Philippines Business Culture Overview

Business matters are always best dealt with on a face-to-face basis in a warm and pleasant atmosphere. While many Western businesspersons thinks that time is gold and want to get to the point immediately, Filipinos like to be indirect, talk about mutual friends, family commonalities. Only after establishing a cordial atmosphere will people negotiate. No matter what the final result, the discussions should always end cheerfully. To a Filipino, cultivating a friend, establishing a valuable contact and developing personal rapport are what make business wheels turn. The Filipino way of doing business is an infusion of the East and West.

In setting up appointments in the Philippines, especially in government offices, it is most advantageous if a “go-between” or someone with previous connections to that office can make some form of introduction on behalf of the requesting party. Mid-morning or afternoon meetings are preferred, and a follow up call to confirm the meeting a day before is recommended in the Philippines..

After the requisite small talk following the introductions, a typical business meeting would focus mainly on the agenda at hand. Specific conclusions would not necessarily be achieved during the initial meeting, but Filipinos would usually be amenable to follow up discussions or negotiations. A formal agreement or contract may take a longer time to be finalized compared with what Westerners are accustomed to in the Philippines.

Moreover, as in most Asian cultures, Filipinos would rather avoid “loss of face” or public humiliation. Therefore, Filipino contacts prefer an atmosphere of calm and restraint, avoid direct confrontation, and would typically offer a polite reply coupled with a smile rather than an outright negative feedback to the other party’s ideas. A “yes” may mean a lot of things therefore one should be aware of the subtleties of a particular conversation in the Philippines.

Philippine business has its own etiquette. For example, as a show of respect, Filipinos usually address people by their titles (e.g., Architect Cruz, Attorney Jose, Dr. Romero) although the professional might request a more informal approach (e.g., addressing them by their nicknames) after the formal introduction.

In dealing with high-ranking Philippine government and military officials in the Philippines, it is best to address them by their formal titles (e.g., Secretary Flores, General Alfonso, Director Santos, Admiral Lopez, etc.)

Handing out business cards (preferably bearing your position or title) is standard procedure in the Philippines, although the manner in which the cards are exchanged tend to be rather informal as compared with other cultures. If a Filipino contact gives you a personal number (e.g., home or mobile) aside from what is indicated on the business card, it is usually an invitation to call, and is a good sign for establishing cordial relations.
The U.S. businessperson traveling in the Philippines should avoid, as much as possible, personally grappling with the bureaucracy in the Philippines. Customs, for instance, requires many signatures to clear air cargo. The Filipino approach to the problem is to use staff capable of moving through the bureaucracy. Whether getting a driver's license or registering a car, the U.S. business executive will benefit by delegating the chore to a someone able to negotiate through a sea of desks, with a smile and a knack for delivering token gifts or keepsakes. 

Observing office etiquette in the Philippines is also important. When reprimanding employees, take them aside and do it privately. Be as gentle as possible and always make it a point to end the meeting with some show of personal concern for his family to make him feel he is still part of the team and that the criticism is not personal. Again, this is consistent with avoiding “loss of face” in Filipino culture.

English is the official business language in the Philippines. Most correspondences, contracts, and other documents are written in English. Among Filipinos, however, it is common to hear “Taglish” (a combination of Tagalog, a regional dialect from which the Filipino language is largely based, and English, or shifting back and forth between the two languages) during informal conversations. Body language and hand gestures (e.g., a raised eyebrow, a faint smile, a scratch in the head) are also integral to how Filipinos express themselves. Texting, or sending SMS through mobile phones, has now become a choice medium in the Philippines.

Business lunches and dinners are usually arranged personally over the phone and confirmed by the secretary.

The person who invites customarily pays. A guest does not order the most expensive items on the menu, unless the host insists otherwise. It is also customary to have a drink before sitting at a dining table.

A pleasant atmosphere and a minimum of formality is the tone. Business is not usually discussed until after establishing a convivial ambiance, usually after soup or appetizer. Dress is according to venue.

Filipinos tend to be relaxed in replying to RSVPs. Telephone follow-ups are best, about three days before. Party hosts usually have staff track down guests for a confirmation reply. In a formal occasion, seating is arranged. There is usually a head table for the VIPs. A guest speaker is often the highlight of the dinner. Light entertainment is not unusual. In most instances, important guests accept requests to sing. Americans with vocal talents can score in the Philippines.

Christmas is also a time to show appreciation to people with whom you have regular dealings with, e.g., the security guard, doorman, messenger, as well as good customers and clients, through token gifts. Gifts could range from baskets of goodies to company giveaways to plain calendars or office items with your company logo.

Office hours for business firms and the Philippine Government normally are from 8:00 a.m. to 5:00 p.m., with a one-hour lunch break. Most banks are open from 9:00 a.m. to 3:00 p.m. It is best to attempt to accomplish business objectives in midmorning or late afternoon. Many business deals are completed informally during meals, entertainment, or over a round of golf. Offices are generally closed on Saturdays and Sundays in the Philippines.

Summer-weight clothing normally worn in temperate zones is suitable for the Philippines. It is acceptable for businessmen to conduct calls in short or long-sleeved shirt and ties without a coat. Either a two-piece suit or the native "barong tagalog" (a lightweight, long-sleeved shirt worn without a tie) are acceptable, ordinary business attire. Light suits and dresses are appropriate for women in the Philippines.

Philippines Business Climate 

An open economy allows 100% foreign ownership in almost all sectors and supports a Build-Operate-Transfer (BOT) investment scheme that other Asian countries emulate. Government corporations in the Philippines are being privatized and the banking, insurance, shipping telecommunications and power industries have been deregulated. Incentive packages include the corporate income tax, reduced to a current 32%, with companies in the Special Economic Zones (PEZA) are subject to only 5% overall tax rates in the Philippines.

Multinationals looking for regional headquarters in the Philippines are entitled to incentives such as tax exemptions and tax and duty-free importation of specific equipment and materials.

English is taught in all schools, making the Philippines the world's third largest English-speaking country. Every year, there are some 350,000 graduates enriching the professional pool.