US Department of State filippinsk lov behandler generelt utenlandske investorer det samme som deres hjemlige kolleger, med viktige unntak som er omtalt i Utenlandske investeringsloven (beskrevet nedenfor). Bedrifter eller partnerskap må registrere seg hos Securities and Exchange Commission (SEC), og enslige innehavere må være registrert hos Bureau of Trade Regulation og Consumer Protection i Department of Trade and Industry (DTI). Investorer rapporterer generelt at det filippinske byråkratiet er ikke-diskriminerende, men sakte å behandle disse kravene. Utenlandske Investerings Negative List er faktisk to lister, hvilke disposisjonssektorer som er begrenset eller begrenset når det gjelder utenlandske investeringer under 1991 Foreign Investment Act. Utenlandske investeringsloven krever også at den filippinske regjeringen publiserer en oppdatert negativ liste hvert 2. år for å gjenspeile endringer i loven, den åttende negative listen ble utlyst i februar 2010. Denne relativt lange listen over utenlandske investeringer begrenser bidrar til den fattige filippinske posten ved å tiltrekke seg utenlandske investering. Liste A forteller investeringssektorer og aktiviteter for hvilke utenlandsk kapitaldeltakelse er begrenset av mandat til forfatningen og spesifikke lover. Liste B beskriver områder hvor utenlandsk eierskap er begrenset eller begrenset (generelt på 40 prosent) av hensyn til nasjonal sikkerhet, forsvar, folkehelse, sikkerhet og moral. Begrensningene stammer fra en konstitusjonell bestemmelse som tillater kongress å reservere til filippinske borgere visse områder av investeringer og begrense utenlandsk deltakelse i offentlige tjenester eller deres drift. Det finnes ingen mekanisme for et frafall under de negative lister. Bare filippinske borgere kan praktisere lisensierte yrker som ingeniørfag, medisin og allierte yrker, regnskap, arkitektur, interiørdesign, kjemi, miljøplanlegging, sosialt arbeid, undervisning og lov. Toppstillinger og valgledere av flertall utenlandsk eide foretak (det vil si president, daglig leder og kasserer eller tilsvarende) er unntatt fra disse restriksjonene. Bedrifter som registrerer seg hos Investor Board (BOI) kan ansette utenlandske statsborgere i tilsyns-, tekniske eller rådgivende stillinger i fem år fra registrering, utvides i begrensede perioder etter BOIs skjønn. 1987 grunnloven forbyder utenlandske statsborgere å eie land på Filippinene. Investors39 Lease Act fra 1994 gjør det mulig for utenlandske investorer å leie en sammenhengende landpakke på opptil 1000 hektar i 50 år, fornybar én gang i 25 år. I midten av 2003 tillot Dual-Citizenship Act naturfødte filippinere som ble naturaliserte borgere fra et fremmed land for å gjenvinne filippinsk statsborgerskap. Filippinske dobbeltborgere har nå full rett til besittelse av land og eiendom. Eierskapsloven er fortsatt vanskelig å etablere, er dårlig rapportert og regulert, og rettssystemet er sakte å løse saker. Andre investeringsområder som er reservert for filippinere, omfatter: massemedier (unntatt innspilling), småskala gruvedrift, privat sikkerhetsutnyttelse av marine ressurser, herunder liten utnyttelse av naturressurser i elver, innsjøer og laguner og produksjon av brannknekker og pyrotekniske enheter. Detaljhandel er svært begrenset til utenlandske investeringer. Detaljhandel med innbetalt kapital på mindre enn 2,5 millioner, eller mindre enn 250.000 for detaljister av luksusvarer, er reservert for filippinere. Utenlandske eierskap av detaljhandelsforetak med innbetalt kapital på mellom 2,5 og 7 millioner er nå tillatt, med innledende kapitaliseringskrav. Bedrifter som driver finansiering og verdipapirforsikring som er regulert av SEC, er begrenset til 60 prosent utenlandsk eierskap. Selv om det var en avslapping av tidligere politikk, var antallet nye utenlandske banker som kunne åpne full service grener på Filippinene, på totalt ti i 1994 i bank liberaliseringsloven, og alle lisenser er utstedt. Disse utenlandske bankene er begrenset til seks avdelinger hver. I tillegg fikk fire utenlandske banker som opererte i Filippinene før 1948, å åpne opp til seks grener hver. Utenlandske banker som kvalifiserer etter loven - offentlig notert og med nasjonale eller globale rangeringer - kan eie opptil 60 prosent i et lokalt innlemmet datterselskap. Utenlandske investorer som ikke oppfyller disse kravene er begrenset til en eierandel på 40 prosent. Siden 1999 har Bangko Sentral ng Pilipinas (Central Bank) pålagt et moratorium for utstedelse av nye banklisenser, og begrenser investeringer til eksisterende banker, selv om mikrofinansieringsinstitusjoner er fritatt. Filippinsk lov krever også at flertall filippinske eide banker til enhver tid skal kontrollere minst 70 prosent av de totale banksystemressursene i landet. Forsikringsbransjen er åpen for 100 prosent utenlandsk eierskap, med en glidende skala av minimumskapitalkrav, avhengig av graden av utenlandsk eierskap. Som regel kan bare det statseide regjeringstjenesteforsikringssystemet (GSIS) gi dekning for statlig finansierte prosjekter. Build-Operate-Transfer (BOT) prosjekter og privatiserte offentlige selskaper må sikre forsikring og binding fra GSIS, i hvert fall proporsjonal med GPH-interesser. Andre spesifikke grenser for utenlandske investeringer inkluderer: private radiokommunikasjonsnettverk (20 prosent) ansettelsesrekruttering og lokalt finansiert byggverk og reparasjon (25 prosent) reklamebyråer (30 prosent) utforskning, utvikling og utnyttelse av naturressurser (40 prosent med unntak) utdanningsinstitusjoner (40 prosent) drift og forvaltning av offentlige forsyningsvirksomheter (40 prosent) drift av kommersielle dybdefiskefartøyer (40 prosent) filippinske offentlige anskaffelseskontrakter (40 prosent) justering selskapsforsikringssektoren (40 prosent) drift av BOT-prosjekter i offentlige tjenester (40 prosent) eierskap av private landområder (40 prosent) ris og maisforedling (40 prosent, med noen unntak). Filippinene begrenser også utenlandsk eierskap av hensyn til nasjonal sikkerhet, forsvar, folkehelse, sikkerhet og moral, inkludert sprengstoff, skytevåpen, militærutstyr og massasjeklinikker, som generelt er begrenset til 40 prosent utenlandsk egenkapital. Utenlandske eierskap i små og mellomstore bedrifter er også begrenset til 40 prosent i ikke-eksportvirksomheter. I tillegg til begrensningene som er beskrevet i Foreign Investment Negative List, skal bedrifter med mer enn 40 prosent utenlandsk egenkapital som kvalifiserer for BOI-insentiver, avhende til 40 prosent nivå innen 30 år fra registreringsdato eller innenfor en lengre periode fastsatt av BOI. Utenlandske kontrollerte selskaper som eksporterer 100 prosent av produksjonen, er unntatt fra dette kravet. BOT-loven gir juridiske rammer for store infrastrukturprosjekter og andre typer offentlige kontrakter. Franchise i jernbane - eller bybanestasjonstransportsystemer, elforsyning, vannfordeling og telefonsystemer kan kun tildeles bedrifter med minst 60 prosent filippinsk eierskap. Amerikanske firmaer har vunnet kontrakter i henhold til lov og lignende arrangementer, hovedsakelig i kraftproduksjonssektoren. Men mer aktiv utenlandsk deltakelse under BOT og lignende ordninger kan bli frustrert av problemer med juridisk administrasjon, blant annet: svakheter i planlegging, anbudsgivning og gjennomføring av infrastrukturprosjekter i private sektorer, regulatoriske og juridiske utfordringer for å samle inn eller øke toller og avgifter og doblet tvetydigheter om nivået av garantier og annen støtte fra regjeringen. Den filippinske gruvedrift fra 1995 tillater en utenlandsk enhet fullstendig eierskap til et selskap som er involvert i storskala utforskning, utvikling og utnyttelse av mineralressurser, slik det er arrangert gjennom finansielle og tekniske bistandsavtaler med den filippinske regjeringen. Adresseringsbegrensninger på utenlandske investeringer vil være avgjørende for Aquino administrationrsquos uttalte mål om aggressivt å fremme offentlig-private partnerskap (PPP) som et middel til å supplere utilstrekkelige offentlige ressurser for vitale infrastrukturer. En konferanse i november 2010 som lanserte PPP under den nye regjeringen ble godt mottatt av næringslivet. Regjeringstjenestemenn lovet å beskytte investorer mot regulatorisk risiko, selv om de ikke har gitt spesifikasjoner, og kunngjorde en avslapping i enkeltlånergrenser for filippinske banker som finansierer PPP-ordninger, underlagt risikostyringskrav. Regjeringen har også etablert et PPP-senter for å fremme åpenhet og overvåke prosjektutvikling og godkjenning, og har tildelt ressurser i 2011-budsjettet for rett vei, arealinnsamling og andre forberedende anlegg for å tiltrekke seg privat deltakelse i infrastruktur. Konverterings - og overføringspolitikk Sentralbanken har arbeidet de siste fem årene for å slappe av og strømlinjeforme det filippinske valutamarkedet (forex) rammebetingelser og bidra til å stanse den hurtige takknemligheten av pesoen. Det er ingen restriksjoner på full og umiddelbar overføring av midler knyttet til utenlandske investeringer, utenlandsk gjeldsbetjening eller betaling av royalties, leasingavgifter og lignende avgifter. Sentralbankforskriften fastsetter spesifikke krav til valutakjøpskjøp. Det er ikke obligatorisk krav om overføring av utenlandsk valuta på eksportinntjening og andre utenlandsk valutainntjenere som utenlandske arbeidstakere. Sentralbanken følger en markedsbestemt valutapolitikk, med mulighet for intervensjon som hovedsakelig er rettet mot å utjevne overdreven valutakursvolatilitet. Ekspropriasjon og kompensasjon Filippinsk lov tillater ekspropriasjon av privat eiendom for offentlig bruk eller i nasjonal velferd eller forsvarets interesse. I slike tilfeller tilbyr GPH kompensasjon for den berørte eiendommen. De fleste ekspropriasjonssaker involverer oppkjøp for store infrastrukturprosjekter i offentlig sektor. I tilfelle ekspropriasjon har utenlandske investorer rett under filippinsk lov til å overføre beløp mottatt som kompensasjon i den valutaen som investeringen ble opprinnelig gjort og til valutakursen på tidspunktet for overføring. Det kan imidlertid være en langvarig prosess å godta en gjensidig akseptabel pris. Det er ingen nylige tilfeller av ekspropriasjon som involverer amerikanske selskaper i Filippinene. BOT-entreprenører i energisektoren, inkludert amerikanske firmaer, har imidlertid rapportert tvister om eiendomsskattestudier med lokale myndigheter (LGU). I minst ett av disse tilfellene har LGUene igangsatt auksjon og / eller konfiskasjonsprosedyrer på entreprenørens eiendeler, som selskapene utfordrer ved domstolene. Filippinsk lov mandater salg til 40 prosent utenlandsk egenkapital i enkelte sektorer. Omnibus Investment Code spesifiserer en 30-års salgstid for ikke-pioner utenlandske selskaper som aksepterer investeringsinnspill. Pioneer bedrifter og selskaper som eksporterer 100 prosent av produksjonen er fritak fra denne bestemmelsen. Visse ikke-luksuriøse detaljhandelsvirksomheter må tilby minst 30 prosent av egenkapitalen til offentligheten innen åtte år fra driftsstart. Investeringskonflikter kan ta år for partene å nå endelig avgjørelse. En rekke GPH-handlinger de siste årene har reist spørsmål om helheten av kontrakter på Filippinene og har oversvømt investeringsklimaet. Nylige høyprofilerte tilfeller inkluderer GPH-initiert gjennomgang og gjenforhandling av kontrakter med uavhengige kraftprodusenter, rettsavgjørelser som medfører angivelig besmittet og ufordelagtige BOT-avtaler, og utfordringer i omfanget av utenlandsk deltakelse i storskala naturressursforskningsaktiviteter, som for eksempel gruvedrift . Mange utenlandske investorer beskriver ineffektiviteten og usikkerheten i rettssystemet som et betydelig avvik for investeringen. Rettsvesenet er konstitusjonelt uavhengig av utøvende og lovgivende grener og står overfor mange problemer, herunder underbemanning og korrupsjon. GHF forfølger rettsreform med støtte fra utenlandske givere, inkludert den amerikanske regjeringen, den asiatiske utviklingsbanken og verdensbanken. Filippinene er medlem av Internasjonalt senter for oppgjør av investeringstvister og av konvensjonen om anerkjennelse og håndheving av utenlandske arbitrage-priser. Imidlertid har filippinske domstoler, i flere tilfeller involvert amerikanske og andre utenlandske firmaer, vist seg uvillig til å overholde voldgiftsprosessen eller dens resulterende beslutninger. Håndheve en voldgiftskandidat i Filippinene kan ta flere år. En etterlengtet insolvenslov laget for å gjenkjenne kreditorrettigheter og respektere prioriteringen av krav erstattet den århundre gamle insolvensloven i juli 2010. Under visse forhold kan rehabilitering påbegynnes av skyldnere eller kreditorer under domstolstilsyn, forhåndsforhandlet, eller utenom rettssaker. Loven fastsetter også betingelsene for frivillig (debitorinitiert) og ufrivillig (kreditorinitiert) likvidasjon. Handlingene gjenkjenner grenseoverskridende insolvensprosedyrer og FNs senter for International Trade and Developmentrsquos Model Law on Cross-border Insolvency, slik at domstolene kan yte lettelse som følge av insolvens eller rehabiliteringsprosedyrer i utenlandsk jurisdiksjon som involverer en utenlandsk enhet med eiendeler i Filippinene. Regional rettsinstanser utpekt av Høyesterett som kommersielle domstoler har jurisdiksjon over konkurs og konkurs saker. Selv om håndhevelsen forblir nøkkel, søker den nye loven å gi et klart, gjennomsiktig og forutsigbart juridisk rammeverk for rehabilitering og likvidasjon av nødsituerte foretak, som tidligere var regulert av foraktet lovgivning og en kakofoni av noen ganger tvetydige og inkonsekvente avgjørelser, prosedyrer og annen rettspraksis utsatt for utfordringer og langvarige forsinkelser. Ytelseskrav og incitamenter Ytelseskrav bygger vanligvis på et godkjent prosjektforslag, etablert av BOI for de investorer som får incentiver. Generelt er BOI og investoren enige om årlige produksjonsplaner og eksportresultatmål, med krav om at registrerte prosjekter opprettholder minst 25 prosent av totale prosjektkostnader i form av egenkapital og oppfyller et 20 prosent lokalt verdiskapende krav til innkjøp . I praksis har BOI vært fleksibel for å håndheve dette kravet så lenge den faktiske ytelsen ikke avviger vesentlig fra bransjestandarden. Enkelte næringer har vært gjenstand for mer spesifikke lokale innkjøpskrav. Imidlertid er bestemmelser som krever at utenlandske forhandlere til kilde lokalt bortfalt i mars 2010, etter ti år. Filippinene er ikke