The Philippines is famous for its emerald rice fields, smoldering volcanoes, wildlife, and mega cities. Located on a land distant from the mainland Southeast Asia, it holds great historical features and rich in cultural and spiritual. Catholicism is the main religion of the area, and resulted from the Spanish rulership. The Spanish culture remains in the country as evident in the festivals, architecture, and churches. The country’s economy is steadily growing as well as the tourism and agriculture. It gains a lot of revenue from tourism due to its beaches and islands, which act as the main tourist attractions. The main reason for Robots Inc. to choose the Philippines as a study subject is their opportunities for new entries into their market.
The Philippines enjoys good economic and political systems. It has a democratic government composed of a constitutional republic and a presidential system (Phillipine Government, 2016). Its governance model is unitary states, but there are exceptions such as the autonomous regions located in Muslim Mindanao. The region is completely unbound from the Philippines’ national government. As time went by, legislators felt the need to alter the system to unicameral, central, or parliamentary. The move began after the Ramos administration was quite dissatisfying, consequently affecting the country’s economy.
The president acts as the head of state and government as well as the commander in chief (Phillipine Government, 2016). The president serves a single term of six years after winning the elections through popular vote. Another task the president has is appointing the cabinet and presiding over it. The bilateral Congress composes of a Senate, which hosts the upper house whose elected members serve a term of six years. It also composes of the House of Representatives, which hosts the lower house whose elected members serve a period of three years. It is the work of the Supreme Court to vest the judicial power and comprises of the Chief Justice, presiding officer, and associate justices. The president appoints them from the nominations brought forth by the Judicial Bar Council.
Philippine’s economy stands out as the 39th largest, and it had a gross domestic product of $289.686 billion in 2014 (Staff, 2015). Its primary exports consist of electronic products, garments, semiconductors, copper products, petroleum products, fruits, transport equipment, and coconut oil. It major trading collaborates include Japan, China, United States, South Korea, Hong Kong, Netherlands, Germany, Thailand, and Taiwan. Since it became an industrialized country, it transitioned its economy from agriculture to manufacturing and services. The agriculture sector hires 32 percent of the national labor force and its revenue accounts for 14 percent of the country’s GDP. The industrial sector hires 14 percent of the national labor and brings returns of 30 percent of the GDP. The remaining 47 percent of the labor force is in the services zone, which accounts for 56 percent of the GDP. With the focus on service and industrial zone, the country stands at a great position in making great revenues from exporting most of its manufacture products.
These major steps in the country’s economy drive down the unemployment rate to six percent as of 2014 (Staff, 2015). The lower charges placed on necessities took the inflation rate to 3.7 percent in the same year, and the country grossed $83.201 billion in international reserves. Such progress enables the country’s debt-to-GDP ratio to decline over the years to 38.1 percent by 2014 from highs of 78 percent in 2004. Economists mark the country as a net importer with the potential of becoming a creditor nation in a span of a few years. The government, over the years, has placed major concerns in transportation, communication, and development. The three entities act as the economy’s backbone and international bridge to better opportunities and investors from across the world.
Philippines stood out as the second wealthiest country in East Asia after World War II. However, the other East Asia countries recovered from the war’s effects and overtook Philippines in 1960 (Phillipine Government, 2016). During the dictatorial rule of President Ferdinand Marcos, the country entered into a stagnated economic phase, where the government mismanaged the economic resources and political volatility increased. The economic growth was slowly deteriorating, and there were bouts of recession. However, the 1990s proved to be a hopeful time as economic liberation helped in the recovery process. All was well until the Asian Financial Crisis in 1997, which affected most of the Asian countries. It resulted in a lingering decline of the country’s currency, Peso, and the stock market fall. However, the effect was not as diverse as other neighboring countries. The fiscal conservatism of the government played a major role in stabilizing the economy over the years as well as provides close supervision of the International Monetary Fund.
The GDP growth increased in 2004 to 6.4 percent, making it the fastest growth rate over the past three decades (Phillipine Government, 2016). Though its average annual GDP growth between 1966 and 2007 stood at 1.45 percent compared to the East Asia’s average of 5.96 percent. At the time, the daily income of 45 percent of the Filipinos was less than $2. As a way of recovering and improving its economy, the country relied heavily on remittances from Filipinos abroad. The input acts as the county’s source of foreign currency surpassing foreign direct investment. It reached a peak of 10.4 percent in 2010. The regional development was uneven especially in Metro Manila, which gained most of the country’s economic growth at the other region’s expense. The government looked for the different ways in which it would distribute the economy evenly across the regions by promoting investment. The outcome is constant growth in business process outsourcing and service industries like tourism.
