Chinese Filipinos. The Phils is a dynamic economy but very tricky to navigate.

  • http://www.dayananconsulting.com/ David Elefant

    The information mentioned can apply to either a corporation or a sole proprietorship. I would avoid sole proprietorships because of the unlimited liability of the owner.

  • eric

    Hi this is eric. Looking for investor planning to have banana exporting company in davao

  • Brian Araya

    I am a Canadian married to a filipina. I just came back from a month in Cagayan de Oro City (my second visit there) and I want to set up a plan to start a business that will support moving my family and retiring there. I am 45 yrs old a manager/software bidding estimator for a steel framing and drywall company. This does not mean that I need to focus on construction as a business but any advice is appreciated. How will being married to a filipina benefit our starting a business. I am prepared to have her as full owner on the books if necessary. Our marriage occurred in the Philippines.

  • Bonny Hunter

    In one word: Don’t. As a local and someone experienced in my own country you are only going to get yourself into deep doo-doo. It’s not worth it. Perhaps less than 1% of foreigners survive here properly. Most lose their shirts.

  • Rob Tipton

    The best way to do business in the PI, and to avoid the red tape is to go online.
    Yep–tried an true!
    It won’t make you rich quick, but if you find your nique–you’ll sustain yourself and expand in time.

  • Tommy2guns

    is this still current today?