Business, Government and Society

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Table of Contents

Current Business Environment3
Business and Government5
The Legal System5
Effectiveness of the system5
Infrastructure development reform programme6
Trade and Investment liberalisation package6
Governance Reforms7
Government Information System7
Regulations 8
Tax Regulations8
Trade Regulations8
Business and Society9
Corporate Social Responsibility9
Tapping on resources11
Research and Development11
Safe environment12
Poverty and Child Labour12

Business environment encompasses all factors that affect a company's operations, and includes customers, competitors, stakeholders, suppliers, industry trends, regulations, other government activities, social and economic factors, and technological developments. It is also known as Operating Environment. Business Environment can be further categorised into Market Environment and Nonmarket Environment. Market environment describes interactions between firms, suppliers and customers that are governed by markets and contracts. Firms are expected to operate effectively by being efficient in production and responsive to consumer demand. They must also anticipate and adapt to change, innovate through research and development, and develop new products and services. Effective management is the key to success for the firms. In contrast, Nonmarket environment is composed of the social, political and legal arrangements that structure interactions outside of, but in conjunction with, markets and contracts as well as interactions between firm and individuals, interest groups, government entities and the public that are intermediated not by markets but by public and private institutions. Nonmarket environment is important because it affects performance of firm in the market environment. Failure to deal with non market issues may lead to decrease in revenue and a tarnished reputation.

Current Business Environment in the Philippines
In the Market Environment, various industries form the dominant part of Philippines economy. In the Manufacturing sector, they are known for automotive parts, food processing, electronics, garments, and textiles. Philippines is a major importer of industrial and electrical machinery. Also, mining is potentially one of the biggest industries in the Philippines as the country is rich in chromites, copper and nickel. In addition to its coal reserves, natural gas has recently been discovered in the Palawan islands. The Philippines is a world leader in renewable energy sources. It has considerable hydroelectric generation facilities, and has installed the world’s first commercial scale geothermal energy installation. Furthermore, underground heat sources account for 25% of all the energy needs. The cost of operating business in the Philippines can contribute 35% to 50% cost savings compared to US business operations cost. The country’s labour is cheap and is 100% open to foreign investments. Growth is also boosted by higher government spending and larger remittances from OFWs. Economic growth has increased slightly from 3.5% to 7%, and recent years have been marked by a reduction in national debt and debt service ratios.

Chart 1.5
Statistics taken from Another sector is the Outsourcing industry, which is growing very fast in Philippines. A majority of the top ten U.S call centre firms operate in the Philippines. P&G has over 400 people in Makati doing back-up office work to their Asian operations including Finance, Accounting, Human Resource and Payment Processing. Products in the agricultural sector include staples and fruits. However, the sector suffers from low productivity, low economies-of-scale, and inadequate infrastructure support. Private investment in buildings is expected to expand, but...
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