signatar til WTO-avtalen om offentlige anskaffelser. Regjeringskonvensjonsloven fra 2003 krever at den offentlige sektoren anskaffer varer, forsyninger og konsulenttjenester fra bedrifter som er minst 60 prosent filippinske eide og infrastrukturtjenester fra bedrifter med minst 75 prosent filippinsk interesse. Selv om filippinsk lov skisserer objektive kriterier for valg av et elektronisk elektronisk innkjøpssystem, fortsetter amerikanske og andre utenlandske selskaper å ta opp bekymringer om uregelmessigheter i offentlige anskaffelser og inkonsekvent implementering. Filippinsk lov gir også fortrinn til lokale produkter og eller filippinske kontrollerte foretak i budevalueringsprosessen for kjøp av varer og forsyninger fra det offentlige. Når det laveste budet er fra en leverandør av importerte varer andor fra et utenlandsk eid selskap, kan den laveste innenlandske bieieren kreve preferanse og matche tilbudet, forutsatt at det opprinnelige budet ikke var mer enn 15 prosent høyere enn det utenlandske tilbudsgiver eller utenlandske enhet. Filippinske konsulenter nyter fortrinnsrett i offentlige prosjekter. Hvis filippinske konsulenter jobber for utlendinger på slike prosjekter på grunn av teknisk behov, krever loven at de er ledende konsulenter. Når utenlandsk finansiering er uunnværlig, må utenlandske konsulenter inngå joint ventures med filippinere. Multilaterale giverbyråer rapporterer at deres samarbeidspartnere har hittil vært i stand til å overholde begge donors39 interne retningslinjer for innkjøp og filippinsk lov. Utenlandske budgivere kan delta i utenlandsk finansierte bistandsprosjekter, forutsatt at utenlandsk bistandsavtale uttrykkelig gir bestemmelse om bruk av utenlandsk regjering eller internasjonale finansieringsinstitusjoner, innkjøpsprosedyrer og retningslinjer. Den offisielle utviklingshjelpsloven tillater videre presidenten å fravike lovbestemte preferanser for lokale leverandører for utenlandsk finansierte prosjekter. Reformloven om offentlige anskaffelser omfatter ikke prosjekter i henhold til BOT-loven, noe som gjør at investorer i kvalifiserende prosjekter kan engasjere seg i filippinske og eller utenlandske firmaer til bygging av infrastrukturprosjekter. Innkjøp av statlige myndigheter og statseide eller kontrollerte selskaper er underlagt et motkravskrav som medfører betaling av minst 1 million i utenlandsk valuta. Gjennomføringsbestemmelser fastsetter nivået av motpartsforpliktelser på minst 50 prosent av importprisen og fastsetter straffer for ikke-effektivisering av motpartsforpliktelser. Over 140 lover adresserer generelle og sektorsmålrettede investeringsinnstøtninger i Filippinene. Echoing tidligere administrasjoner, president Benigno Aquino III har offentlig uttalt støtte for rationalisering av finanspolitiske incentiver og en rekke regninger har blitt arkivert i den filippinske kongressen. Omfanget og detaljene i reformen forblir imidlertid omstridende. Forslag fra nøkkelsekretærsekretærer om å avvikle inntektsskattferier har vært spesielt kontroversielle. Hvert år skisserer investeringsplanen (IPP) listen over investeringsområder som har rett til insentiver. IPP 2010 fortsetter mange av de samme prioriterte investeringsområdene som den forrige, blant annet: landbrukindustri og fiskeri (omfatter bioteknologiske produkter og tjenester) infrastrukturtekniske produkter forretningsprosess outsourcing forskning og utvikling og kreative næringer. Også dekket er ldquostrategic aktiviteter, rdquo prosjekter med en minimumsinvestering på US 300 millioner som skaper minst 1000 jobber eller bruker avansert teknologi. Nytt i 2010-planen er inkludering av kvadratiske prosjekter, kvote som fremmer effektiv bruk av energi, naturressurser og råvarer, og prosjekter som minimerer forurensning og klimagassutslipp. Screening for legitimitet og regulatorisk overholdelse av selskaper som søker investeringsincitamenter ser ut til å være ikke-diskriminerende, men søknadsprosessen kan være komplisert ettersom insentiver gitt av BOI, ofte avhenger av handlinger fra andre byråer, som Finansdepartementet (DOF), inkludert dets Tollvesenet (BOC). Blant de betydelige incentivene som tilbys til BOI-registrerte selskaper, er: 4-6 års inntektsskatt ferie ekstra år med skatteferier for utvidelse og modernisering prosjekter skattefradrag for nødvendige og store infrastrukturverk for bedrifter lokalisert i områder med mangelfull infrastruktur, offentlige forsyninger og andre anleggsavgiftsfritak for avlsbeholdninger og nødvendige leveranser eller reservedeler unntatt fra kupongavgift og eventuell eksportavgift, plikt, pant eller avgifter på ikke-tradisjonelle eksportprodukter i ti år muligheten til å ansette utenlandske statsborgere i tilsyns-, teknisk eller rådgivende stillinger i fem år under forenklede visumkrav (stillingen som president, daglig leder og kasserer er ikke underlagt denne begrensningen) og forenkling av tollprosedyrer. For å oppmuntre den regionale spredningen av næringer, har BOI-registrerte foretak som befinner seg i mindre utviklede områder og de tretti fattigste provinsene automatisk berettiget til å tilby incitamenter. Slike foretak kan trekke 100 prosent av infrastrukturutgifter fra skattepliktig inntekt. Et selskap kan også trekke 100 prosent av inkrementelle lønnskostnader i fem år, noe som er dobbelt så høyt som mulig for BOI-registrerte prosjekter som ikke ligger i mindre utviklede områder. I tillegg til de generelle insentiver som er tilgjengelige for BOI-registrerte selskaper, gjelder en rekke insentiver spesielt for eksportorienterte bedrifter. Et foretak med mer enn 40 prosent utenlandsk egenkapital som eksporterer minst 70 prosent av produksjonen, kan fortsatt ha rett til insentiver, selv om aktiviteten ikke er oppført i IPP. Disse inkluderer: skattekreditt for skatter og avgifter betalt på importerte råvarer som brukes til behandling av eksportprodukter, fritak for skatter og avgifter på importerte reservedeler (gjelder firmaer som eksporterer minst 70 prosent) og tilgang til tollbindere. BOI er fleksibel med håndheving av individuelle eksportmål, forutsatt at eksporten i prosent av totalproduksjon ikke faller under minimumskravet (50 prosent for lokale bedrifter og 70 prosent for utenlandske bedrifter). BOI-registrerte utenlandsk kontrollerte bedrifter som kvalifiserer for eksportincitamenter, er gjenstand for en 30-års salgstid, hvor minst 60 prosent av egenkapitalen må være filippinsk kontrollert. Utenlandske firmaer som eksporterer 100 prosent av produksjonen, er unntatt fra dette frasalgskravet. Eksportorienterte bedrifter med minst 50 prosent av inntektene deres fra eksport kan registrere seg for ytterligere insentiver i henhold til eksportutviklingsloven fra 1994. Registrerte eksportører kan være berettiget til begge disse og BOI-insentiver, forutsatt at eksportørene er registrert i henhold til BOI-regler og forskrifter og eksportøren utnytter ikke samme eller lignende insentiver to ganger. Spesifikke eksportincitamenter inkluderer en skattekreditt på mellom 2,5 og 10 prosent av årlige inkrementelle eksportinntekter. Filippinsk lov gir også incitamenter for multinasjonale bedrifter til å etablere regionale eller regionale hovedkvarter og regionalt operasjonskontor i Filippinene (Omnibus Investment Code 1987, med endring). Filippinsk lov anser regionalkvarteret å være grener av multinasjonale selskaper med hovedkontor utenfor Filippinene som ikke tjener eller oppnår inntekt på Filippinene, men som fungerer som tilsyns-, kommunikasjons - eller koordineringssentre. Incitamenter for regionalt hovedkontor inkluderer: fritak fra inntektsskatt unntak fra filial overskudd remittance skattefritakelse fra merverdiavgift salg eller leasing av varer og eiendom og overføring av tjenester til det regionale hovedkvarteret underlagt null prosent momsfradrag fra alle skatter, avgifter eller avgifter pålagt av en lokal enhet (unntatt eiendomsskatt) merverdiavgift og skattefri import av trenings - og konferansemateriell og utstyr som bare brukes til hovedkontorets funksjoner. Det regionale driftkvarteret har mange av de samme incentivene som regionalt hovedkvarter, men er inntektsgenererende, er underlagt standard 12 prosent merverdiavgift, gjeldsavgift for avkastningsavgift, og en fortrinnsrett på ti prosent av selskapsskatt. Privilegier utvidet til utenlandske ledere som arbeider med disse operasjonene, inkluderer skatte - og skattefri import av personlige og husholdningseffekter, og innvandringsfordeler for ledere. Støtteberettigede multinasjonale selskaper som etablerer et regionalt hovedkontor, må bruke minst 200 000 årlig til å dekke virksomheten. Multinasjonale selskaper som etablerer regionale varehus for levering av reservedeler, produserte komponenter eller råvarer til deres utenlandske markeder, har også incitamenter til import som reexporteres. Eksportert import er unntatt fra toll, intern omsetningsskatt og lokale skatter. Importerte varer beregnet på det filippinske markedet er underlagt gjeldende avgifter og avgifter. Rett til privat eierskap og etablering Filippinsk lov anerkjenner den private rett til å erverve og avhende eiendommer eller forretningsinteresser, med forbehold for utenlandske statsborgerskap som er angitt i den filippinske grunnloven og andre lover. 1987 grunnloven gir myndighetene myndighet for å regulere konkurranse og forby monopol, selv om det ikke foreligger noen implementeringslov. Noen få sektorer er stengt for privat virksomhet, generelt på grunnlag av sikkerhet, helse eller offentlig moral. Quot Den filippinske regjeringen kontrollerer og driver for eksempel kasinoene i landet gjennom det filippinske Amusement and Gaming Corporation og driver lotterioperasjoner gjennom filippinske veldedighetskampene Kontor. Bare det statseide GSIS kan sikre offentlige finansierte prosjekter. BOT-prosjekter og delvis privatiserte regjeringsbedrifter må oppfylle forsikrings - og båndkrav fra statsforsikringssystemet, i forhold til GPHs interesser. I tillegg skal statlige midler i hovedsak deponeres i den filippinske sentralbanken og statseide banker. Beskyttelse av eiendomsrettigheter Forsinkelser og usikkerhet knyttet til et besværlig domstolssystem fortsetter å berøre investorer, selv om Filippinene har etablert prosedyrer og systemer for registrering av fordringer på eiendom. Spørsmål om den generelle helligheten av kontrakter, og eiendomsrettighetene de støtter, har også skjult investeringsklimaet. Spesielt bekymret i Filippinene er utfordringen med beskyttelse av immateriell rettighet, som Filippinene er oppført på United States Trade Representative (USTR) Special 301 Watch List. Amerikanske distributører fortsetter å rapportere høye nivåer av piratkopierte optiske plater av kinematografiske, musikalske verk, dataspill og forretningssoftware, samt utbredt uautorisert overføring av bevegelsesbilder og annen programmering på kabel-TV-systemer. Varemerkekrenkelse av en rekke produktlinjer er også utbredt, med forfalskede varer åpenbart tilgjengelige i alle større byer. IP-koden gir det juridiske rammeverket for beskyttelse av immaterielle rettigheter i Filippinene, særlig på sentrale områder av patenter, varemerker og opphavsrett. Lov om elektronisk handel utvider det juridiske rammeverket som er opprettet av IP-koden til Internett. Investorproblemer inkluderer mangler i IP-koden og andre IP-lover som har uklare bestemmelser om rettighetene til opphavsrettseiere over kringkasting, rebroadcast, kabeloverføring eller satellittoverføring av sine arbeider og byrdefulle restriksjoner som påvirker kontrakter for lisensprogramvare og annen teknologi. Filippinene har generelt sterke patent - og varemerkelovgivning. Patentets første-til-patentsystem gir patenter som er gyldige i 20 år fra datoen for innlevering av patentinnehaveren, garantert ytterligere rett til eksklusiv import av oppfinnelsen. Den billigere medisinloven fra 2008 begrenser imidlertid patentbeskyttelse for legemidler, og liberaliserer vesentlig begrunnelsen for obligatorisk lisensiering av legemidler, selv om denne bestemmelsen ikke er implementert til dags dato. Varemerkelov beskytter kjente merker, som ikke behøver å være i faktisk bruk eller registrert for å være beskyttet i henhold til loven, og forutgående bruk av et varemerke i Filippinene er ikke nødvendig å legge inn et varemerkerapplikasjon. På området for lov om opphavsrett har Filippinene ikke vedtatt nødvendige endringer i sin IP-kode som fullt ut ville implementere WIPO-opphavsretten eller forestillinger og fonogrammer-traktatene, til tross for at det var et WIPO-medlem og hadde tiltrådt avtalene. Filipinsk lov beskytter imidlertid dataprogramvare som et litterært arbeid, og eksklusive utleierettigheter kan tilbys i flere kategorier arbeid og lydopptak. Vilkår for beskyttelse av lydopptak, audiovisuelle verk og aviser og tidsskrifter er kompatible med avtalen om handelsrelaterte aspekter av immaterielle rettigheter (TRIPS). Filippinene har vært et betydelig kilde land for ulovlig camcording av nye utgivelser internasjonale filmer, en trend som førte til at streng straff for slike aktiviteter ble innført gjennom Anti-Camcording Act of 2010. Tidlige rapporter tyder på at forekomsten av ulovlig videokamera fallet i 2010 , selv om lovens langsiktige effekt forblir usikker. IP-koden gjenkjenner også industrielle design, artister39s rettigheter og forretningshemmeligheter. Registreringen av et kvalifiserende industrielt design er for en periode på fem år og kan fornyes i to påfølgende femårsperioder. Mens filippinsk lov anerkjenner artisters rettigheter i 50 år etter døden, er utøvelsen av eksklusive rettigheter for opphavsrettseiere over kringkasting og videresending tvetydig. Selv om det ikke er noen kodifiserte regler om beskyttelse av forretningshemmeligheter, påstår filippinske tjenestemenn at eksisterende sivile og kriminelle vedtekter beskytter handelshemmeligheter og konfidensiell informasjon. Andre viktige lover som definerer immaterielle rettigheter er plantebeskyttelsesloven, som gir planteoppdrettere immaterielle rettigheter i samsvar med 1991-unionen for beskyttelse av nye plantesortkonvensjoner, og den integrerte kretsloven, som gir WTO-konsekvent beskyttelse for utformingen design av integrerte kretser. Vanligvis er de filippinske regjeringstilsynene mest lydhør overfor de opphavsrettseierne som aktivt jobber med dem for å målrette overtredelse. Byråer vil ikke proaktivt målrette overtredelse, med mindre eieren av opphavsretten bringer det til deres oppmerksomhet og samarbeider med dem om overvåkings - og håndhevelseshandlinger. Intellektuell eiendomskontoret (IPO) har jurisdiksjon for å løse visse tvister om påstått overtredelse og lisensiering. Selv om eierskapseierne noen ganger har brukt IPO39s administrative klagesystem som et alternativ til rettssystemet, kan prosessen bevege seg sakte på grunn av begrensede ressurser. Felles anstrengelser mellom privat sektor og det nasjonale undersøkelsesbyrået, det filippinske nasjonalpolitiet og det optiske mediekortet har resultert i noen vellykkede håndhevelseshandlinger. Håndhevelsehandlinger følger ikke ofte med vellykkede påtale. Krenkelse av immaterielle rettigheter betraktes ikke som en stor kriminalitet innenfor det filippinske rettssystemet og har lavere prioritet i rettssaker. Den filippinske regjeringen har forsøkt flere ulike rettslige tilnærminger til å håndtere immaterielle saker, men ingen har jobbet bra på grunn av mangel på ressurser og tunge ikke-IP arbeidsbelastninger. På grunn av utsikter til langvarig rettssak, er mange saker avgjort utenfor domstol. Siden 2001 har det vært seksti-fire overbevisninger for IP-overtredelser, uten overbevisninger i 2009 eller 2010. Konkurrente immaterielle overtredere bruker sjelden tid i fengsel, siden seks års straff gjør det mulig for dem å søke om prøvelse straks under filippinsk lov. Transparency of the Regulatory System Philippine national agencies are required by law to develop regulations via a public consultation process, often involving public hearings. In most cases, this ensures some minimal level of transparency in the rulemaking process. New regulations must be published in national newspapers of general circulation or in the GPH39s official gazette before taking effect. On the enforcement side, however, regulatory action is often weak, inconsistent, and unpredictable. Regulatory agencies in the Philippines are generally not statutorily independent, but are attached to cabinet departments or the Office of the President and, therefore, subject to political pressure. Many U. S. investors describe business registration, customs, immigration, and visa procedures burdensome as a source of frustration. To counter this, some agencies, such as the SEC, BOI, and the Department of Foreign Affairs (DFA), have established express lanes or quotone-stop shopsquot to reduce bureaucratic delays, with varying degrees of success. Efficient Capital Markets and Portfolio Investment The Philippines is generally open to foreign portfolio capital investment. Non-residents may purchase domestically-issued securities and invest in money market instruments, as well as peso-denominated time deposits, though foreign exchange purchases face some restrictions. Although growing, the securities market remains relatively small and underdeveloped, with a limited range of choices. Except for a few large firms, long-term bonds and commercial paper are not yet major sources of capital. Philippine Stock Exchange Membership in the Philippine Stock Exchange (PSE) is open to foreign-controlled stock brokerages incorporated under Philippine law. Offshore companies not incorporated in the Philippines may underwrite Philippine issues for foreign markets, but not for the domestic market. The Lending Company Regulation Act of 2007 requires majority Philippine ownership for such enterprises, to establish a regulatory framework for credit enterprises that do not clearly fall under the scope of existing laws. Current law also restricts membership on boards of directors for mutual fund companies to Philippine citizens. Investments in any publicly-listed firm on the PSE are governed by foreign ownership ceilings stipulated in the Constitution and other laws. In 2010, the ten most actively-traded companies accounted for about 44 percent of trading value and 44 percent of domestic market capitalization. To encourage publicly-listed companies to widen their investor base, the PSE introduced reforms in 2006 to include trading activity and free float criteria in the selection of companies comprising the stock exchange index. The 30 companies included in the benchmark index are subject to review every six months. Hostile takeovers are not common because most company shares are not publicly listed and controlling interest tends to remain with a small group of parties. Cross-ownership and interlocking directorates among listed companies also lessen the likelihood of hostile takeovers. The Securities Regulation Code of 2000 strengthened investor protection by requiring full disclosure in the regulation of public offerings, and implementing stricter rules on insider trading, mandatory tender offer requirements, and the segregation of broker-dealer functions. The Code also significantly increased sanctions for securities violations, and mandated steps to improve the internal management of the stock exchange and future securities exchanges. Moreover, the Code expressly prohibits any one industry group (including brokers) from controlling more than 20 percent of the stock exchangersquos voting rights, though the PSE has yet to fully comply. The enforcement of these strengthened laws is mixed. While there has been some progress from the creation of special commercial courts, the prosecution of stock market irregularities can be subject to delays and uncertainties of the Philippine legal system. As of September 2010, the five largest commercial banks in the Philippines represented more than 47 percent of total commercial banking system resources, with estimated total assets the equivalent of about US68 billion. The Central Bank has worked to strengthen banks39 capital bases, reporting requirements, corporate governance, and risk management systems. Central Bank-mandated phased increases in minimum capitalization requirements and regulatory incentives for mergers have prompted several banks to seek partners. Commercial banks39 published average capital adequacy ratio was 16.2 percent on a consolidated basis as of March 2010, above the ten percent statutory limit and the eight percent internationally accepted benchmark. Philippine banks had limited direct exposure to investment products issued by troubled financial institutions overseas. Fiscal and regulatory incentives to encourage the sale of non-performing assets to private asset management companies have promoted a resilient banking sector in the Philippines. By September 2010, non-performing loans and non-performing asset ratios of commercial banks were estimated at 3.1 percent and 3.7 percent. The General Banking Law of 2000 paved the way for the Philippine banking system to phase in these internationally accepted, risk-based capital adequacy standards. In 2007, the Philippines adopted the Basel 2 capital adequacy framework, expanding coverage from credit and market risks to include operational risks and enhancing the risk-weighting framework. The Central Bank has announced that the Philippines will adopt Basel 3 capital adequacy rules on a staggered basis starting in 2012. Other important provisions of the General Banking Law strengthened transparency, bank supervision, and bank management. However, some impediments remain to more effective bank supervision and prompt corrective action, including: stringent bank deposit secrecy laws the need to secure the affirmative vote of at least five Monetary Board members before a bank can be examined within a period of less than 12 months from last examination and, inadequate liability protection for Central Bank officials and bank examiners. Credit is generally granted on market terms and foreign firms are able to obtain credit from the domestic market. However, some laws require financial institutions to set aside loans for certain preferred sectors, which may translate into increased costs andor credit risks. According to the Agri-Agra Law, banks must set aside 25 percent of loanable funds for agricultural credit, with at least ten percent earmarked for programs such as improving the productivity of farmers to whom land has been distributed under agrarian reform programs. In early 2010, a new law tightened alternative modes of compliance -- which used to include low-cost housing, educational and medical developmental loans -- to those directly targeting the agricultural sectors. Recent investor experience in alternative modes of compliance raise questions about implied guarantees by the Philippine government and investors are cautioned to exercise due diligence. Banks are also required to set aside ten percent of their loans for micro-, small - and medium-sized borrowers, 80 percent of which should be earmarked for micro and small enterprises. While most domestic banks are able to comply with these mandatory lending requirements, operating restrictions make it more difficult for foreign banks to comply. Direct lending by non-financial government agencies is limited to the Department of Social Welfare and Development, focusing on the poorest areas not being served by micro-finance institutions. Anti-Money Laundering and Information Exchange The Paris-based Financial Action Task Force (FATF) continues to monitor implementation of the Philippine Anti-Money Laundering Act through the Anti-Money Laundering Council. Covered institutions include foreign exchange dealers and remittance agents, which are required to register with the Central Bank and must comply with various Central Bank regulations and requirements related to the implementation of the Philippines39 anti-money laundering law. The Philippines is a member of the Egmont Group, the international network of financial intelligence units and the Asia Pacific Group on Money Laundering. The Asia Pacific Group on Money Laundering conducted a comprehensive peer review of the Philippines in September 2008. In October 2010, FATF included the Philippines in a list of jurisdictions with ldquostrategic deficienciesrdquo that posed potential risks to the international financial system. FATF and the Philippine government have agreed on an action plan to address these deficiencies by December 2011, and legislation is pending before the Philippine Congress. Following the signing into law of the Exchange of Information on Tax Matters Act in March 2010 and the issuance of implementing rules and regulations in September 2010, the Organization for Economic Cooperation and Development (OECD) upgraded the Philippines from its tax standards ldquoblacklistrdquo to the list of jurisdictions that ldquohave substantially implemented the internationally agreed tax standardrdquo for the exchange of information. All Central Bank-supervised entities are required to adopt Philippine Financial Reporting Standards and Philippine Accounting Standards, patterned after International Financial Reporting and Accounting Standards issued by the International Accounting Standards Board (IASB). The SEC requires an entityrsquos Chairman of the Board, Chief Executive Officer, and Chief Financial Officer to assume management responsibility and accountability for financial statements. The SEC reviews and revises guidelines, as necessary, on the accreditation of auditing firms and external auditors to promote quality control and discipline in the financial reporting environment. The SEC requires listed companies to disclose to the SEC any material external audit findings within five days of receipt. Material findings include fraud or error, losses or potential losses aggregating 10 percent or more of company assets, indications of company insolvency, and internal control weaknesses that could result in financial reporting problems. Effective January 1, 2010 the Philippines adopted the International Financial Reporting Standards for Small - and Medium-Sized Entities. Except for limited circumstances, the standards apply to enterprises which do not have public accountability and with total assets from 3 million to 350 million pesos or liabilities from 3 million to 250 million pesos. A number of local accountancy firms are affiliated with international accounting firms, including KPMG, PricewaterhouseCoopers, Ernst amp Young, Deloitte, BDO, and Grant Thornton. Outward capital investments from the Philippines do not require prior approval from the Central Bank if: the outward investments are funded by withdrawals from foreign currency deposit accounts the funds to be invested are not purchased from the banking system or foreign exchange corporations that are subsidiaries of banks or, the funds to be invested do not exceed 60 million per investor or per fund per year (if sourced from the banking system or bank-affiliated foreign exchange corporations). Outward investments exceeding 60 million that are funded with foreign exchange purchases are subject to prior Central Bank approval. Qualified investors, such as mutual funds, pension or retirement funds, insurance companies, may apply for a higher annual outward investment limit. All outward investments of banks in subsidiaries and affiliates abroad require prior Central Bank approval. Foreign exchange proceeds from profits and capital divestments from such outward investments should be inwardly remitted and sold for Philippine pesos within 30 banking days from receipt of the funds abroad. Regulations do not require inward remittance of these proceeds if intended for reinvestment overseas, provided the funds are reinvested abroad within 30 banking days from receipt. Competition from State-Owned Enterprises Private and state-owned enterprises (SOEs) generally compete equally, with some clear exceptions. The governmental National Food Authority has, at times, been the sole legal importer of rice, though in 2008 the GPH ceded about half of all rice importation to the private sector. In the insurance sector, only the state-owned GSIS may provide coverage for government-funded projects, although the industry was opened up to 100 percent foreign ownership in 1994. All BOT projects and privatized government corporations must fulfill all insurance and bonding requirements from the GSIS, at least in proportion to GPH holdings. Besides confronting direct competition from SOEs in some limited areas, the GPH has intervened to directly cap or control pricing in some additional private markets. In the wake of the 2009 typhoons, the Philippine government imposed temporary price controls on gasoline and a basket of basic goods and services. Under Philippine law, the President may freeze prices on basic goods and services for a period of 90 days under a state of emergency. The