How to enter the Philippine market

The Philippines was Australia’s 17th largest export destination in 2024, with total exports reaching AUD 7.5 billion. Confidential items of trade and resources dominate Australia’s exports, but education, business and recreational travel are also key sectors. Emerging trends are presenting opportunities for a range of other sectors, including food and agribusiness, education and skills, and resources and energy.

Market entry models for exporting goods and services

Choosing an appropriate market entry model is essential for businesses looking to export to the Philippines. Any choice should be informed by factors such as the overarching business strategy, target sector, and business size and maturity. Market entry models frequently evolve over time.

A. Agents and importers/distributors

Many Australian firms doing business internationally rely on agents or distributors. The roles of agents and distributors differ, and they can vary across industry and geography, particularly in the Philippines. It is therefore critical that roles and responsibilities are clearly defined early in any agreement.

Agents: Agents act as representatives of suppliers and do not take ownership of the products they are trying to sell. They are usually paid on a commission basis, which provides an incentive for them to drive sales. Standard agent commissions range from between 5 and 10 per cent in the Philippines but can vary by sector. Being based in-market they will often represent several complementary products or services. They can be retained exclusively as the sole agent for a company’s goods or services or as one of several for the exporter.

Importers/distributors: Unlike agents, importers and distributors buy the goods from exporters and then resell them to local retailers or direct to consumers. In some cases, an importer/distributor may sell to other wholesalers who then on-sell to retailers or consumers. Importers and distributors may carry complementary and competing lines and usually offer after-sales service. They earn money by adding margins to product prices. Margins are generally higher than agent fees because importers and distributors have higher costs, such as for carrying inventory, marketing and extending credit for customers.

There are two types of importers/distributors in the Philippines: stocking distributors and indenters. Stocking distributors are bound by a contract to buy and sell a set number of items stated in their agreement with a foreign supplier. Indenters act as brokers between foreign suppliers and the end user. They help foreign suppliers save costs by avoiding the need to stock high-end products and capital outlays for expensive equipment.

Choosing an agent or importer/distributor: Whether using an agent or distributor, building a close working relationship is essential. While corporate agents and distributors are required to register with the Philippine Securities and Exchange Commission (SEC) and sole proprietorship agents must register with the Department of Trade and Industry (DTI), due diligence is important – ask for trade references and seek a credit check through a professional agency. It is best to meet any potential agents or distributors in the Philippines. This will give them a chance to demonstrate knowledge of the market and provide an early opportunity to build the relationship.

Time in market is an important consideration when choosing an agent or importer/distributor in the Philippines. Most established agents, importers and distributors have a full portfolio of products with limited capacity to take on new principals and products. Working with new, smaller companies that are actively sourcing products can be an effective way to gain entry and grow in the market, though due diligence is still essential before making this decision.

B. Australian consolidators

The most common market entry model for food, beverage and consumer products in the Philippines is through consolidators, especially if the customers are supermarkets or retailers and the exporter is an SME. Consolidators are used when an exporting company is unable to completely fill a shipping container with its own merchandise. They handle the cargo of several exporters regardless of whether they are going to the same destination. Consolidators offer additional services like packing, insurance, timetabling, customs clearance and local transportation.

C. Online Sales

The Philippine e-commerce market is relatively robust, with consumers able to access products and services from a wide range of local and regional digital platforms. Driven by increasing disposable incomes and a growing middle class, e-commerce sales are expected to reach AUD 24 billion in 2025,. While the value of online sales remains modest by advanced economy standards – around 7.5 per cent of total retail sales – this is forecast to rise to 9.5 per cent by 2028.

Government efforts to increase internet connectivity and support e-commerce growth are steadily boosting adoption. At the end of 2025, there was an internet penetration rate of 83.8 per cent of the total population with 98 million people online. Digitalisation is a core theme of the Philippine Development Plan 2023-2028, which aims to accelerate the digitalisation and innovation of SMEs and start-ups and increase e-commerce adoption.

Despite the development of the Philippine digital economy, cross-border e-commerce can be a challenging market entry model. Logistics issues and inconsistent customs procedures can create issues for exporters. It is common for agents and importers/ distributors to handle online sales as an additional sales channel.

Accessing digital consumers: While over 60 per cent of Filipinos have made a purchase online, a large proportion of the population is yet to engage with e-commerce. Effective and targeted online marketing is vital to establish trust and brand loyalty, particularly among those discovering online retail for the first time.

