BASIC FACTS FOR THE INVESTOR

TRADE INFORMATION

a)   Import Rules and Regulations

The importation of most goods and merchandise is generally allowed. Exceptions include certain articles regulated for reasons of public health and safety, national security, international commitments, and development and rationalization of local industry.

i)   Documentation Requirements

 

1) Commercial Invoice - There is no special form required unless preferential duty rates are being claimed by the shipper. Invoices may be printed on the exporters letterhead and signed by a responsible member of the firm and must show pertinent information such as: description of the goods, quantity, CIF values, country of origin and name of vessel.

2) Pro-forma Invoice - This may be requested by the importer but is not a requirement.

3) Bills of Lading - Should indicate the name of the shipper and the consignee.

4) Packing List - Data in the list should tally with that in other documents.

5) Certificate of Origin - There is no special form of certificate of origin required. However, this may be required if there is a claim for preferential duty for goods of ASEAN origin.

6) Insurance Certificate - It is a normal business practice to obtain this document.

In addition to the above, all goods imported into Philippines, or transshipped into or out of  Philippines, are to be shown in metric units on all declarations, licenses, manifests and other trade documents.

ii)   Prohibited/regulated imports

An ongoing import liberalization program has significantly reduced the items subject to import licensing requirements.  A few are regulated for reasons of public health, morals, and national security.  Corn, corn substitutes,  are prevented from importation in order to protect local producers.

The importation into the Philippines of the following articles is prohibited:

• Dynamite, gunpowder, ammunition and other explosives and weapons of war, and parts, except when authorized by law.


• Written or printed articles containing, advocating, or inciting treason, rebellion, insurrection, sedition or subversion against the Philippine government; or forcible resistance to any law of the Philippines, or threat to take the life of or inflict bodily harm upon any person in the Philippines.


• Written or printed articles, negatives or film, photographs, engravings, lithographs, objects, paintings, drawings, or other representation of an obscene or immoral character.


• Articles, instruments, drugs and substances designed, intended or adapted for producing unlawful abortion, or any printed matter which advertises or describes or gives directly or indirectly information where, how or by whom unlawful abortion is done.


• Roulette wheels, gambling outfits, loaded dice, marked cards, machines, apparatus or mechanical devices used in gambling or the distribution of money, cigars, cigarettes or other articles when such distribution is dependent on chance, including jackpot or pinball machines or similar contrivances, or parts.


• Lottery and sweepstakes tickets except those authorized by the Philippine government, advertisement and lists of drawings.


• Any articles manufactured in whole or in part of gold, silver or other precious metals or alloys; the stamps, brands or marks of which do not indicate the actual fineness of quality of said metals or alloys.


• Any adulterated or misbranded articles of food or any adulterated or misbranded drug in violation of the "Food and Drugs Act".


• Marijuana, opium, poppies, coca leaves, heroin, or any other narcotics or synthetic drugs which are or may be declared habit forming by the President of the Philippines; or any compound, manufactured salt, derivative or preparation, except when imported by the Philippine government or any person duly authorized by the Dangerous Drugs Board, for medicinal purposes only.


• Opium pipes and parts, of whatever material.


• Used clothing and rags (RA 4653)


• All other articles and parts, the importation of which is prohibited by law or rules and regulations issued by competent authority. (as amended by Presidential Decree No. 34)

    Regulated/Restricted Commodities

iii)   Tariff duties

The Philippines grants most-favored nations (MFN) treatment to all trading partners. With the MFN tariff schedule in force as of 01 January 1999, 176 tariff lines are duty free; goods such as compound chemicals, rubber and rubber articles, wood, textile yarns, laboratory and hygienic glassware, ferrous waste and scrap, machinery, plant of laboratory equipment, apparatus and equipment for photography, instruments and appliances used in medical/surgical and veterinary sciences.

The largest part of tariff lines bearing the 3%, 5%, 7%, 10%, 20% and 30% are set on basic products, agricultural goods, fish and crustaceans, raw materials and manufacturing activities of intermediate and finished goods.

A limited number of tariff items subject to rates starting from 30% to 65% include agricultural products like maize, rice, sugar, meat and meat products, food preparations, beverages and spirits. Effective December 2000, the Philippine government has agreed to to maintain tariffs of petrochemicals and automotive parts at current levels up to 2004.

This policy covers most MFN tariff rates levied on goods coming from countries outside ASEAN. MFN rates will go down to no more than 5% in 2004, while duties on polymers will be kept at 15% until 2004. The government will keep  MFN rates currently at 3% - 10% for completely knocked down units, and 20% - 30% for completely built up units, up to 2004, with an option for extension.

MFN Tariff rates on other goods will be maintained until the end of 2001, with a gradual reduction until 2004. The tariff freeze covers all agricultural commodities, industrial goods, and locally finished goods produced in low quantity.

iv)  Non-Tariff Barriers

The Philippines is a signatory to the agreement on Technical Barriers to Trade, which was designed to eliminate the use of standards and certification systems as impediments to trade.