Philippine government39s privatization program is managed by the Privatization Management Office under the Department of Finance. Apart from restrictions under the Foreign Investment Negative List, there are no regulations that discriminate against foreign buyers. The bidding process appears to be transparent, though the Supreme Court has twice overturned high profile privatization transactions to foreign buyers. The Power Sector Assets and Liabilities Management Corporation is mandated to sell 70 percent of the government-owned National Power Corporationrsquos (NPC) generating assets and transfer 70 percent of NPC-Independent Power Producer contracts to private companies. The Philippine government has opened access and retail competition through several measures, including: the unbundling of rates removal of cross-subsidies establishment of the Wholesale Electricity Spot Market and, privatization of 92 percent of NPCrsquos generation assets (as of mid-2010). Corporate Social Responsibility Although no law requires corporate social responsibility (CSR) programs, they constitute a basic and fundamental feature of most significant business operations in the Philippines. U. S. companies report strong and favorable response to CSR programs among employees and within local communities. Many CSR programs focus on poverty alleviation efforts, promotion of the environment, health initiatives, and education. In some cases, the GPH has compelled its own entities to engage in CSR. For example, the Philippine Bases Conversion and Development Authority is mandated to declare portions of its property in Fort Bonifacio and surrounding areas as low-cost housing sites. Terrorist groups and criminal gangs operate in some regions of the country. The Department of State publishes a consular information sheet at (travel. state. gov) and advises all Americans living in or visiting the Philippines to review this information periodically. The Department of State has issued a travel warning to U. S. citizens contemplating travel to the Philippines at ( travel. state. govtravelcispatwtwtw2190.html ). The Department strongly encourages visiting and resident Americans in the Philippines to register with the Consular Section of the U. S. Embassy in Manila through the State Department39s travel registration website, ( travelregistration. state. gov ). Arbitrary, unlawful, and extrajudicial killings by elements of the security services and political killings, including killings of journalists, by a variety of actors continued to be major problems. On May 10, 2010, approximately 75 percent of registered citizens voted in elections for president, both houses of congress, and provincial and local governments. The election was generally free and fair, but was marked by some violence and allegations of vote buying and electoral fraud. Peace talks between the government and the Mindanao-based insurgent group Moro Islamic Liberation Front (MILF) are ongoing. The peace process had stalled in August 2008 after the Supreme Court placed a temporary restraining order on the signing of a preliminary peace accord and some MILF members attacked villages in central Mindanao and killed dozens of civilians in response. The ensuing fighting between government and insurgent forces caused both combat and civilian deaths and the displacement of hundreds of thousands of people. In July 2009, both sides instituted ceasefires, ending nearly one year of intense fighting and enabling the parties to discuss a return to the negotiating table. The New People39s Army (NPA), the military arm of the Communist Party of the Philippines, is responsible for general civil disturbance through assassinations of public officials, bombings, and other tactics. It frequently demands quotrevolutionary taxesquot from local and, at times, foreign businesses and business people. To enforce its demands, the NPA sometimes attacks infrastructure such as power facilities, telecommunications towers, and bridges, mostly in Mindanao. The National Democratic Front, an umbrella organization which includes the Communist Party and its allies, has engaged in intermittent peace talks with the Philippine government. It has not targeted foreigners in recent years, but could threaten U. S. citizens engaged in business or property management activities. Terrorist groups, including the Abu Sayaaf Group and Jemarsquoah Islamiyah, periodically attack civilian targets in Mindanao, kidnap civilians for ransom, and engage in armed skirmishes with the security forces. Corruption is a pervasive and longstanding problem in the Philippines. President Aquino, who assumed the presidency in July 2010 on a good governance platform, has vowed to combat corruption as critical to inclusive growth and poverty reduction. Early efforts to reign in corruption by the administration have improved public perception, but are frequently overshadowed by high-profile cases reported in the Philippine media. The Philippines is not a signatory of the Organization for Economic Cooperation and Development Convention on Combating Bribery. It has ratified the UN Convention against Corruption in 2003. The Philippine Revised Penal Code, Anti-Graft and Corrupt Practices Act, and Code of Ethical Conduct for Public Officials aim to combat corruption and related anti-competitive business practices. The Office of the Ombudsman investigates and prosecutes cases of alleged graft and corruption involving public officials, with the quotSandiganbayan, quot or anti-graft court, prosecuting and adjudicating those cases. The Presidential Anti-Graft Commission assists the President in coordinating, monitoring, and enhancing the governmentrsquos anti-corruption efforts. The Commission also investigates and hears administrative cases involving presidential appointees in the executive branch and government-owned and controlled corporations. Solicitingaccepting and offeringgiving a bribe are criminal offenses, punishable by imprisonment (6-15 years), a fine, andor disqualification from public office or business dealings with the government. Bilateral Investment Agreements As of November 2010, the Philippines had signed bilateral investment agreements with Argentina, Australia, Austria, Bahrain, Bangladesh, Belgium, Luxembourg, Burma, Canada, Cambodia, Chile, China, the Czech Republic, Denmark, Equatorial Guinea, Finland, France, Germany, India, Indonesia, Iran, Italy, Japan, Republic of Korea, Kuwait, Laos, Mongolia, Netherlands, Pakistan, Portugal, Romania, Russian Federation, Saudi Arabia, Spain, Sweden, Switzerland, Syria, Taiwan, Thailand, Turkey, United Kingdom, Venezuela, and Vietnam. The Philippines does not have a bilateral investment agreement with the United States. Bilateral Tax Treaty The Philippines has a tax treaty with the United States for the purpose of avoiding double taxation, providing procedures for resolving interpretative disputes, and enforcing taxes of both countries. The treaty also encourages bilateral trade and investments by allowing the exchange of capital, goods and services under clearly defined tax rules and, in some cases, preferential tax rates or tax exemptions. Pursuant to the most favored nation clause of the Philippine-United States tax treaty, U. S. recipients of royalty income qualify for the preferential rate provided in the Philippine-China tax treaty. Accordingly, a ten percent tax rate applies with respect to most royalties. A 15 percent tax applies on the remittance of profits by Philippine branches of U. S. companies to their head office and dividends remitted by Philippine subsidiaries of U. S. companies to their parent companies. A foreign company without a branch office that renders services to Philippine clients is considered a permanent establishment, and is liable to pay Philippine taxes if its personnel stay in the country for more than 183 days for the same or a connected project in a twelve-month period. However, BIR rulings on the taxation of permanent establishments have been inconsistent on whether to treat them as resident or non-resident foreign corporations. Philippine courts reportedly have denied a number of claims for refund of tax payments in excess of rates prescribed under applicable tax treaties for failure to secure tax treaty relief rulings. An entity must obtain a tax treaty relief ruling from the BIR in order to qualify for preferential tax treaty rates and treatment. However, according to several tax lawyers, the volume of tax treaty relief applications has resulted in processing delays, with most applications reportedly pending for over a year. Recently, the BIR appears to be altering its position on taxing gains through liquidation. Previously, it had consistently applied Philippine-United States Tax Treaty provisions exempting foreign companies from capital gains and corporate income tax on profit from the redemption and sale of shares by Philippine affiliatessubsidiaries being liquidated. However, a 2009 ruling involving a foreign company held that such gains were subject to corporate income tax, but not to capital gains tax in another case, the BIR ruled that the gains were subject to tax on dividends. The companies and other interested parties have filed position papers with the Department of Finance to contest these rulings. Although the BIR has yet to finalize long-pending draft regulations on transfer pricing, it has declared that, as a matter of policy, it subscribes to the OECD39s transfer pricing guidelines. Currently, the Tax Code authorizes the BIR to allocate income or deductions among related organizations or businesses, whether or not organized in the Philippines, if such allocation is necessary to prevent tax evasion. Domestic and foreign resident companies subject to regular income tax may claim an optional standard deduction of up to 40 percent of gross income, in lieu of itemized deductions. Companies may opt for either the optional standard deduction or itemized deductions in filing their quarterly income tax returns. However, in the final consolidated return for the taxable year, companies must make a final choice between standard or itemized deductions for the purpose of determining final taxable income for the year. The BIR has issued recent rulings involving non-U. S. investors asserting that the stock transfer tax is an ad valorem, transactional tax -- different from the capital gains tax -- and therefore applies on the sale of publicly-listed shares in the stock exchange. These rulings contradicted previous exemptions from the stock transfer tax by virtue of bilateral tax treaty provisions exempting foreign nationals from tax on capital gains. This interpretation could serve as a precedent for the BIR in resolving similar tax treaty relief applications by U. S. and other foreign investors. BIR rules and regulations for tax accounting have not been fully harmonized with the Philippine Financial Reporting Standards, which are patterned after standards issued by the International Accounting Standards Board. The disparities between reports for financial accounting and tax accounting purposes can be an irritant between taxpayers and tax collectors. The BIR requires taxpayers to maintain records reconciling figures presented in financial statements and income tax returns. OPIC and Other Investment Insurance Programs The Philippine government currently does not provide guarantees against losses due to inconvertibility of currency or damage caused by war. The Overseas Private Investment Corporation can provide U. S. investors with political risk insurance for expropriation, inconvertibility and transfer, and political violence, based on its agreement with the Philippines. The Philippines is a member of the Multilateral Investment Guaranty Agency. Managers of U. S.-based companies widely report that Philippine labor is relatively low cost, motivated, and possesses strong English language skills. As of October 2010, the Philippine labor force was estimated at 36.5 million, with an unemployment rate at 7.1 percent. This figure includes employment in the informal sector and does not capture the substantial underemployment in the country. Multinational managers report that total compensation packages tend to be comparable with those in neighboring countries. In the call center industry, the average labor cost is between 1.60 and 1.90 per hour. Regional Wage and Productivity Boards meet periodically in each of the country39s 16 administrative regions to determine minimum wages, with the National Capital Board setting the national trend. As of January 2011, the non-agricultural daily minimum wage in the National Capital Region is 404 pesos (approximately 9), although some private sector workers receive less. Cost of living allowances are given across the board. Most other regions set their minimum wage significantly lower than Manila. The lowest minimum wage rates were in the Southern Tagalog Region, where daily agricultural wages were 190 pesos (4.21). Regional Boards may grant various exceptions to the minimum wage, depending on the type of industry and number of employees at a given firm. Literacy in both English and Filipino is relatively high, although there have been concerns in the business and education communities that English proficiency was on the decline. The Department of Education, under its National English Proficiency Program, continues its efforts to strengthen English language training, including school-based mentoring programs for public elementary and secondary school teachers aimed at improving their English language skills. Violation of minimum wage standards is common, especially non-payment of social security contributions, bonuses, and overtime. In 2009, President Arroyo signed a law offering relief for companies that had not been paying social security taxes for their employees, as an incentive to resume their social security remittances. Philippine law also provides for a comprehensive set of occupational safety and health standards, although workers do not have a legally-protected right to remove themselves from dangerous work situations without risking loss of employment. The Department of Labor and Employment (DOLE) has responsibility for safety inspection, but a severe shortage of inspectors makes enforcement extremely difficult. The Philippine Constitution enshrines the right of workers to form and join trade unions. The mainstream trade union movement recognizes that its members39 welfare is tied