Finance and Investment

-Philippines-

“Diskarte” - (RESOURCEFULNESS)

Philippines expat guide to banking, investments, and income opportunities Finance and investment options for expats in the Philippines including real estate and local business setup

Banking and Money Management

Setting Up Bank Accounts:
Expats can open a local bank account with major banks like BDO, Metrobank, or BPI. Requirements typically include:

  • A valid passport.

  • Proof of residence (such as a lease agreement or utility bill).

  • Alien Certificate of Registration (ACR) card or work permit (depending on the bank’s requirements).

Accessing Financial Services:
Expats have access to a variety of financial services, including:

  • Online banking and mobile banking apps for easy account management.

  • International money transfers through SWIFT or remittance services.

  • ATM access nationwide, though expats should be aware of withdrawal limits and fees.

Currency Exchange and Fee Management:
To manage currency exchanges and fees effectively:

  • Use local currency exchange services (often found in malls or dedicated exchange shops) for better rates.

  • Consider opening a multi-currency account for easier access to foreign currencies.

  • Avoid excessive international ATM fees by using partner banks or banks that waive foreign transaction fees.

For more detailed guidance on banking and financial management in the Philippines, [click here].

Investing in Local Markets

Real Estate Investment:
Foreigners are not allowed to own land in the Philippines but can invest in condominiums. Expats can own up to 40% of the units in a condominium project. They can also lease land for up to 50 years with an option to extend for an additional 25 years.

  • Real estate in major cities like Manila or Cebu provides good potential returns through rental income.

Stocks and Businesses:
Foreigners can invest in the Philippine Stock Exchange (PSE) through a stockbroker or investment account. Popular sectors include banking, telecommunications, and energy. When starting a business, foreign ownership is allowed up to 40% in most industries, but there are sectors, such as retail and agriculture, where more stringent restrictions apply.

Foreign Ownership Restrictions:

  • Foreigners can fully own businesses in specific sectors promoted by the Board of Investments (BOI) or in export-oriented ventures.

  • The Foreign Investment Act allows 100% foreign ownership in companies with a paid-up capital of US$200,000 or more, but there are exceptions for companies involved in priority sectors.

Local Investment Opportunities and Returns:
There are significant opportunities in sectors like real estate development, renewable energy, tourism, and business process outsourcing (BPO). Rental yields in urban areas can range from 6% to 8%, and stock market returns depend on sector performance.

For detailed strategies and legal considerations for investing in the Philippines, [click here].

Income Opportunities

Generating Income Legally:
Expats can legally earn income in the Philippines through remote work, freelancing, or starting local businesses, as long as they comply with local regulations, including obtaining the proper visas and work permits.

Remote Work and Freelancing:
Many expats in the Philippines engage in remote work for foreign companies or freelance in fields such as IT, writing, graphic design, or consulting. The country’s low cost of living and widespread internet access make it an attractive location for digital nomads.

  • Expats can typically work remotely on a tourist or retirement visa, as long as the work is not for a local company.

  • Freelancing platforms like Upwork or Fiverr are popular for expats seeking international clients.

Setting Up Local Businesses:
Starting a business in the Philippines requires navigating foreign ownership restrictions. However, sectors like BPOs, tourism, and tech startups offer opportunities for expats to start businesses with up to 40% foreign ownership, or even more in BOI-registered businesses.

Legal and Tax Implications:

  • Expats must secure the appropriate work permit or special investor's visa to legally work or run a business.

  • Income earned in the Philippines is subject to progressive income tax rates, ranging from 0% to 35%, depending on earnings.

  • Expats should check for double taxation agreements to avoid being taxed twice on foreign-earned income.

For a full guide on income opportunities and tax strategies in the Philippines, [click here].