Top product categories for online sales include electronics, personal and household care, furniture, fashion and food (Figure 2). Smartphone penetration is enabling mobile and social commerce, with mobile commerce accounting for nearly 28 per cent of all online spending in 2025. And with 96 million social media users - making up 82 per cent of the population - Facebook is emerging as an important online sales channel, accounting for over 89 per cent of all web traffic referrals.

Figure 2: E-commerce spending on consumer goods (2025), AUD billion

Search engines: Search engines are a key tool for brand research, with half of all Filipino internet users using them to research new products and brands. Google is the dominant search engine, followed by Bing, and Yahoo.

Online sellers and marketplaces: Philippine consumers are embracing online shopping. With exclusive deals, large product selections and different payment methods, e-commerce marketplaces have become a key feature of the Philippine market. Large e-commerce players such as Shopee and Lazada dominate market share, but local and regional players have a strong foothold in the market. Australian businesses can leverage these platforms’ existing customer base, logistical capabilities and marketing strategies to introduce their products or services to the local market.

Social media: There were over 90.8 million social media users in the Philippines as of 2025. These users are having a major impact on the Philippine digital economy, with 42.5% of consumers discovering new brands, products and services through social media ads, and over a third using social media platforms to find inspiration for product purchases. The most widely used social media platforms are Facebook, TikTok, Instagram, X (Twitter) and Pinterest.

Investment environment

Philippine foreign investment conditions have historically been rigid. As a result, the country has lagged regional peers in attracting foreign investment. At the end of 2024, total inward FDI stock stood at AUD 193.6 billion, compared to Thailand's AUD 519.1 billion, Vietnam's AUD 384.3 billion and Malaysia's AUD 321.7 billion. The Philippine Government has built upon the original Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act (2021), introducing the CREATE More Act (2024), which provides competitive tax incentives for foreign and local investors, alongside the relaxed restrictions on foreign ownership and lower capital requirements.

The improving investment climate has removed constraints on foreign business activities in many sectors, including renewable energy, public utilities and retail. Although inadequate infrastructure, high power costs, slow broadband and regulatory and bureaucratic inconsistencies are ongoing impediments to investment, the operating environment in special economic zones is comparably better (details can be found in Section 5.1)

The Philippines Government offers a range of business incentives to encourage foreign investment in priority sectors, including:

• Corporate Income Tax (CIT): Income Tax Holiday (ITH) of four to seven years and a preferential final tax of 5 per cent of gross income in lieu of all national and local taxes for five or ten years after the ITH period.
• Import duties/tax: Tax and duty-free importation of capital equipment, spare parts and accessories.
• Value Added Tax (VAT) exemptions: VAT exemptions on a range of items, including medicines, vaccines and medical devices. 
• Land rent and levies: Regional Headquarters based in the Philippines that do not earn revenue in the Philippines pay no income tax and receive additional tax concessions.

Investment rules and regulations

The government has implemented several initiatives designed to encourage foreign investment. The Ease of Doing Business Law (2018) expedites business transactions through the speedy issuance of permits and licences. The Strategic Investment Priority Plan (2022) (SIPP) lists investment activities that qualify for incentives and Executive Order 18 (2023) introduced ‘green lanes’ to fast- track strategic investments. A new list of sectors eligible for incentives is due to be released in 2026.

Before engaging in business in the Philippines, foreign investors must register their business with its key regulatory agencies, such as the SEC, DTI, Bureau of Internal Revenue (BIR), Local Government Units (LGU). Secondary permits or licenses may also be required for certain industries. In cases where a foreign business intends to incorporate in the Philippines, they must register under the Foreign Investments Act (1991) as either a Stock Corporation or a Partnership. Foreign businesses established legally outside the Philippines may also apply to establish a Branch Office or Representative Office.

DTI oversees key agencies such as the Philippine Economic Zone Authority (PEZA), the Board of Investments (BOI) and the Intellectual Property Office of the Philippines (IPOPHL). Businesses may register their proprietorship and register their business name through the DTI website. Guidance on the business registration process can be found on the DTI website at dti.gov.ph.

The Philippine BOI is an attached agency of DTI and is responsible for the development of investments in the Philippines. It facilitates the promotion of priority sectors and investment opportunities.