to the productivity of the economy and competitiveness of firms frequent plant closures have made many unions even more willing to accept productivity-based employment packages. The trend among firms of using temporary contract labor continues to grow. In 2010, DOLE reported eight strikes involving 3,034 workers. The DOLE Secretary has the authority to end strikes and mandate a settlement between the parties in cases involving the national interest, which can include cases where companies face strong economic or competitive pressures in their industries. In 2010, there were 135 registered labor federations and 16,132 private sector unions. The 1.7 million union members represented approximately 4.7 percent of the total workforce of 36.5 million. Mainstream union federations typically enjoy good working relationships with employers. Special Economic Zones (ecozones) often offer on-site labor centers to assist investors with recruitment. These centers coordinate with the Department of Labor and Employment (DOLE) and Social Security Agency, and can offers services such as mediating labor disputes. Although labor laws apply equally to ecozones, unions have noted some difficulty organizing inside them. There have been some reports of forced labor in connection with human trafficking in the commercial sex, domestic service, agriculture, and fishing industries. The Philippines is a signatory to all International Labor Organization (ILO) conventions on worker rights, but has faced challenges enforcing them. Unions allege that companies or local officials use illegal tactics to prevent them from organizing workers. The quasi-judicial National Labor Relations Commission reviews allegations of intimidation and discrimination in connection with union activities. In September 2009 the government cooperated with a high-level ILO mission to investigate labor rights violations in the country. The ILO mission noted issues relating to violence, intimidation, threat, and harassment of trade unionists and the absence of convictions in relation to those crimes. It also observed obstacles to the effective exercise in practice of trade union rights. In response to ILO mission recommendations, the government constituted the Tripartite Industrial Peace Council (TIPC) to monitor the application of international labor standards and has proposed several legislative measures to address weaknesses in the Labor Code. Foreign Trade ZonesFree Ports Enterprises enjoy preferential tax treatment when located in export processing zones, free trade zones, and certain industrial estates, collectively known as economic zones, or quotecozones. quot Enterprises located in ecozones are considered to be outside the customs territory and are allowed to import capital equipment and raw material free from customs duties, taxes, and other import restrictions. Goods imported into free trade zones may be stored, repacked, mixed, or otherwise manipulated without being subject to import duties and are exempt from the GPH39s Selective Pre-shipment Advance Classification Scheme. While some ecozones have been designated as both export processing zones and free trade zones, individual businesses within them are only permitted to receive incentives under a single category. Among the most compelling incentives for firms in export processing and free trade zones are: income tax holiday for a maximum of eight years exemption from real estate taxes for certain machinery for the first three years of operation of such machinery a five percent flat tax rate on gross income in lieu of all national and local income taxes, after expiration of the income tax holiday tax - and duty-free importation of capital equipment, raw materials, spare parts, supplies, breeding stocks, and genetic materials simplified import and export procedures remittance of earnings without prior approval from the Central Bank domestic sales allowance equivalent to 30 percent of total export sales permanent resident status for foreign investors and immediate family members exemption from local business taxes and, simplified import and export procedures. Philippine Economic Zone Authority The Philippine Economic Zone Authority (PEZA) manages three government-owned export-processing zones (Mactan, Baguio, and Cavite) and administers incentives to firms in about 230 privately-owned and operated zones, technology parks and buildings. Any person, partnership, corporation, or business organization, regardless of nationality, control andor ownership, may register as an export processing zone enterprise with PEZA. PEZA administrators have earned a reputation for maintaining a clear and predictable investment environment within the zones of their authority. PEZA reported an increase of 32 percent in investments in 2010, compared to the previous year. Information technology parks located in the National Capital Region may serve only as locations for service-type activities, with no manufacturing operations. PEZA defines information technology as a collective term for various technologies involved in processing and transmitting information, which include computing, multimedia, telecommunications, and microelectronics. Bases Conversion Development Authority The ecozones located inside former U. S. military bases are independent of PEZA and subject to the Bases Conversion Development Authority. The principal converted bases are the Subic Bay Freeport Zone (Subic Bay, Zambales) and the Clark Special Economic Zone (Angeles City, Pampanga). Other converted properties include John Hay Special Economic Zone Poro Point Special Economic and Freeport Zone and, Morong Special Economic Zone (Bataan). These ecozones offer incentives comparable to those offered by PEZA. Additionally, both Clark and Subic have their own international airports, power plants, telecommunications networks, housing complexes, and tourist facilities. The Phividec Industrial Estate (Misamis Oriental, Mindanao) is governed by the Phividec Industrial Authority, a government-owned and controlled corporation. Incentives available to investors are comparable to those offered by PEZA, and also include special low rates for electrical power and land lease. Two lesser-known ecozones are the Zamboanga City Economic Zone and Freeport (Zamboanga City, Mindanao) and the Cagayan Special Economic Zone and Freeport (Santa Ana, Cagayan Province). The incentives available to investors in these zones are very similar to PEZA incentives but administered independently. In addition to offering export incentives, the Cagayan Economic Zone Authority is also authorized by law to grant gaming licenses. Foreign Direct Investment Statistics The Philippine SEC, BOI, National Economic and Development Authority (NEDA), and the Central Bank each generate direct investment statistics. The Central Bank records actual investments based on the balance of payments methodology, readily available in U. S. dollar terms. Central Bank data are widely used as a reasonably reliable indicator of foreign investment stock and foreign investment flows. The figures in Table 1 below refers to foreign direct investment (FDI) stock reported by the Central Bank, based on the Philippine international investment position using the balance of payments methodology. Disaggregation of net FDI flows by country and by industry is presented in Tables 2 and 3, respectively. Table 4 provides a list of top foreign investors in the Philippines, using the latest available published information from the SEC. Table 1: Foreign Direct Investment Stock (US Millions)U. S. Department of State Ethiopia is one of the fastest growing economies in the world. It has registered impressive GDP growth for several years, ranging between 8 and 12, depending on the data source. The World Bank and IMF forecast continued average growth of 7.5 to 8.5 in 2015 and approximately 7 to 7.5 over the next three years. With a population of roughly 90 million, Ethiopia is the second most populous country in sub-Saharan Africa, after Nigeria. The government of Ethiopia follows an integrated 5-year development plan, the Growth and Transformation Plan (GTP), which aims to achieve 11.2 ndash 14.9 GDP growth annually as well as achieve the Millennium Development Goals and attain middle-class income status by 2025. To realize these goals, the government is investing heavily in large-scale social, infrastructural and energy projects. These developments are positive indicators for future private sector development, but translate into the flow of significant amounts of capital into public sector infrastructure projects, which can provide important opportunities but can also limit capital available to the private sector. World Bank estimates show that public infrastructure spending was approximately 19 of Ethiopiarsquos total GDP in fiscal year 2011-2012. Competitive labor and energy costs as well as the budding consumer markets are key pulls for foreign direct investment (FDI). Current challenges to the private sector include foreign exchange shortages and limited access to finance, long lead-times for inputs and exports due to the current logistic infrastructure and associated high land transportation costs, and bureaucratic delays. Areas closed to foreign investment are banking, insurance and accountingassurance services, retail, telecommunications and transportation. Businesses interested in entering the market should focus on aligning operations to complement the overall goals of the GTP. Key growth sectors include renewable energy, construction, healthcare, tourism, textile and apparel, leather products, telecommunication support services and products, and aviation support services and products. The government of Ethiopia is currently pursuing accession to the World Trade Organization, while maintaining their goal of attaining least-developed country status, by 2015. In 2015, Ethiopia also became a full member of the Common Market for Eastern and Southern Africa (COMESA). It is actively pursuing improving the current investment climate through adopting more efficient bureaucratic processes in the areas of registration, logistics, and tax processes. Key energy generation and distribution projects as well as transportation infrastructure projects are scheduled for completion by the end of 2015. 1. Openness To, and Restrictions Upon, Foreign Investment Attitude toward Foreign Direct Investment Ethiopiarsquos five-year Growth and Transformation Plan (GTP) ndash 2010 to 2015, which was approved by the Ethiopian Parliament in November 2010 and is currently in its fifth year, is driving Ethiopiarsquos demand for and openness to foreign investment. The GTP overarching goals are to achieve the Millennium Development Goals and middle-income status by 2025. These goals translate to a focus on improving the quantity and quality of social services and infrastructure, ensuring macro-economic stability with targeted GDP growth of 11 to 14.9, and enhancing productivity in agriculture and manufacturing. Given the scale of public investment required to support GTP targets, coupled with the current negative domestic savings rate and a World Bank estimate of 4.3 collected tax revenues as a percentage of GDP, Ethiopia requires significant inflows of foreign financial resources. While tax incentives for investment in the high priority sectors of heavy and light manufacturing, agribusiness, textiles, sugar, chemicals and pharmaceutical and mineral and metal processing underscore the governmentrsquos focus and openness to FDI, the recent credit worthiness ratings by the international rating agencies has opened up Ethiopiarsquos access to commercial foreign loans. In May 2014, Moodyrsquos rated Ethiopiarsquos credit worthiness a lsquoBrsquo, while SampP and Fitch gave a lsquoBrsquo in May 2014. The rating agencies underscored Ethiopiarsquos stable outlook and positive prospects for continued economic growth in the short and medium term. Key drivers of their ratings were the huge investments in infrastructure and power generation and their likely effect in improving trade conditions. The countryrsquos peace and stability also positively influenced the rating. The rating agencies noted however that the private sector remained weak and access to domestic credit restricted economic growth. In December 2014, Ethiopia issued its first Euro-bond offering, raising USD 1 billion at a rate of 6.625. The 10-year bond was oversubscribed indicating a continued market interest in high ndash growth sub-Saharan African markets, but did trigger the country to exceed its non-concessional borrowing threshold set by the World Bank, which could limit Ethiopiarsquos access to additional concessional lending. According to the Ministry of Finance and Economic Development, the GOE will allocate these funds for additional infrastructure investment. Other Investment Policy Reviews Over the past three years, the Ethiopian Investment Commission (EIC) has undertaken an independent review of its investor services in an effort to streamline the investment process and is in the process of developing a more efficient one-stop-shop facility for foreign direct investors. LawsRegulations of Foreign Direct Investment The government of Ethiopia is currently revising its 1960 commercial code in an effort to facilitate investment and ease of operations. Areas of focus include clarifying regulations for potential investors, standardizing appropriate accounting practices to more accurately assess tax and other operating liabilities, increasing protection for shareholders and provisions for bankruptcy filings as well as modernization of trade and registration processes. To date, the instructions for drafting the code are finalized the actual revision and drafting of the new code has not started. The revised Investment Code of 1996, as well as the Investment Proclamation, provide incentives for development-related investments and have gradually removed most of the sectorial restrictions on investment. However, the investment code does prohibit foreign investment in some sectors -- please refer to 39Limits on Foreign Control39 section. The 2012 amendment to Ethiopiarsquos investment proclamation introduced provisions for the establishment of industrial development zones, both state-run and private, with favorable investment, tax, and infrastructure incentives. The amendment raised the minimum capital requirement to USD 200,000 per project for wholly-owned foreign investments