Investing in the Philippines

Investment in Philippines has a lot of potential to expand the existing marginally effective growing capacity. Everything grows here somewhere and grows well. Natural health has been swept under the carpet around the world in the last year but demand is still growing for the products. Example cacao is sold wet here in Mindanao for 35pesos a kilo. High quality drinking chocolate expressly made for the natural health industry sells in America for up to 3,000 to 4,000 Pesos per kilo packaged and nicely presented. There are thousands of products which could be marketed with this level of value added. We are currently researching some lists. Anybody interested?

johnthesailor wrote:

Investment in Philippines has a lot of potential to expand the existing marginally effective growing capacity. Everything grows here somewhere and grows well. Natural health has been swept under the carpet around the world in the last year but demand is still growing for the products. Example cacao is sold wet here in Mindanao for 35pesos a kilo. High quality drinking chocolate expressly made for the natural health industry sells in America for up to 3,000 to 4,000 Pesos per kilo packaged and nicely presented. There are thousands of products which could be marketed with this level of value added. We are currently researching some lists. Anybody interested?

Sure there are much higher potentials in the Philippines (and other SE Asian countries) compared to USA and Western Europe.  I predicted that over 25 years ago, seen some e g at USA has got lovered credit classification since then,  but FEW understand still!!! The US and west European stock markets were much overvalued before covid and it's much worse now specialy in USA were stock market investors are NUTS in average, which can be seen at index level chanmge since covid going UP!!!   

BUT demand of some products have gone DOWN significant in Phils because of covid.

There are some good buying opportunities of businesses because of covid now, although some are depending of covid problem future if it's an excelent or terrible investment.

I have researched different business types in the Philippines some years now.  Some types have been skiped while others have improved at my list of favorites.
First steps are taken, to buy two cheap by owners wrong handled businesses in Phils (together with Filipino business partner so it's legal for me as foreigner to own part.) Such wrong handled businesses were for sale cheap before covid too, but I didn't buy earlier because I hadn¨t found a suiting Filipino business partner until recently.  The demand for such products are lowered some by covid. We will see situation when we have solved the mess owners have made, which I expect will take around 6 months to solve, but it's flexible by how many we hire to do the body work part of the solving.

Then there is always the government and the courts;

If you run up against another player the courts and the government suddenly become more of the problem than any competition or they end up siphoning off much of your profit.  Particularly if you are not native.

Cheap?....pse define cheap.
I feel that for a 3rd world developing country (with mass unemployment which is getting worse due to covid) many locally grown essential items are way overpriced for the locals.(e.g:rice/meat/fish/eggs/vegetables).
On the other hand the local brandy/beer/cigarettes are indeed cheap and which I don't consider as essential items.

manwonder wrote:

Cheap?....pse define cheap.
I feel that for a 3rd world developing country (with mass unemployment which is getting worse due to covid) many locally grown essential items are way overpriced for the locals.(e.g:rice/meat/fish/eggs/vegetables).
On the other hand the local brandy/beer/cigarettes are indeed cheap and which I don't consider as essential items.

Before covid it was common too, business owners put their businesses for sale cheap just because they didn't got results as they had expecte. This because of their own incompetence, not having basic knowledge in the businesstype they own!!!  Actualy the only Filipino I have found, who had even heared of a very important step in production process is the business partner I have found and he has only a tiny such business, while some owners of big such busineses haven't even heared of the very importamt step in handling the process!!! 
Now and then I have found such misstreated businesses for sale for much lower asked price than they are worth - if knowing how to solve the problem. 