Market entry models for investing

Choosing an appropriate market entry model is essential for businesses looking to invest in the Philippines. A business’ size, sector and growth strategy will help determine which market entry model fits best. Investment models frequently evolve over time as businesses enter and expand in a market.

A. Representative office

Opening a representative office (RO) can be a useful and economical first step to explore business opportunities in the Philippines. ROs cannot conduct direct commercial or revenue generating activities such as the execution of contracts, receipt of funds, sale or purchase of goods, or provision of services.

However, ROs can provide a wide range of support activities to head offices back in Australia. They are a common form of presence in the Philippines for foreign companies, particularly those in the early stages of a market entry strategy. Representative offices are ineligible for PEZA and BOI registration.

Establishing a representative office in the Philippines

B. Franchising

Franchising allows business owners to retain a measure of control while harnessing the energy of franchisees to drive expansion. Franchises project a company’s reputation and brand, and while it can be expensive, building a network of franchises is generally cheaper than owning and operating retail or branch offices in foreign markets.

Franchising gained momentum in the Philippines in the early 1990s, mainly through the arrival of large American chains. Since then, the market has grown to include many well-known international chains. According to the DTI, the Philippines is the seventh largest franchise market globally and the largest market in Southeast Asia.

Franchise activities are governed by the DTI, SEC and BIR. Businesses looking to enter a franchising agreement must first register with the SEC and obtain a business permit from the local government unit (LGU). Depending on business type, businesses will need to apply for different permits. The minimum capital requirement for establishing a franchise ranges from PHP 500,000 - 10,000,000 (AUD 13,441 - 268,810).

Franchise trade events and associations can provide useful information and resources on franchising opportunities and procedures. Most legally established franchisors in the Philippines are registered with the Filipino International Franchise Association (FIFA). Benefits of registration include use of the FIFA logo and franchise auditing of existing franchise programs.

Establishing a franchise in the Philippines

C. Foreign owned enterprise

Businesses may establish a separate, wholly-owned legal entity in the Philippines. Sole proprietorships can be 100 per cent foreign owned if they meet the minimum capital requirement of AUD 309,000 , or AUD 154,000 where the business employs at least 50 Filipino workers or involves advanced technology, and whose proposed business activities do not fall under the Foreign Investment Negative List. Including application times, a sole proprietorship can usually be established within two to three months.

Establishing a foreign owned enterprise in the Philippines

C. Joint venture

A joint venture (JV) is an agreement between two or more parties to work together on a short-term or long-term project. JVs can be an effective way to undertake research and development, create a new product or provide a new service. By bringing together businesses that operate in different segments of the same industry, they can also be an effective way to build comprehensive product and service offerings. A local Filipino partner can provide knowledge and contacts, as well as a realistic assessment of risk.

Each party is responsible for the profits, losses and costs associated with the activity, but a JV is an independent entity, separate from the parties’ other businesses. A JV is underpinned by a legal agreement between the parties. A typical agreement should include details on the:

• Legal basis for the agreement
• Structure, governance and obligations of the joint venture
• Division of profits and losses 
• Ownership of intellectual property
• Disagreement or dispute resolution processes
• Leave or termination conditions

E. Public-Private Partnership

A Public-Private Partnership (PPP) is a contractual agreement between the Philippines Government and one or more private businesses. Under a PPP, private firms can build, operate and maintain public infrastructure facilities and provide services traditionally delivered by government. Examples of these are roads, airports, bridges, hospitals, schools, railways, and water and sanitation projects, as well as so-called soft sectors like IT.

The Philippines adopted the PPP model in the late 1980s and in recent years has begun promoting private sector investment in key infrastructure projects. The Philippine PPP Code (2023) has streamlined this approval process for solicited projects. As of 2025, there are 251 PPP projects worth a combined AUD 75.5 billion in the government's active pipeline. PPPs are complex to structure and implement but present opportunities for established businesses to enter the market. The Philippines Public Private Partnership Center provides helpful information on the process of establishing a PPP.

