FEASIBILITY STUDY ABOUT FOREIGNERS INVESTING IN PHILIPPINE TOURISM

and railway development.I. facilities and services. there will invariably be greater demand for tourism superstructures. The need for improved accessibility will likewise open investment opportunities in air. In the first quarter of 2007. EXECUTIVE SUMMARY In this feasibility study. historico-cultural heritage projects and ecotourism and agri-tourism projects. water and land transport operations. road construction and rehabilitation.6 days in earlier years to 8. OVERVIEW OF PHILIPPINE TOURISM INDUSTRY The Philippine tourism industry flourished in the 1970s and early 1980s but declined in the mid 1980s. which was a record high in the number of tourist visits since 1989. TOURISM INVESTMENT OPPORTUNITIES What are the investment opportunities in the Philippine tourism industry? As the Philippine tourism industry is expected to continue to grow. In 2000. we will discuss requirements for investing in the Philippine Tourism. with the average length of tourist stay falling from 12. supporting the growth of the tourism sector. II. The Philippine tourism industry is stable and fast growing which means more and more investments are needed to sustain its growth. seaport. the tourist arrival in the Philippines grew as much as 20% in . Hotels. it totaled 2. In response to worldwide demand for integrated tourism development. the Philippines' tourist arrivals totaled 2. and was expected to grow as much as 3. About 1. the Department of Tourism is also encouraging investments in tourism estates.838. a growth of almost 29%. III.2 million. resorts and other types of accommodation facilities especially in the regions will have to be built to address the lodging requirements of both foreign and domestic travelers. The government passionately supports tourism by heavy investments in infrastructure developments and marketing activities Numerous ongoing projects in airport. In 2003.4 million in 2007. tourism growth was slower in the Philippines than in other Southeast Asian countries.2 million tourists visited the Philippines in 1992.000. In 1987.9 days in 1988. flood control.

e.1 11.8 per cent of the total workforce. contributing 8 per cent to 9 per cent to the nation's GDP. tourism in the Philippines bounced back in 2004. the Department of Tourism recorded 3. By and large. From 2000.5 million registered in 2010. For the year 2004. STATE OF TOURISM I.2003. 3 IV. What is the general state of tourism in the Philippines? After a series of declines from 2000-2003. In 2012.99 billion. Board of Investments and Land Transportation. or about 18. Retrieved 23 May 2013.291 million. tourism is expected to employ 7. which in turn resulted in visitor receipts totaling US$1.same period last year. This figure.9% but increased by 18.6m jobs". Tourism investments endorsed by the Department to concerned agencies (i.2 per cent of national employment in 2011. Franchising and Regulatory Board ) reached over Php937. . after the Department of Tourism launched a widely publicized tourism marketing campaign titled "It's More Fun In the Philippines. can easily double if we include investment projects that did not go through the Department of Tourism for endorsement purposes.8 million Filipinos.4 million people by 2016. the Philippines recorded 4. Justin (5 March 2013). Over the years tourism has been a top foreign exchange generator. Inside Investor.27 million tourist arrivals. "Philippine tourism to create 3. In a greater thrust by the Aquino administration to pump billions of dollars into the sector. or 10. however.2 percent higher than the 3.2 The tourism industry employed 3.8% for the year 2003 to 2004.9 million tourists visiting the country.897 million in 2004 with new projects in land transport and in hotel development. the tourism industry continues to be a major contributor to the growth of the Philippine economy. visitor arrivals in the Philippines decrease by an average of 2. 1 2 tourism-dept-claims-2011-a-banner-year-for-the-philippines "It's More Fun in the Philippines official website". 3 Calderon. In 2011. visitor arrivals reached 2. according to data gathered by the National Statistical Coordination Board.

retrieved June 8. Tourism Statistics.II. Statistics4 TOP 20 international visitors 4 ^ a b Department of Tourism (Philippines). 2012 .

