Expats doing business in the Philippines will be operating in one of the largest Southeast Asian markets. Its strategic location has made the Philippines a potential gateway for investors into the wider Asian region and many multinational companies operate here.
With a multicultural and ethnically diverse population, the Philippines offers a vibrant and dynamic business environment. However, expats may find that the country is not always an easy place to do business. This is reflected in the country’s ranking in the World Bank’s Ease of Doing Business survey for 2020, where it came 95th out of 190 countries surveyed. It is difficult to start a business (ranked 171st) and enforce contracts (152nd).
Fortunately, there has been progress in areas such as protecting minority investors (72nd) and dealing with construction permits (85th), and getting electricity also ranks well (32nd).
Filipino and English are the two languages of business in the Philippines. Spanish is also spoken by many Filipinos, along with Arabic and Chinese.
Business hours are usually from 8am to 5pm, with a one-hour lunch break. Offices are generally closed on weekends, which fall on a Saturday and Sunday.
Business dress in the Philippines is formal. Men usually wear suits or formal office apparel. Some men wear the traditional barong tagalog, a lightweight, long-sleeved shirt worn without a tie. Light suits and dresses are acceptable for women. Filipinos usually dress for the weather. Since it is a tropical country, light and loose clothing materials are advised during the hot summer.
A handshake and a smile are the usual forms of greeting. Always greet the eldest or most senior person first.
Gift giving is widely practised in Filipino business culture and is especially popular once a contract has been signed. Gifts should not be overly extravagant; popular gifts include flowers, sweets, perfume and spirits.
Women are generally treated equally in the Philippines and there are many successful women in Filipino business circles.
Business culture in the Philippines
Filipino business culture is a mix of East and West. Although geographically part of Southeast Asia, the country has strong European and American ties that extend into everyday social interactions and its business culture. Although many business practices may be Westernised, Eastern traditions and cultural norms still play a central role.
Family is important in Filipino culture and many businesses are family owned, with several family members often working for the same company. Business relationships, therefore, equate to personal relationships. Networking and building close interpersonal relationships with Filipino counterparts is critical when doing business.
Business structures in the Philippines are hierarchical and decisions are made mostly by the top-level executives. However, group input also plays a role in making decisions.
Filipinos are known for their friendliness and hospitality. This extends to the business environment. Filipinos place great emphasis on polite language and gentle conversation. When speaking, one’s tone should remain neutral and direct questions should be avoided.
Business is best dealt with face to face. Only once polite conversation has been concluded should business be negotiated. Filipinos enjoy conversation about their friends and family, but topics such as politics, religion and corruption are best avoided.
Business communication is often indirect, and expats should be aware of this to avoid miscommunication. A 'yes' may not necessarily mean an agreement has been made.
Moreover, physical gestures and their meanings are significant. Filipinos often use their eyes, lips and hands to convey a wide range of messages. Raised eyebrows and a smile indicate a silent 'hello' or a 'yes' in answer to a question. Fixed eye contact between men could be considered aggressive.
To Filipinos, the concept of ‘saving face’ and maintaining self-esteem is imperative. Public displays of anger, trying to prove someone wrong in front of others, or disrespect of a colleague’s rank or position can cause loss of face. When in an embarrassing situation, the Filipino may generally laugh or try to change the subject to hide the awkwardness. Expats should avoid criticising a Filipino associate publicly.
Expats should not be surprised if Filipino colleagues or friends ask personal questions about their age, salary or how much something cost them to buy, or make frank comments regarding weight and appearance. Such questions come from curiosity and the comments are generally meant in a light-hearted manner.
Dos and don’ts of business in the Philippines
- Do treat Filipino associates with respect and avoid offending anyone in public or during meetings.
- Don’t be surprised if Filipino counterparts ask personal questions. These should be answered politely.
- Do remember that Filipino business culture is personal, so personal relationships should be nurtured and respected.
- Don’t make direct eye contact. It is considered rude to stare.
- Don’t wag a finger at someone or curl a finger to summon someone, as these gestures are considered rude.