E g  the business with land we have highest prioroty now to check in detail, the seller just ask a litle more than just empty land go for there.  I will know more detailed after the "inventory" but just after a hasty look we saw much values - if solving the problems - so I estimate just what's AT the land will be worth 5-6 times more than the asked price to me when business partner and all ciosts are paid (including bohnuses to employees if they will do as they are suppoused to do.)  Then I calculated with 25 % lower sell price for the products than before covid.
The second business, which we are interested in too, are more complicated to solve and need more checking before decide if buy it or not, but it has even biger earning potential than the first in the long run if we can solve the two extra problems it has.   These extra problems are different than the basic ones both have and I know how to solve, but these two extra need to be checked extra because they aren't international general as the main, these extra are Phil type problems   

(There is a third I know of more detailed with around 3 times my money backi in some years, plus the worth of 40 % of the land to me.  But I will probably skip that  ((if I don't find other business partner for that)) because that's to far away from the other two.)

I count these as cheap      
if covid don't mess up the product selling prices for ever.   In my estimates I counted with we don't sell anything during whole 2021, some during 22022, but mainly during 2025-2026. If earlier, we can exband earlier, buying more such bad handled businesses in the neighbourhood of the first two.

One of the 4 products we plan to make after the mess solving, is the one with highest earning possibility. It suit for export too, so we will not be depending of the market  in Phils, although we aim at just that to start with at least as long as we don't make biger volumes. 

The plan for now is to make only ONE time investment in startup and then grow just by using incomes we will get.  If we don't change our mind to speed up exbantion         Some depending of too which bargain offers we will get/find before we get any biger earning.   
Back when an international company started buying for an other type of business many years ago, when it became known they bought - Filipinos are gpod at spreading rumpurs      - then it became a rush of Filipino owners, who were eager to sell at such low price, because before that there weren't any buyers, only interested people who didn't have money to buy.   
It's some similar for such we are buying now, some owners have failed to find buyers in over three years...  So it will be a crap investment if we fail to solve the problems (which we sure can solve for the first, unclear for the second) or if covid demolish the prices we can get for the products, because if we would want to sell the businesses, we will get such seling problem ourself   
(But I told my business partner I aim at we make a business, which our future great grandkids will still cooperate in        (after adding some related businesses so all of them who want to can get work in the business.)  I have some such addings in mind even before the first is up and running       For being a Filipino citizen my business partner think very much ahead into the future 

When it's about "normal" businesses, then I normaly calculate similar to how "mogul" investors calculate when they value a business  = the total of:
1.  "Scrap value" if the business would be closed and the assets - except customers - would get sold in parts.
2. Three years normal profit adjusted for costs as development or exbantions. When it's a business ready to make break through start earning big, then calculate with expected future three year's result. 

But in this case it usn't so relevant to calculate like that by the "scrap value" and future earnings will be tiny  - if we don't solve the mess so things start function good.  And it isn't normal neither by so many owners of such businesses in Phils make a main simple misstake, which make a big mess needing to be solved.

LemSaDipolog wrote:

Then there is always the government and the courts;

If you run up against another player the courts and the government suddenly become more of the problem than any competition or they end up siphoning off much of your profit.  Particularly if you are not native.

Yes risk for that.  My business partner will be the front and I have told him to tell it's a foreigner involved only when he has to tell it.

A reducing risk/coimfort  in this type of business is almost no Filipinos know how to handle such,, so if they make so much trouble so I abnd my busines partner chose to skip handling it, then they will soon will get much less than they expect to get by they will proibably screw up as earlier owners have done           
Btw he is pissed allready at how rich Manila Filipinos have tried to scam him twice. The small will not be solved, but the big got solved after he got assistance to go to court by the foreigner, who recomended him to me.

Diksha wrote:

Hello everyone,

During your expatriation in the Philippines, you might have been made aware of interesting investment schemes (local or international). Whether one wants to make money grow, protect oneself or prepare for retirement, investment is always an attractive option. It is, however, never free of risk. Would you, therefore, like to share some practical information for other expats and expats to be?

Is the Filipino economy open to foreign investment? Do local authorities encourage investment (through formalities, tax etc.)?

What are the promising sectors to invest and do business in the Philippines?