the biggest eagle in the world. large marine life. and almost 1000 orchids. It was honored by UNESCO as the First Natural Site in the Philippines to be inscribed in the prestigious World Heritage List. TOURISM IN THE PHILIPPINES I.V. dolphins. i. where a blend of international cuisine of eastern and western culinary creations can be experienced in first class restaurants.736 overlapping marine species in a 10x10 km area. . about 3. dubbed as the “Center of the Center of Marine Shorefish Biodiversity”. and the dugong or sea cow. marine turtles. A sanctuary to an amazing variety of flora Almost 12. 7 seagrass species.800 kinds of trees. The Tubbataha Reef National Marine Park teems with 300 coral species. the Philippine Tarsier.000 kinds of ferns. around 1. the only herbivorous mammal today. the largest concentration of marine life in the world. the world's smallest mammal in existence. A cosmopolitan lifestyle stretches across the urban centers where shopping is customer-friendly in terms of export-quality products at reasonably low prices. PHILIPPINES HAS VARIETY OF SCENIC SITES Philippine island is an archipelago that offers a variety of scenic sites with its natural and man-made formations. 71 algae species. and seabirds. Haven to a diverse fauna found nowhere else in the world The archipelago is home to the Philippine Eagle. 46 coral genera.000 species of plants have been identified in the archipelago.000 species of flowering plants. It has been found to have 1. in a study made by America’s Smithsonian Institute. ii. Rich in marine biodiversity The Philippines is home to Verde Island. including more than 8.

the Philippines offers countless attractions to see. The mountain features a wide range of flora and fauna and is home to over 272 bird species.6 As an archipelago composed of 7. Despite the rise of modern shopping centers. traditional Filipino shopping areas still remain around the metropolis. Aside from its white sand beaches. eTravel Pilipinas. heritage houses in Vigan. 111 of which are endemic to the area. is welcome to invest in the Philippines. big shopping centers of Metro Manila. beaches. It offers a rich biodiversity with its tropical rainforests. Department of Tourism. Metro Manila.107 islands. 100% foreign equity may be allowed in all areas of investment except those reserved for Filipinos by mandate of the Philippine Constitution and existing laws. and the cultural attractions of Manila.811 visitors.d.II. 2009.107 islands.107 islands. regardless of nationality. the country attracted 4. the Philippine Eagle. "Visitor Arrivals to the Philippines Reached Record-High 4. The Philippines is a country of vibrant 7. (n. is known for being one of the best shopping destinations in Asia. Mindanao. islands. all teeming with life and blessed with beautiful natural wonders.272. Boracay is also known for being a popular destination for relaxation. Numerous shopping malls can be found around the metropolis. Retrieved January 22. the national capital region of the country. The Philippines is an archipelagic country composed of 7. WHO MAY INVEST IN THE PHILIPPINES Anyone. TOURISM IN PHILIPPINES AS A MAJOR ECONOMIC CONTRIBUTOR TO PHILIPPINE ECONOMY Tourism in the Philippines is a major economic contributor to the Philippine economy. Mount Apo is a popular destination for hiking and mountain activities. coral reefs. In 2012.3 Million in 2012". mountains. Located just approximately 315 km (196 mi) south of Manila is Boracay. . lush forests of Bohol. Retrieved January 26. especially in the business and financial districts of Ortigas Center and Bonifacio Global City.5 In 2012. diving sites of Palawan. tranquility and for an exciting nightlife. such as the famous white sand beaches of Boracay. Boracay received the best island award from the international travel magazine Travel + Leisure. while high-end shopping centers are mostly located at the Ayala Center in Makati. Mount Apo. and diverse range of flora and fauna. Mount Apo is also home to the country's national bird. 5 6 "Natural Resources and Environment in the Philippines". it is known for its white sand beaches and has been a favorite island destination for local and foreign visitors. 2013. the southernmost island of the Philippines is home to the country's tallest mountain.. VI. its wide collection of shopping centers offer a range of local and international shops.). With the liberalization of the foreign investment law. making it as one of the megadiverse countries in the world. rice terraces of Ifugao. Boracay was also named as the second best beach in the world.