Current Economic Situation
According to the World Bank, Philippines economic growth went down to 5.3 percent towards the end of 2014. Reason for the declining trend is the government weakness in demand spending and lack of supply in agricultural production (Staff, 2015). The government consumed less as well as decreased the spending on infrastructure by 6.2 percent. The Supreme Court was the main cause of the weakening economy turnout through its delay in settling some cases such as the Typhoon Yolanda reconstruction. Regardless of the slowdown, the government was in a position to secure more than one million jobs for its citizens, though people were quite skeptical about the job quality. An annual survey done by Annual Poverty Indicator Survey showed an increase in the income for the bottom 20 percent than the others.
The solutions lay in changing the current policies and laws that govern how the government takes over the economy. The government should spend more on investment and make quick developmental changes and policies. Apart from that, it should implement ways in which it can increase market awareness and provide solutions to new investment ventures.
Government Policies, Laws, and Regulations
The policies, laws, and regulations in the Philippines tend to favor its growth towards an economically driven country. Its international relations seek to create trade ventures with the international market and provide a chance for overseas Filipinos to invest in their country (Zamora, 2015). The country’s general relations are looking up with the introduction of shared democratic values. These values enable the creation of better policies among the European and Western countries that share similar interests with them.
The country involved itself with different trade organizations such as East Asia Summit, the Latin Union, ASEAN, the Association of Southeast Asian Nations) Non-Aligned Movement (Zamora, 2015). The aim of joining such organizations is to increase its overall trade relations and be present in the developments that occur across the world. The country stands to benefit from high-income returns and better relations, being a major player in providing a better platform for its trade policies and engagements with other countries.
Relations between Canadian and Philippines Governments
The Canadian government made a treaty with the Philippines government in a document dubbed Contracting Parties. The main agenda was to intensify the economic operation between the two countries (View Treaty-E101525, 2014). The outline to reach these goals is possible through the creation of favorable conditions for the investors in both parties and increases their prosperity chances. The parties recognized the need to protect and encourage investments made in host companies, which will benefit the economic prosperity. The document defines and outlines different trade bodies such as enterprise, fair market value, financial institution, investment, intellectual property rights, and investor. Both parties came to an agreement on investment grants for the potential investors.
Improvement of Government Relations
Robots Inc. seeks to provide better solutions to the weaknesses found in the treaty between the Canadian and Philippines governments. The first step is to ensure full description of the clauses stated in the document. Some of the treaties tend to leave out fine details on who exactly should take up the blame in situations when one of the parties surpasses their jurisdiction. Second, it would be beneficial to the two parties to establish boundaries on the possible trade policies.
Absolute Advantages in the Philippines
The entry of Robots Inc. will further increase better relations by the two governments and provide most of its people good employment opportunities. The Philippine government should invest more in creating a better environment for the investors. The government should center on rebuilding some of its structures especially those affected by the Tsunami and hasten the court system. The president should have overruling powers on matters that concern national growth instead of waiting for the courts to make a ruling. Creating quality jobs are better than having many jobs. Despite making the efforts of creating jobs, the government needs to pay more attention towards the growth of the industrial sectors.
Free Trade Zone
The Philippines has a working free trade zone, which tends to focus on foreign investors input to the country. The country provides a gateway to South East Asia, creating better opportunities to introduce business opportunities to prospective investors (Zamora, 2015). Interested companies have tax exemptions of 100 percent for the first four to eight years. The tax exemptions include customs duties and corporation tax. Currently, Philippines boasts of several trade zones such as Clark Freeport Zone, Subic Bay Freeport Zone, Cagayan Special Economic Zone and Zamboanga Ecozone.
Establishing Robots Inc. in the Philippines has its benefits and shortcomings. Hiring an industrial space of 1000sqm will attract $2,500 to $6,000 annually (Zamora, 2015). The incorporation time will be eight weeks, and it takes roughly four weeks to set up a company’s bank account. However, during the high season, industrial space can be scarce bringing out the need to contribute more to the zone’s growth. Despite the disadvantage, the zone lacks serious environmental, political, and ethical problems that would limit the company’s potential.
Phillipine Government. (2016). Retrieved from Goverment.ph: http://www.gov.ph/about/gov/
Staff, T. (2015, January). Philippine Economic Update - January 2015 Edition. Retrieved from The World Bank: http://www.worldbank.org/en/country/philippines/publication/philippine-economic-update-january-2015
View Treaty-E101525. (2014, March 3). Retrieved from Global Affairs Canada: http://www.treaty-accord.gc.ca/text-texte.aspx?id=101525&lang=eng
Zamora, C. (2015). Philippines Free Zones. Retrieved from Healy Consultants: http://www.healyconsultants.com/philippines-company-registration/free-zones/