and USD 150,000 for joint investments with domestic investors (or USD 100,000USD 50,000 respectively in the areas of engineering, architectural, accounting and auditing services, business and management consultancy services and publishing). A foreign investor reinvesting profits or dividends may not be required to allocate minimum capital. Under the GTP, key priority industries include: textile and garment industry, leather and leather products, sugar and sugar-related products, cement, metal and engineering, chemical, pharmaceutical and agro-processing. Investments in this area are accompanied with additional tax and duty incentives as established in proclamation 7692012. A 2014 amendment to the investment proclamation restructured the existing regulatory investment body, the Ethiopian Investment Agency (EIA) under the Ministry of Industry, to a separate governmental body, the EIC, with the Ethiopian Prime Minister serving as Chairman of the EIC Board. The 2014 amendment also provides flexibility for the EIC to decide on appeals submitted to it by foreign and domestic investors on specific projects. In addition, the new EIC Investment Board is empowered to authorize the granting of new or additional incentives other than what is outlined under the existing regulations and authorize foreign investment in areas, otherwise exclusively reserved for domestic investors, if the exception is in the lsquonational interest. rsquo The EIC39s website, ethioinvest, outlines the GOE39s key focus sectors as well as details registration processes and provides regulatory details for investors. In alignment with GTP goals to further develop medium and large scale industries, the government established the Ethiopian Industrial Zones Corporation (EIZC) under the Ministry of Industry in 2012 to oversee the construction and regulation of the zones. Currently the EIZC is preparing the first Industrial park proclamation with the aim of decreasing environmental pollution, enhancing export of manufactured goods and ensuring sustainability. As of April 2014, Bole Lemi-I is the only operational industrial zone developed by the government. For Bole Lemi - II and Qilinto industrial zone developments, the government is in the process of design selection with the support of the World Bank financing and technical advice. Two additional industrial zones, the Eastern Industrial Zone and George Shoe Factory, are developed by Chinese and Taiwanese private businesses. There is also plan to develop industrial zones in Dire Dawa and Hawasa. Limits on Foreign Control Ethiopiarsquos investment code prohibits foreign investment in banking, insurance, and financial services. The remaining state-owned sectors include telecommunications, power transmission and distribution, and postal services with the exception of courier services. Manufacturing of weapons and ammunition can only be undertaken as joint ventures with the government. Other areas of investment reserved for Ethiopian nationals include: broadcasting air transport services travel agency services, forwarding and shipping agencies retail trade and brokerage wholesale trade (excluding supply of petroleum and its by-products as well as wholesale by foreign investors of their locally-produced products) most import trade capital goods rentals export trade of raw coffee, khat, oilseeds, pulses, hides and skins bought from the market live sheep, goats, and cattle not raised or fattened by the investor construction companies excluding those designated as grade 1 tanning of hides and skins up to crust level hotels (excluding star-designated hotels) restaurants and bars (excluding international and specialized restaurants) trade auxiliary and ticket selling services transport services bakery products and pastries for the domestic market grinding mills hair salons clothing workshops (except garment factories) building and vehicle maintenance saw milling and timber production custom clearance services museums, theaters and cinema hall operations and printing industries. However, the government of Ethiopia has indicated an interest in bringing foreign private sector expertise to some of the above sectors. Ethiopian-Americans can obtain a local resident card from the Ministry of Foreign Affairs that allows them to invest in many sectors closed to foreigners. Foreign firms can supply goods and services to Ethiopian firms in the closed sectors. The government continues to implement its privatization program for some government-owned entities, which were largely nationalized by the Derg military regime in the 1970s. The current government39s position is that property seized lawfully by the Derg (i. e. by court order or government proclamation published in the official gazette) remains the property of the state. Nearly all tenders issued by the Ethiopian government39s Privatization and Public Enterprises Supervising Agency (PPESA) are open to foreign participation. In some instances, the government prefers to engage in joint ventures with private companies rather than sell an entire entity. The government has sold 370 public enterprises since 1995. Most of these enterprises were small companies in the trade and service sectors. The agency privatized three enterprises in 2014 and currently around 27 public enterprises remain under PPESA control. With the exception of the restricted areas of investments, the regulations governing the investment registration policy is consistently referenced for foreign investors. While investors have complained about different interpretations (particularly relating to accounting for in-kind investments) from the EIC. foreign investors generally do not face undue screening of FDI, unfavorable tax treatment, denial of licenses, discriminatory import or export policies, or inequitable tariff and non-tariff barriers. The EIC is working to establish an expedited one-stop shop service that it hopes will significantly cut the time and cost of acquiring investment and business licenses. However, bureaucratic hurdles continue to affect project implementation and some U. S. investors report that the EIC still lacks capacity to meet its own stringent deadlines. A business license can be obtained in one day if all requirements are met, though in practice this is uncommon. A foreign investor intending to buy an existing private enterprise or buy shares in an existing enterprise needs to obtain prior approval from the EIC. Currently, within the sectors allowing foreign investment, there are no laws restricting competition for foreign companies or foreign-owned subsidiaries. The EIC reviews investment transactions for compliance with FDI requirements and restrictions as outlined by the investment proclamation and amendments. However, companies have complained that state-owned enterprises receive favorable treatment in the government tender process. As the public sector is heavily involved in the economic development, this translates into a sizeable portion of the open tenders on the market. Ethiopiarsquos Trade Practice and Consumers Protection Authority (TPCPA), is accountable to the Ministry of Trade, and is tasked with promoting a competitive business environment by regulating anti-competitive, unethical, and unfair trade practices to enhance economic efficiency and social welfare. Some of the Commission39s powers include: investigating complaints by aggrieved parties compelling witnesses to appear and testify at hearings and searching the premises of accused parties. Since 2011, the TPCPA has conducted 15 workshops for over 5000 government and private sector attendees. However, since its inception, the TPCPA has been primarily focused on self-organization and administrative work, and had not conducted any significant enforcement activities as of January 2013. The Federal Trade Competition and Consumer Protection Appellate Tribunal which is formed under TPCPA saw 45 consumer protection and unfair trade cases in 201314. In addition the Authority is providing market information on some goods to the public using print and electronic media. Because of its consistent GDP growth of between 8 - 12 over the past 10 years, its population of over 90 million and its stable investment climate, Ethiopia is becoming an increasing priority for foreign investment and foreign companies. Investment trends show the following two key features: Equity investment terms are usually for 8 ndash 10 years with inputs being not only capital inflows, but also capacity building and knowledge transfer. Manufacturing companies are taking advantage of the special industrial zones, skilled labor and tax incentives for initial start-up imports and export-related expenditures. While foreign exchange shortages for import of inputs and logistic costs remain high both in actual cost and lead time requirements, most manufacturing companies still identify a cost advantage on the whole due to low power, labor and customs costs. Millennium Challenge Corporation Country Scorecard The Millennium Challenge Corporation, a U. S. Government entity charged with delivering development grants to countries that have demonstrated a commitment to reform, produced scorecards for countries with a per capita gross national income (GNI) or USD 4,125 or less. A list of countrieseconomies with MCC scorecards and links to those scorecards is available here: mcc. govpagesselectionscorecards. Details on each of the MCCrsquos indicators and a guide to reading the scorecards are available here: mcc. govpagesdocsdocreport-guide-to-the-indicators-and-the-selection-process-fy-2015 . 2. Conversion and Transfer Policies All foreign currency transactions must be approved by Ethiopia39s central bank, the National Bank of Ethiopia (NBE). The local currency (Birr) is not freely convertible. A 2004 NBE directive allows non-resident Ethiopians and non-resident foreign nationals of Ethiopian origin to establish and operate foreign currency accounts up to USD 50,000. Ethiopia39s Investment Proclamation allows all registered foreign investors, whether or not they receive incentives, to remit freely profits and dividends, principal and interest on foreign loans, and fees related to technology transfer. Foreign investors may also remit proceeds from the sale or liquidation of assets, from the transfer of shares or of partial ownership of an enterprise, and funds required for debt service or other international payments. The right of expatriate employees to remit their salaries is granted in accordance with NBE foreign exchange regulations. Forex reserves were heavily depleted during 2012 and still remain at low levels. By the end of FY14, the gross reserves are estimated at USD 2.8 billion, covering approximately 1.9 months of prospective imports. According to the IMF, heavy government infrastructure investment has fueled the need for forex for the associated imports. In addition, the forex reserve decrease is further exacerbated by weaker than expected exports of coffee, Ethiopiarsquos main export crop, a trend that had begun to reverse by mid-2014 and exports actually increased by 5.5 during the 20132014 fiscal year. Still, businesses usually expect delays of foreign exchange supply of 6 weeks to 3 months and slow-downs in manufacturing due to foreign exchange shortages are common. Delays of repatriation for high USD sales amounts of up to 2 years have been reported. Localization of inputs and partnering with export-oriented partners are strategies employed by the private sector to address the foreign exchange shortage. According to data from the National Bank of Ethiopia, the birr depreciated approximately 130 against the U. S. Dollar between November 2006 and January 2015, through a series of controlled step-downs, including 20 devaluation in September 2014. As of January 2015, the exchange rate was approximately 20.14 birr per dollar. The illegal parallel market exchange rate was approximately 22.80 per dollar in January 2015, a premium of 13.2 over the official rate. Ethiopiarsquos Financial Intelligence Unit monitors suspicious currency transfers, including large transactions exceeding 200,000 birr (roughly equivalent to U. S. reporting requirements for currency transfers exceeding USD 10,000). 3. Expropriation and Compensation Per Ethiopia39s 1996 Investment Proclamation and subsequent amendments, assets of a domestic investor or a foreign investor, enterprise or expansion cannot be nationalized wholly or partly, except when required by public interest and in compliance with the laws and with payment of adequate compensation. Such assets may not be seized, impounded, or disposed of except under a court order. The Derg military regime nationalized many properties in the 1970s. The current government39s position is that property seized lawfully by the Derg (i. e. by court order or government proclamation published in the official gazette) remains the property of the state. In most cases, property seized by oral order or other informal means is gradually being returned to lawful owners or their heirs through a lengthy bureaucratic process. Claimants are required to pay for improvements made by the government during the time of its control over the property. Ethiopia39s Privatization and Public Enterprises Supervising Agency (PPESA) stopped accepting requests from owners for return of these formerly expropriated properties in July 2008. Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts According to the Investment Proclamation, disputes arising out of foreign investment that involve a foreign investor or the state may be settled by means agreeable to both parties. A dispute that cannot be settled amicably may be submitted to a competent Ethiopian court or to international arbitration within the framework of any bilateral or multilateral agreement to which the government and the investor39s state of origin are contracting parties. The Ethiopian Commercial Code (Book V.) does outline Bankruptcy provisions and proceedings and references that the Ethiopian court system will have jurisdiction over bankruptcy filings and proceedings subject to international conventions. The primary purpose of the law is to protect creditors, equity shareholders and other contractors and bankruptcy is not criminalized according to the law. In practice, there is currently limited application of the bankruptcy procedures due to lack of knowledge of the procedures by the private sector. The 2015 World Bank Ease of Doing Business index sub-category 39Resolving Insolvency39 outlines some average expectations for insolvency proceedings in Ethiopia doingbusiness. orgdataexploreeconomiesethiopiaresolving-insolvency . Currently, there is no data to track investment dispute trends or patterns. While disputes can be resolved in international arbitration forums at the agreement of both parties, enforcement is contingent on the Ethiopian court system. Both foreign and domestic investors involved in disputes have expressed a lack of confidence in the judiciary to objectively assess and resolve disputes. Ethiopia39s judicial system is overburdened, poorly-staffed and inexperienced in commercial matters, although efforts are underway to strengthen its capacity. While property and contractual rights are recognized and there are commercial and bankruptcy laws, judges often lack understanding of commercial matters and case scheduling suffers from extended delays. The Addis Ababa Chamber of Commerce has an Arbitration Center dedicated to assist those with the arbitration process. There is no guarantee that the award of an international arbitral tribunal will be fully accepted and implemented by Ethiopian authorities. ICSID Convention and New York Convention Since 1965, Ethiopia has been a member state to the International Centre for Settlement of Disputes (ICSID Convention) but has not ratified the convention on The Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). Duration of Dispute Resolution Due to an overloaded court system, dispute resolution can last between several months and several years. According to the World Bank, Ease of Doing Business report, the average for Enforcing Contracts is 530 days. 5. Performance Requirements and Investment Incentives Ethiopia is currently an observer of the World Trade Organization (WTO) wto. orgenglishthewtoeaccea1ethiopiae. htm and is in the process of developing its services offer and revising its goods offer. Ethiopia currently does maintain formal measures that are inconsistent with Trade Related Investment Measure requirements. Local and Foreign investors have asserted that informal priority for foreign exchange has been given to export-oriented businesses andor those that provide a higher local input content. The 2003 amendment to the Investment Proclamation outlines investment incentives for investors in specific areas. New investors engaged in manufacturing, agro-processing activities, or the production of certain agricultural products, who export at least 50 of their products or supply at least 75 of their product to an exporter as production inputs, are exempt from income tax for five years. An investor who exports less than 50 of his product or supplies his product only to the domestic market is income tax exempt for two years. Investors who expand or upgrade existing enterprises and export at least 50 of their output or increase production by 25 are eligible for income tax exemption for two years. An investor who invests in the developing regions of Gambella, Benishangul Gumuz, South Omo, Afar or Somali Region will be eligible for an additional one-year income tax exemption. An investor who exports hides and skins after processing only up to crust level will not be entitled to the income tax incentive. Research and Development The Ethiopian government does encourage technology and knowledge transfer to further develop the Ethiopian workforce via corporate-financed corporate social responsibility programs andor training programs incorporated into investment proposals. Currently, there are no government financed research and development programs however. Ethiopia does not formally impose performance requirements on foreign investors. There is currently no forced localization or data storage requirements for private investors. However, in the case of joint ventures with SOE39s, investors have reported requirements of up to 30 domestic content in goods andor technology. 6. Right to Private Ownership and Establishment Both foreign and domestic private entities have the right to establish, acquire, own and dispose of most forms of business enterprises. There is no right of private ownership of land. All land is owned by the state and can be leased for up to 99 years. Small scale rural landholders have an indefinite period of use rights, but cannot lease out whole holding for a longer period of time, except in Amhara Region. In November 2011, the government enacted a controversial urban land lease proclamation that allows the government to determine the value of land in transfers of leasehold rights, in an attempt to curb speculation by investors. 7. Protection of Property Rights Secured interests in property are protected and enforced, although all land ownership remains in the hands of the state with use rights to landholders. Certain residents have been relocated (and usually compensated for properties on land) when the government decides that the land they are living on should be used for a road or other public use. Land leasehold regulations vary in form and practice by region. As land is a public property, the law doesnrsquot allow mortgaging land. Intellectual Property Rights Ethiopia has yet to sign a number of major international intellectual property rights (IPR) treaties, such as: the Paris Convention for the Protection of Industrial Property the World Intellectual Property Organization (WIPO) copyright treaty the Berne Convention for Literary and Artistic Works the Madrid System for the International Registration of Marks and the Patent Cooperation Treaty. The GOE has expressed its intention to accede to the Berne convention and Madrid protocol by 2015. The Ethiopian Intellectual Property Rights Office (EIPO) has been tasked primarily to protect Ethiopian copyrighted materials and pirated software. Generally, EIPO has weak capacity in terms of manpower and none in terms of law enforcement. In addition, a number of businesses, particularly in the tourism and service industries, operate in Ethiopia freely using well-known trademarked names or symbols without permission. The government does not publicly track counterfeit goods seizures, and no estimates are available. Resources for Rights Holders The Ethiopian Intellectual Property Office (EIPO) oversees the administration and advises on IPR issues. Contact and office information is available at eipo. gov. et For additional information about treaty obligations and points of contact at local IP offices, please see WIPOrsquos country profiles at wipo. intdirectoryen . Embassy POC: Economic Officer, Helena Schrader, SchraderHPstate. gov 8. Transparency of the Regulatory System Ethiopia39s regulatory system is generally considered fair, though there are instances in which burdensome regulatory or licensing requirements have prevented the local sale of U. S. exports, particularly health-related products. Investment decisions can involve multiple government ministries lengthening the registration and investment process. In 2011, the central bank issued a directive for all banks and insurance companies to adhere to International Financial Reporting Standards (IFRS). Foreign investors have complained about the abrupt cancellation of some government tenders, a perception of favoritism toward vendors who provide concessional financing, and a general lack of transparency in the procurement system. In September 2009, the government established a new public procurement and property administration agency. This agency is an autonomous government organ, has its own judicial arm, and is accountable to the Ministry of Finance and Economic Development. Ethiopia is a member of UNCTADrsquos international network of transparent investment procedures ethiopia. eregulations. org. Foreign and national investors can find detailed information on administrative procedures applicable to investment and income generating operations including the number of steps, name and contact details of the entities and persons in charge of procedures, required documents and conditions, costs, processing time and legal bases justifying the procedures. 9. Efficient Capital Markets and Portfolio Investment Access to finance is an impediment to increased Ethiopian domestic private investment. While credit is available to investors on market terms, a 100 collateral requirement limits the ability of some investors to take advantage of business opportunities. Additionally, an April 2011 measure forcing non-government banks to invest the equivalent of 27 of each loan made in National Bank of Ethiopia (NBE) bonds has contributed to liquidity shortages that have reduced the ability of banks to lend to the private sector. Ethiopia currently has nineteen banks--three state-owned, and sixteen privately-owned. In September 2011, the NBE raised the minimum paid up capital required to establish a new bank from Birr 75 million to 500 million which effectively stopped the entry of most new banks into the market. Foreign banks are not permitted to provide financial services in Ethiopia. The state-owned Commercial Bank of Ethiopia mobilized 65.1 of the total bank deposits and provided more than 50.4 of total bank loans in the fiscal year 201213. Ethiopia does not have a securities market, and salespurchases of debt are heavily regulated. The GOE is drafting legislation to regulate the over-the-counter market for private share companies. In addition, Moodyrsquos rated Ethiopiarsquos credit worthiness a lsquoBrsquo, while SampP and Fitch gave it a lsquoBrsquo. The NBE controls the bank minimum deposit rate, which now stands at 5, while loan interest rates are allowed to float. Real interest rates have been negative in recent years mainly due to high inflation. The government offers a limited number of 28 days, 3-month, and 6-month Treasury bills, but prohibits the interest rate from exceeding the bank deposit rate. The government began to offer a one year Treasury bill in November 2011. The yields on these T-bills are below 2. This market remains unattractive to the private sector and over 95 of the T-bills are held by the state-owned Commercial Bank of Ethiopia and public enterprises. The Ethiopia Commodity Exchange (ECX), launched in 2008, trades commodities such as coffee, sesame seeds, maize, wheat, and haricot beans. The GOE launched ECX to increase transparency in commodity pricing, alleviate food shortages, and encourage the commercialization of agriculture. However, critics allege that ECX policies and pricing structures are inefficient compared to direct sales at prevailing international rates. Money and Banking System, Hostile Takeovers Ethiopia currently has nineteen banks--three state-owned, and sixteen privately-owned. In September 2011, the NBE raised the minimum paid up capital required to establish a new bank from Birr 75 million to 500 million which effectively stopped the entry of most new banks into the market. Foreign banks are not permitted to provide financial services in Ethiopia. Based on the most recently available data, the state-owned Commercial Bank of Ethiopia typically mobilizes about two-thirds of total bank deposits and half of total bank loans. Ethiopia does not have a securities market, and salespurchases of debt are heavily regulated. The GOE is drafting legislation to regulate the over-the-counter market for private share companies. In addition, Moodyrsquos rated Ethiopiarsquos credit worthiness a B, while SampP and Fitch gave it a B. The NBE controls the bank minimum deposit rate, which now stands at 5, while loan interest rates are allowed to float. Real interest rates have been negative in recent years mainly due to high inflation. The government offers a limited number of 28 days, 3-month, and 6-month Treasury bills, but prohibits the interest rate from exceeding the bank deposit rate. The government began to offer a one year Treasury bill in November 2011. The yields on these T-bills are below 2. This market remains unattractive to the private sector and over 95 of the T-bills are held by the state-owned Commercial Bank of Ethiopia and public enterprises. Currently, there are no restrictions for foreigners to own a local bank account. 10. Competition from State-Owned Enterprises State-owned enterprises and ruling party-owned entities dominate major sectors of the economy. There is state monopoly or state dominance in sectors such as telecommunications, power, banking, insurance, air transport, shipping, and sugar. Ruling party-affiliated endowment companies have a strong presence in the ground transport, fertilizer, and textile sectors. Both state-owned enterprises and endowment companies dominate the cement sector. State-owned enterprises have considerable advantages over private firms, particularly in the realm of Ethiopia39s regulatory and bureaucratic environment, including ease of access to credit and speedier customs clearance. Local business owners as well as foreign investors complain of the lack of a level playing field when it comes to state-owned and party-owned businesses. While there are no conclusive reports of credit preference for these entities, there are indications that they receive incentives such as priority foreign exchange allocation, preferences in government tenders, and marketing assistance. Ethiopia publishes aggregate financial data of state-owned enterprises, but detailed information is not included in the national budget, and few state-owned enterprises outside of Ethiopian Airlines publicly release detailed financial statements. In 2010, the Ethiopian government corporatized state-owned enterprise Ethiopian Telecommunications Corporation (ETC) by turning over its management to France-Telecom per a two-year contract. As part of this process, a new company, Ethio Telecom (ET), was formed to replace ETC. In January 2013, France-Telecom handed back the management of Ethio Telecom after completion of the contract. Similar to the corporatization of ETC, a tender for the management of Ethiopian Electric Power Company (EEPCO) was advertised in 2011. After splitting the power corporation into two entities, the management contract of the Ethiopian Electric Utility has been given to an Indian company for two years contract beginning December 2013. The Public-Private Dialogue Forum (PPDF), a joint consultative forum between the private sector and the government, has held six workshops to date focusing on various business issues such as company registration, business licensing, legal structures, access to finance, procurement, manufacturing, and protecting property rights. The private sector was represented by the Ethiopian Chamber of Commerce and Sectorial Associations (ECCSA) and the government by the Ministry of Trade (MOT). Additionally, Prime Minister Hailemariam Desalegn, together with the full Council of Ministers, meets with representatives of the private sector annually to discuss their commercial concerns. Nearly all tenders issued by the Ethiopian government39s Privatization and Public Enterprises Supervising Agency (PPESA) are open to foreign participation. In some instances, the government prefers to engage in joint ventures with private companies rather than sell an entire entity. The government has sold over 300 public enterprises since 1994. Most of these enterprises were small enterprises in the trade and service sectors. The agency privatized 3 Enterprises in 2014 and currently around 27 public enterprises remain under PPESA control. OECD Guidelines on Corporate Governance of SOEs Currently, Ethiopia is not a member to the Organization for Economic Cooperation and Development (OECD). They also do not adhere to the guidelines on corporate governance of SOEs. Corporate governance of state-owned enterprises is structured and monitored by a board of directors composed of senior government officials and politically-affiliated individuals. Sovereign Wealth Funds Ethiopia has no Sovereign Wealth Funds. 