GENERAL POLICY OF THE GOVERNMENT FOR FOREIGN INVESTMENTS The government recognizes the pivotal role of private sector investments and. 7652. ARE FOREIGNERS ALLOWED TO LEASE IN THE PHILIPPINES? YES. help provide employment. lease agreements may be entered into with Filipino landowners. VIII. the lease shall be limited to projects with an investment of not less than US$5M. Lease period is 50 years.A. increase production. renewable once for another 25 years. Foreign investors investing in the Philippines can now lease private lands up to 75 years. REQUIREMENTS IN INVESTING IN PHILIPPINES A foreign corporation must first secure the necessary licenses or registrations from the appropriate government bodies. Based on R.VII. Investment rules and regulations have thus been liberalized to facilitate entry of foreign investments. the necessary incorporation papers from the Securities and Exchange Commission must first be obtained. entitled Investor's Lease Act. thereby. For tourism projects. IX. In the case of corporations or partnerships. . registration from the Bureau of Trade Regulation & Consumer Protection of the Department of Trade and Industry must be secured. No. and provide a base for the overall development of the economy. 70% of which shall be infused in said project within years from signing of the lease contract. In the case of single proprietorship. Foreign investments are encouraged to fill in capital gaps. commits to continuously enhance the business climate.

reasonable distances. LAW AND INCENTIVES COVERING TOURISM INVESTEMT IN PHILIPPINES The government has passed the following laws aimed at encouraging more investments: i.X. creating for this purpose. Special Economic Zone Act of 1995 (Republic Act 7916) This Republic Act provides for the legal framework and mechanism for the creation. 2002. and are identified as viable tourism destinations in view of their historical and cultural significance. operation. existing or potential integrated leisure facilities. foreign exchange and employment. which are geographical areas. including income tax holiday of up to six years. . environmental beauty. Tourism enterprises within the TEZ shall register with the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) for purposes of availment of the incentives provided under the law. The PEZA shall consider for registration tourist-oriented enterprises to be located in PEZA-registered tourism development zones/tourism estates which are enclosed by the DOT as enterprises that will be established and operated with foreign tourists as primary clientele. ii. 9593) The State declares tourism as an indispensable element of the national economy and an industry of national interest and importance. To this end. and to continue to mold an enhanced sense of national pride for all Filipinos. administration and coordination of Special Economic Zones in the Philippines. sufficient in size and capable of being defined into one contiguous territory. the DOT entered into a Memorandum of Agreement (MOA) with PEZA that will grant Special Economic Zone status to tourism development zones and tourism estates upon registration with PEZA subject to the issuance of the required Presidential Proclamation. Tourism Act of 2009 (Republic Act No. the Philippine Economic Zone Authority (PEZA) and for other purposes. among others One of the salient features of this law is also the establishment of "Tourism Enterprise Zones" or TEZs. granting fiscal and non-fiscal incentives to tourism business. accessibility to transportation infrastructures and strategic location. the Tourism Act of 2009 was passed on 12 May 2009. and employment of foreign nationals. such as to catalyze the socioeconomic development of their neighboring communities. On October 7. which must be harnessed as an engine of socioeconomic growth and cultural affirmation to generate investment.

226) This Executive Order authorizes the Board of Investments to grant fiscal incentives and non-fiscal incentives for local and foreign investors engaged in tourism activities listed under the current Investments Priorities Plan (IPP). iv. also recognizes the right of the investor to remit earnings from his investment in the currency in which the investment was originally made and at the exchange rate prevailing at the time of remittance. operation and maintenance of infrastructure projects by the private sector. construction. O. An investor may apply for SIRV at the Philippine Embassy or Consulate in his home country or place of residence. the investor is also allowed to repatriate the entire proceeds of the liquidation of the investment in which the investment originally made. Lastly. O.iii. 7718) The BOT Law authorizes the financing. E. Executive Order No. 63 grants the foreign investor a Special Investor's Resident Visa (SIRV) for as long as the investment subsists. 226) This Executive Order authorizes the Board of Investments to grant fiscal incentives and . the investor may file the application at the Department of Tourism for endorsement to the Bureau of Immigration. the right of succession is also recognized. Incentives granted include income tax holiday (up to 4 years for non-pioneer projects and 6 years pioneer projects) and the employment of foreign nationals. In case of liquidation. If already in the Philippines. 63 This Executive Order grants incentives to foreigners investing at least US$50. Tourism estates including related infrastructure facilities and utilities are among the priority projects eligible for BOT implementation. Build-Operate-Transfer (BOT) Law (Republic Act 6957 as Amended by Republic Act No. v.000 in a tourist-related project or in any tourist establishment as determined by the Committee created in the same law. The E. It allows national implementing agencies and local government units to enter into BOT arrangement as a means of encouraging the participation of foreign and local companies in the country’s infrastructure development program. Omnibus Investments Code (Executive Order No. vi. Omnibus Investments Code (Executive Order No.

