The insider view: Manila

Published: 17 Dec 2014

We examine how business is conducted in cities around the world, with local experts acting as guides

Commercial environment

As the world’s most densely populated metropolis, the capital of the Philippines must contend with all the challenges that typically face mega-cities in high-growth economies. Manila is an important centre of finance, retail and transport – it has the largest seaport in the country – but a 2013 report revealed that the city’s government was in debt at the end of 2012, with a cash balance of 1.5bn pesos ($34m) insufficient to meet liabilities of 3.5bn pesos.

InterNations, an online community for expatriate workers, says that newcomers to Manila will soon notice that its economy is characterised by the production of items such as textiles, coconut oil, rope and shoes. “All of these are produced in the metropolis, providing steady jobs,” it says. “The port is another reason the city functions as the country’s economic centre.”

InterNations adds that, despite the encouraging economic growth that Manila and the nation as a whole have seen, the capital still faces serious problems. “High youth unemployment and a weak infrastructure are just some of them,” it says. “While the recent growth has resulted in a certain level of political stability, this rests on the shaky foundation of Manila’s economy. In order to create a stronger middle class and limit the need for government support, economic reforms are necessary.”

Dipesh Patel ACMA, CGMA, vice-president of finance at security group G4S Holdings in the Philippines, says: “The company has seen double-digit growth in recent years in the Philippines, part of our emerging-markets portfolio. The economy is growing and is likely to accelerate through increased foreign investment, with ASEAN integration set for 2015. With increased investment comes increased risk, certainly in our industry. But we are confident that the future move to a single market economy will have a positive effect.”

Doing business

Business success in Manila is very much a question of building strong ties between client and supplier, according to Patel.

“These relationships are both professional and personal,” he says. “A lot of deals are concluded in an informal social environment – it helps to have an appetite for large servings, no matter what time of the day it is.”

He continues: “The country is built on a unique entrepreneurial spirit. I regularly come across inspiring people who have built large businesses from nothing. These businesses are led by, and quite rightly attract, some very talented individuals who are hungry to drive the economy’s growth.”

Despite the city’s structural challenges and uncertain fiscal situation, opportunities abound for expats interested in coming here, reports InterNations. “Different districts offer different possibilities for setting up a business and working in Manila.” Sectors with potential range from manufacturing, shipping and trucking to health and fitness provision, education and retail.

“If you’re looking to be your own boss and found a company in Manila, you need to apply for a permit by submitting a business transaction form to the Business Promotions and Development Office,” it says. “There you will receive a business identification number, which allows you to get an assessment of your corporate tax and regulatory fees.”

Patel adds: “Having spent most of my career in the UK, I think the Philippines is no different from the UK or other developed markets for doing business, in that our customers’ knowledge and needs are highly sophisticated and ever-increasing. Pricing is very competitive, though, and business in some respects can be highly commoditised. The key to success here is no secret: balance a quality service with a desirable price.”

Management culture

“Having worked in Manila for two years, I can confidently say that the main focus of the executive team – and what is filtered down to middle managers here – is process management and compliance,” Patel says.

“Manage the process to deliver the outcome” is the mantra that’s cascaded down through the organisation right from the top, he reports.

“Historically – and I’m sure we’re not alone in this – we’ve had our fair share of blunders as a company, primarily because processes have either not been followed or (in some cases) not even been in place. As a management team, we have recognised the risks and costs of non-compliance. We have therefore been investing heavily in recruiting new talent, improving the skills of the existing workforce and upgrading our systems.”

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