Non-tariff barriers include trade regulations and documentation like health and veterinary requirements specifically in food, chemicals, birds and animal products.

Import permits from relevant government departments are required for goods such as  meat and livestock, arms and explosives, dangerous drugs, chemicals and plants.

v)   Packing, Marking and Labeling Requirements

Packing

Whatever mode of transport is used, the product will (with a few exceptions), require packing, but the details of this will depend on a number of factors: Transportation, Climate, Pilferage susceptibility,  Freight rates, Customs duties, Customs requirements.

Marking

Shipping mark is vital for the correct identification of the shipment. The first marking on the goods that must be considered is the mark of origin.  This indicates the country of origin of the particular good, e.g. "MADE IN UNITED STATES OF AMERICA".  The mark of origin must be legible, indelible and easily seen. It is best to request the Philippine importer for marking instructions.

Labeling

Special rules apply to the labeling of certain products such as prepared foodstuffs, beverages, pharmaceuticals and toilet preparations.

The label should make clear the quantity and the quality of the goods.  The information on the labels may include name and address of the manufacturer, weight or volume of contents, ingredients and other relevant details.

vi)  Patents and Trademarks

Patents

Patents are valid for 17 years.  Prior or published description anywhere, or use or sale in the Philippines one year before application is prejudicial.  Compulsory licensing is possible three years after the grant if patent is not worked on a commercial scale, or if it relates to food or medicine or the article is necessary for public health or safety.  Patent registration must be marked on the product, otherwise damages for infringement cannot be recovered.

Trademarks

Trademark registrations are valid for 20 years from the registration date and are renewable indefinitely for similar periods.  The first user of a trademark is entitled to its proprietary rights.  Registration confers prima facie evidence of legal ownership.  Trademark applications are examined and, if satisfactory, published for a 30 - day opposition period.  A registered trademark must be used within its 5th, 10th, or 15th anniversary, otherwise it may be cancelled during these periods.  The customs authorities may seize goods bearing counterfeit marks.  The Philippines has a trademark classification system consisting of 52 classes of goods.  Official state emblems (including that of the Red Cross), description marks and surnames cannot be registered.

TRADE PRACTICES

a)   Distribution Channels

Philippine agents and distributors have shown creativity and innovation in dealing with the distribution of goods and have established vast networks of workable systems considering the archipelagic features of the country. They are, however, fairly complex and best navigated by a local agent familiar with the route.

b)   Price Quotations

Although pricing is a key factor in any business transaction, a number of other questions need to be clarified before any business proposal can be considered. The subject of price should be postponed  until other aspects of the transaction have been agreed upon.

Besides customers preferences, an exporter should assess competition from both domestic and foreign suppliers and must be familiar with the prices they quote.  The distribution channels used for the product and the promotion tools and messages required should also be examined.  Making counter-proposals also requires detailed information on the costs of the exporter's production operations, freight insurance, packing and other related expenses.

As a partner committed to long-term business relationships, the exporter can stress the following aspects of operations:  management capabilities, production capacity and processes; quality control systems, technical cooperation with foreign firms (if any), structures for handling orders, export experience, financial standing and links with banks.

After dealing with these issues, the exporter can then steer the discussion towards price quotations.  It is in this phase that the exporter must clarify all matters pertaining to credit terms, payment schedules, currencies of payment, insurance, commission rates, warehousing charges, after-sales servicing responsibilities, and costs of replacing damaged goods.  Agreement on these points constitutes the "price package".

c)   Terms of Payments

Individually tailored Terms of Payment can be arranged to suit specific circumstances. The basic terms are Payment before release of goods, Documentary Letter of Credit (confirmed or unconfirmed), Bank Documentary Collections and Open account, possibly involving goods on consignment.
Modes of payment may be found under the General Import Policy and Import Rules and Regulations.

d)      Business Etiquette/Practices

THE PHILIPPINES BILATERAL ARRANGEMENTS WITH SELECTED ASEAN COUNTRIES

INDONESIA  

Objectives:     

 
Activities:       

SINGAPORE

Objectives:

a)   Under the Philippine - Singapore Action Plan, provides a framework for strengthening bilateral cooperation through the consolidation and formulation of new bilateral cooperation initiatives over the immediate, medium and long-term period, taking advantage of the complementarities and synergies that exist between the Philippines and Singapore and;

b)   Strengthen, through wider bilateral cooperation, the sense of friendship and understanding between the governments and people of the Philippines and Singapore, leading to enhanced peace and prosperity for both countries, and the region.

Activities:

A) Economic Cooperation

B)  Information Technology

C)  Capital Market Development

D)  Education

E)  Culture

F)  People-To-People Exchange

G) Military Cooperation
 
THAILAND

Objectives:   

 Activities:       

VIETNAM

Objectives:     

 Activities:       

 
e)    Investments in the Philippines

USEFUL ADDRESSES

www.dfa.gov.ph

www.dti.gov.ph/ftsc

http://tradelinephil.dti.gov.ph/betp/dti2.main