4. respectively) and the employment of foreign nationals. construction. Backed up by a wide range of credit enhancements and investment incentives. vii. The BOT Law mandates the BOT Center to coordinate and monitor all projects undertaken under RA 7718. viii.non-fiscal incentives for local and foreign investors engaged in tourism activities listed under the current Investments Priorities Plan (IPP). operation and maintenance of infrastructure projects by the private sector. Foreign equity participation of up to 40% is allowed in the operation and management of utilities (i. 8179 ) With the passage of the Foreign Investments Act. Salient points of the amended BOT Law include the following: 1. Recognizes the need for private investors to realize rates of return reflective of market conditions. Foreign Investments Act of 1991 (Republic Act 7042 as Amended by Republic Act No. Institutionalizes government support for BOT projects. It allows national implementing agencies and local government units to enter into BOT arrangement as a means of encouraging the participation of foreign and local companies in the country's infrastructure development program. air. Allows government agencies and local government units (LGUs) to accept unsolicited proposals. 3. the BOT Center expands the coverage of the program to . Incentives granted include income tax holiday (4-6 years for non-pioneer and pioneer projects. the BOT Law opened to the private sector a new window of investment opportunity. Tourism estates including related infrastructure facilities and utilities are among the priority projects eligible for BOT implementation. Under A. and water transport). O. The BOT Center is empowered to actively promote all modes of private sector participation in the implementation of development projects in the country. Broadens the type and variety of projects that can be implemented under the BOT process. 2.e. 67. Build-Operate-Transfer (BOT) Law (Republic Act 6957 as Amended by Republic Act No. foreign nationals are now allowed to invest up to 100% equity participation in new or existing economic activities including restaurant operations that are incidental to the hotel business. 7718) The BOT Law authorizes the financing. land. Provides flexibility to both the government and private sector by allowing the use of a variety of arrangements under the BOT scheme to suit specific conditions. and 5.

Special Economic Zone Act of 1995 (Republic Act 7916) This Republic Act provides for the legal framework and mechanism for the creation. After the ITH period.Project development . . On October 7. joint venture agreement. 2002. administration and coordination of Special Economic Zones in the Philippines. the Philippine Economic Zone Authority (PEZA) and for other purposes.Institution-building . it shall generally be entitled to 6 years ITH. lease and contractual management. If a non-pioneer firm is located in a less developed area. e. The PEZA shall consider for registration tourist-oriented enterprises to be located in PEZA-registered tourism development zones/tourism estates which are enclosed by the DOT as enterprises that will be established and operated with foreign tourists as primary clientele. f.Monitoring ix. The DOT Center is specifically involved in: .Policy advocacy . the option to pay a special 5% Tax on Gross Income. Incentives available are: a. and g. creating for this purpose. c. Employment of foreign nationals. Other incentives as may be determined by the PEZA Board. Special Investor's Resident Visa. Income tax holiday (ITH) for six years for ioneer firms and four years for non-pioneer firms. concession agreement. d. b. the DOT entered into a Memorandum of Agreement (MOA) with PEZA that will grant Special Economic Zone status to tourism development zones and tourism estates upon registration with PEZA subject to the issuance of the required Presidential Proclamation. Tax and duty-free importation of capital equipment required for the technical viability of registered tourism activities.include the BOT scheme. operation. Up to 100% foreign ownership of locator enterprises. except real property taxes. among others.Marketing and promotions . in lieu of all national and local taxes.

5 million. With the enactment or implementation of the Trade Liberalization Act of 2000. 1180. repealing for the purpose Republic Act No. and for other purposes.x. . Retail Trade Liberalization Act of 2000 (Republic Act No. 8762) This is an act liberalizing the retail trade business. up to 100% foreign equity participation in restaurants is now allowed for enterprises with a paid-up capital of US$2. as amended.

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