Who do you turn to for information before investing your money? (organisation, professional, lawyer, consultant)

According to the sectors of activity and the projects, what budget should be foreseen for an investment in the Philippines?

What do you think are the pitfalls to avoid and what advice would you give someone who wants to invest?

Thanks in advance for your feedback,
Diksha

The higher the risk the higher the potential return...  Investing in a 3rd world country exposes expats to currency risk, lack of regulations and standards, sovereign risk, and other risk factors that should be taken to account before investing and when performing due diligence on your potential investment.  Costly investment expenses, punitive taxes, penalties and interest are among the most common mistakes expats make when investing in other jurisdictions.  As an example, US related persons should be aware of compliance issues with the Foreign Account Tax Compliance Act (FATCA) established by the Obama administration in 2010 and watch out for booby traps on Passive Foreign Income Companies (PFIC) that can end up costing you over 50%-100% of your returns in punitive taxes, penalties, interest and tax preparation costs to the IRS.  How the investment also plays a part in your estate should be a major consideration for the sake of your rightful heirs in terms of probate and inheritance or estate taxes.  And this is just the tip of the iceberg.

Good timing EnzyteBob to remind of what I have told   

Two days ago there was a lecture at Palawan organiced by congressman about how to improve Palawan.

https://www.facebook.com/permalink.php? … 4577333084

Funny how much SAME they told in that lecture as I have told    and as we have worked with researching some of a while if/which to add in our own business.  (Although one of them we decided yesterday we will not do ourself because we find other alternatives more interesting.)

And one of them this lecture was about I mensioned to PalawOne in this forum recently.

The renewable energi project I dont have money to myself, but some months ago we tried to make a huge foreign investor to start at Palawan, although with an other solution, which would cost less in investment and would add many more jobs than the lecture alternatives.

- @coach53

Good timing EnzyteBob to remind of what I have told   

Two days ago there was a lecture at Palawan organiced by congressman about how to improve Palawan.

https://www.facebook.com/permalink.php? … 4577333084

Funny how much SAME they told in that lecture as I have told    and as we have worked with researching some of a while if/which to add in our own business.  (Although one of them we decided yesterday we will not do ourself because we find other alternatives more interesting.)

And one of them this lecture was about I mensioned to PalawOne in this forum recently.

The renewable energi project I dont have money to myself, but some months ago we tried to make a huge foreign investor to start at Palawan, although with an other solution, which would cost less in investment and would add many more jobs than the lecture alternatives.

- @coach53

"The Renewable energy project I don't have money myself "

Surely Coach with  your worldly urbane personality and business acumen not to mention past expertise on turn key projects one would assume that you have the working capital to put your enlarged cerebral capacity where your wallet is. Of course it's always easier to utilise investors capital other than your own albeit with a reduced return. From past postings you've always come across as a guy who believes in himself.  To use the oft used cliché 'Where's the Beef' ?

- @Lotus Eater

So you mean your BS to be true "because" I dont have money enough to  finance ALL projects I want to start...? 

@kernow2017 my wife worked for some Indian money lenders for many years, they loose very little money, they have people that collect money from those who are slow paying, my wife was a collector in the markets in Davao, her daily collection was around 40,000 peso

Hello everyone,


During your expatriation in the Philippines, you might have been made aware of interesting investment schemes (local or international). Whether one wants to make money grow, protect oneself or prepare for retirement, investment is always an attractive option. It is, however, never free of risk. Would you, therefore, like to share some practical information for other expats and expats to be?


Is the Filipino economy open to foreign investment? Do local authorities encourage investment (through formalities, tax etc.)?


What are the promising sectors to invest and do business in the Philippines?


Who do you turn to for information before investing your money? (organisation, professional, lawyer, consultant)


According to the sectors of activity and the projects, what budget should be foreseen for an investment in the Philippines?


What do you think are the pitfalls to avoid and what advice would you give someone who wants to invest?


Thanks in advance for your feedback,

Diksha

- @Diksha