11. Corporate Social Responsibility Some larger international companies have introduced corporate social responsibility (CSR) programs however, most local companies do not practice CSR. There is a movement to develop CSR programs by the Ministry of Industry in collaboration with the World Bank, U. S. Agency for International Development, and others. CSR programs supporting workforce capacity-building and services, community-building and infrastructure investment programs by foreign corporation can serve to further align company objectives with the government of Ethiopiarsquos overall GTP development goals. OECD Guidelines for Multinational Enterprises The host government does encourage CSR programs for both local and foreign direct investors but does not maintain specific guidelines for these programs. In early 2015, the Ethiopian Chamber of Commerce amp Sectorial Associations published a 39Model Code of Ethics for Ethiopian Businessesrsquo that was endorsed by the GOE39s President Mulatu Teshomme as the model for the business community. Ethiopia has been relatively stable and secure for investors. Insurgents operating in parts of the Somali Region of Ethiopia have warned investors against exploring for oil or natural gas resources in this area. Some elements of the outlawed Ogaden National Liberation Front continue to operate in parts of the Somali Region and there are reports of sporadic clashes with security forces. Beginning in 2008, the government enacted a series of laws that effectively constrained opposition parties, the media, and civil society. The Ethiopian Peoplersquos Revolutionary Democratic Front (EPRDF), which is the ruling party coalition, and its allied parties subsequently took close to 90 percent of the popular vote and won 545 out of 547 parliamentary seats in the 2010 national elections, which were judged to have lacked a level playing field. Regional-level elections (including for seats in the Addis Ababa and Dire Dawa city councils) were held in 2013 and national parliamentary elections are scheduled in May 2015. In 2009, the Ethiopian government passed the Anti-terrorism Proclamation (ATP), granting executive branch-controlled security services virtually unlimited authority to take unilateral action to disrupt suspected terrorist activities. Terrorist activities are broadly defined in the legislation. The law has been cited in the convictions of twelve Ethiopian journalists, political opposition leaders, and activists, and an Ethiopian employee of the UN. Two Swedish journalists were found guilty of providing support for terrorists and illegally entering the country in 2011 and were sentenced to eleven years in prison, but received a pardon in September 2012. In the lead up to the May 2015 national elections, several opposition party leaders have been detained and charged under the ATP. Five European tourists were killed and two were kidnapped in January 2012 by the Afar Revolutionary Democratic Unit Front (ARDUF), an extremist group backed by Eritrea. In retaliation, the Ethiopian military made incursions into Eritrea in March 2012 targeting the ARDUF and the Eritrean military. An attack on a farm operated by Saudi Star Development in the Gambella Region in April 2013 left five people dead, and was blamed on the Gambella Nilotic Union. The Ethiopian government regards these incidents as terrorist attacks. In February 2012, the Ethiopian government announced that it had arrested al-Qaida operatives with links to Kenya, Sudan, the Philippines, Saudi Arabia, and South Africa in the Bale area of Oromia Region in December 2011. In October 2013, in Addis Ababa, two suspected al-Shabbab operatives died in an explosion described as a failed terrorist attack and were thought to have been targeting a crowded sports event occurring near the explosion. Isolated protests broke out on several university campuses in Ethiopiarsquos Oromia region in late April 2014, resulting in at least eleven deaths, following reports that a draft development plan for Addis Ababa would expand the capitalrsquos territory into the Oromia region. Ethnic conflict, including among university students, occurs at times and occasionally becomes violent. The campaign season in the run-up to the May 2015 general parliamentary elections has been generally peaceful. Although there have been some small-scale clashes between protestors and security officials and, generally, when opposition parties proceed with unauthorized protests, they usually resulted in minor injuries and temporary detentions. Ethiopia ratified the United Nations (UN) Anticorruption Convention in 2007. The UN Investment Guide to Ethiopia (2004) asserted that routine bureaucratic corruption is virtually nonexistent in Ethiopia. The guide added that bureaucratic delays certainly exist, but are not devices by which officials seek bribes. It is a criminal offense to give or receive bribes, and bribes are not tax deductible. Transparency Internationalrsquos 2014 Corruption Perceptions Index, which measures perceived levels of public sector corruption, ranked Ethiopia as 33 (with 0 indicating highly corrupt and 100 indicating very clean). Ethiopia39s rank on the corruption perception index was 110 out of 175 countries in 2014 and 111 out of 175 rated countries in 2013. The Ministry of Justice and the Federal Ethics and Anti-Corruption Commission (FEACC) are charged with combating corruption. Since its establishment, the Commission has arrested dozens of officials on charges of corruption, including managers of the Privatization Agency, Ethiopian Telecommunications Corporation, National Bank of Ethiopia, Ethiopian Geological Survey, the state-owned Commercial Bank of Ethiopia, Ethiopian Revenue and Customs Authority, and private businessmen. UN Anticorruption Convention, OECD Convention on Combatting Bribery In 2003, Ethiopia signed the UN Anticorruption Convention which was later ratified in November 2007. Ethiopia is currently not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Resources to Report Corruption The Ministry of Justice has primary responsibility for combating corruption, largely through the Federal Ethics and Anticorruption Commission (FEACC) that handles reports of corruption feac. gov. et. 14. Bilateral Investment Agreements Ethiopia has bilateral investment and protection agreements with China, Denmark, Italy, Kuwait, Malaysia, Netherlands, Russia, Sudan, Switzerland, Tunisia, Turkey, Yemen, Spain, Algeria, Austria, UK, BelgiumLuxemburg, Libya, Egypt, Germany, Finland, India, and Equatorial Guinea and a protection of investment and property acquisition agreement with Djibouti. A Treaty of Amity and Economic Relations, which entered into force in 1953, governs economic and consular relations with the United States. Ethiopia also has avoidance of double taxation treaties with fourteen countries, including Italy, Kuwait, Romania, Russia, Tunisia, Yemen, Israel, South Africa, Sudan and the UK. Bilateral Taxation Treaties There is no avoidance of double taxation treaty between the United States and Ethiopia. 15. OPIC and Other Investment Insurance Programs The Overseas Private Investment Corporation (OPIC) has offered risk insurance and loans to U. S. investors in Ethiopia in the past. In past years, it has not originated any investment in Ethiopia however, recently, has begun to initial reviews for qualifying investment opportunities. Approximately 85 of Ethiopia39s 90 million people work in agriculture. The Ethiopian government is the most important sector of employment outside of agriculture. According to the Central Statistical Agencyrsquos urban employment and unemployment survey results, urban unemployment was estimated to be 17.5 as of 2012. (24.9 of people between the ages of 15-24 are unemployed.) Ethiopia has ratified all eight core ILO conventions. The Ethiopian Penal Code outlaws work specified as hazardous by ILO conventions. The Ethiopian Parliament ratified ILO Convention 182 on the Worst Forms of Child Labor in May 2003. The U. S. Government produces an annual report on labor conditions in Ethiopia, including an assessment of child labor. The constitution and law provide workers, except for civil servants and certain categories of workers primarily in the public sector, with the right to form and join unions, conduct legal strikes, and bargain collectively. Other laws and regulations that explicitly or potentially infringe upon workersrsquo rights to associate freely and to organize include the CSO law, Council of Ministers Regulation No. 1682009 on Charities and Societies to reinforce the CSO law, and Proclamation No. 6522009 on Antiterrorism. Such laws and detailed requirements make legal strike actions difficult to carry out. In practice, labor strikes are rare. Labor unions, organized under the umbrella Confederation of Ethiopian Trade Unions (CETU), are formed as enterprise-based units and not around specific sectors. There is no formal requirement for unions to join the CETU, however. Child labor is widespread in Ethiopia, and the Ethiopian Government in collaboration with the international community has established programs to combat the worst forms of child labor, particularly in the southern regions. While not a pressing issue in the formal economy, child labor is common in rural agrarian areas and the informal economy in urban areas. Ethiopian traditional woven textiles are included on the U. S. government39s Executive Order 13126 list of goods that have been known to be produced by forced or indentured child labor. Both NGO and Ethiopian government sources concluded that goods produced (in the agricultural sector and traditional weaving industry in particular) via child labor are largely intended for domestic consumption, and not slated for export. Employers are statutorily prohibited from hiring children under the age of 14. In 2013, Ethiopia produced a list of Activities Prohibited for Young Workers and launched its National Action Plan (NAP) on the Elimination of the Worst Forms of Child Labor. The laws defining what sectors may hire young workers, defined as workers aged 14 to 18, are infrequently enforced due to the lack of capacity of labor inspectors within the country. Labor remains readily available and inexpensive in Ethiopia. Skilled manpower, however, is scarce in many fields. Approximately 60 of Ethiopians over the age of 15 are illiterate (defined by UNESCO as ldquoinability to identify, understand, interpret, create, communicate and compute, using printed and written materials associated with varying contextsrdquo). There is no national minimum wage standard. To increase the skilled labor force, the government of Ethiopia has undertaken a rapid expansion of the university system in the last 8 years, increasing the number of higher education institution from one to 33. It has also adopted an education policy that 70 of the annual student intake in Public Universities must focus on science, engineering and technology. 17. Foreign Trade ZonesFree PortsTrade Facilitation There are no areas designated as foreign trade zones andor free ports in Ethiopia. Because of the 1998-2000 Ethiopian-Eritrean war, Ethiopian exports and imports through the Eritrean port of Assab are prohibited. As a result, Ethiopia conducts almost all of its trade through the port of Djibouti with some trade via the Somaliland port of Berbera and Sudan39s Port Sudan. Despite Ethiopia39s efforts to clamp down on small-scale trade of contraband, unregulated exports of coffee, live animals, khat (a mildly narcotic amphetamine-like leaf), fruit and vegetables, and imports of cigarettes, alcohol, textiles, electronics and other consumer goods continues. 18. Foreign Direct Investment and Foreign Portfolio Investment Statistics Table 2: Key Macroeconomic Data, U. S. FDI in Host CountryEconomy Source: Ethiopian Investment Commission Table 4: Sources of Portfolio Investment Currently, data regarding the equitydebt breakdown of portfolio investment assets is not available for Ethiopia via the IMF39s Coordinated Portfolio Investment Survey (CPIS) and is not available for external publication by the GOE. 19. Contact for More Information Addis Ababa Economic Section: EthiopiaInvestmentClimatestate. gov U. S. Embassy main number is 251 011 130 6000. Senior Foreign Commercial Service Officer, Tanya Cole, Tanya. Coletrade. gov Economic Officer, Helena Schrader, SchraderHPstate. gov Trade and Investment Specialist, Abdulkader Hussen, HussenAMstate. govAs per companies act schedule of Depreciation rate, I feel there is no specific rate of depreciation given for software, What depreciation rate should be taken for accounts prepared for companies act purpose Two views collected so far, 1. As applicable to computers subject to duration of licence period. 2. It can be written off in shorter than licence period on providing sufficeint explanation for accelerated rate of depreciation. p. s. In my case, the Licence period it infinite. Kindly give me your valuable feedback.
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