Establishing a PPP (from approval phase) in the Philippines

The strength of the Philippine business process outsourcing (BPO) sector presents opportunities for Australian businesses looking to offshore non-core operations. A Philippine BPO service has several advantages, including:

• Cost benefits: Wages in the Philippines are lower than those in Australia, reducing salary-related costs for Australian businesses. While salaries for skilled workers can vary throughout the Philippines (see Section 4.5), the cost of outsourcing is significantly lower than hiring onshore workers.
• Skilled talent pool: The Philippines labour market is young, educated and technologically savvy. Skilled professionals are particularly adept at IT and web development services, as well as telemarketing, customer care and e-commerce and technical support.
• Cultural compatibility: The Philippine BPO sector has been providing services to international companies since the early 1990s. In additional to high levels of English-literacy, local professionals understand global business practices and onboarding processes.
• Convenient time zone: The Philippines shares the same or similar time zones with all Australian capital cities, facilitating close communication and coordination between onshore and offshore staff.

Establishing a BPO service in the Philippines

Success in the Philippines requires businesses to tailor their product or service to the market. This should be based on detailed analysis of consumer trends, price consciousness, branding, marketing, advertising and payment methods.

The Philippine middle class is expected to comprise 30 per cent of total households by 2030. The accelerated rate of innovation and internet connectivity are presenting new opportunities to access middle class Filipinos. Understanding the characteristics, aspirations and spending habits of this emerging group of consumers is crucial for businesses looking to tap into the market.

The Filipino market is relatively young compared to its Southeast Asian counterparts. Wealth is concentrated among consumers aged between 30-40, while Gen Z (individuals born between 1997 and 2012) represent the largest generation in the country. Despite inflationary pressures and climbing living costs, the outlook for consumer demand remains positive.

As household disposable incomes continue to grow (Figure 3), businesses entering the Philippines should consider product affordability and scalability, helping them cater to middle class consumer trends. Responding to more discerning spending habits by introducing tiered product lines, differentiating product offerings and avoiding portfolio stagnation can help businesses succeed in the Philippine market.

Consumer trends in 2025

Figure 3: Median disposable income per household (2016-2026f), AUD, current prices

Price consciousness

Despite strong economic growth, disposable incomes in the Philippines remain relatively low compared to some Southeast Asian counterparts. At AUD 6,896 the national income per capita ranks below Malaysia (AUD 17,974) and Thailand (AUD 10,953). Businesses must remember that price points designed for the middle class in one market may be out of reach for the middle class in another. Therefore, slight price modifications to an already successful product can significantly boost sales.

Branding

Branding is an essential part of product differentiation, and companies need to research and understand the specific tastes of consumers to achieve success. Although Filipino consumers are traditionally price conscious, higher quality products are valued and increasingly accessible. Tailored product differentiation is growing in popularity. New brands have opportunities to enter the market with targeted promotional campaigns to build a product’s reputation and reach.

Australian businesses in some sectors enjoy a branding advantage simply by virtue of their products being made in Australia. Generally, Australian products have a strong reputation for high quality in the Philippines and an emphasis on Australian origin can be a marketing asset for businesses to leverage, particularly in the food and beverage and agricultural sectors. Austrade’s Nation Brand toolkit provides a range of free branding assets for businesses looking to export.

Marketing

Trade shows serve as a valuable entry point for marketing in the Philippines. With proper preparation they can be a productive way to gain access to new consumer bases, potential clients and competitor insights.

If engaging an agent or importer/distributor, Australian companies should provide a package of marketing resources. Sales promotions and high-impact campaigns can also help establish a brand. Providing special discounts and brand-centred events can be an effective way to build consumer loyalty and product awareness – particularly in sectors that are crowded with incumbents.

Digital marketing methods are becoming more common as smart phone penetration continues to grow. Email, text, search engine optimisation, social media marketing and influencer marketing are now integral parts of a comprehensive marketing campaign.

As English is widespread among the typical target market for Australian products, it is generally not necessary to translate marketing and promotional material into Tagalog. Most local products are labelled in English.

Advertising and media

The Philippines’ young population is accelerating the uptake of mobile technologies and increasing the reach of digital advertising (Figure 4). YouTube advertisements reached over 57 million Filipinos in early 2025 and TikTok advertisements reached 80 per cent of all adults aged 18 and above. Television and print advertisements remain a trusted marketing method but with over 80 per cent of Filipinos using a social media platform for brand research, a digital strategy is now an essential part of any advertising campaign

Figure 4: Digital advertising audiences in the Philippines (2025)

Foreign businesses should consider advertising in both English and ‘Taglish’ (a combination of Tagalog and English). Advertisements in Tagalog only are not common. When translating from English, care should be taken to ensure cultural and linguistic sensitivities. Local interpreters can aid in ensuring the suitability of your campaign.

Australian businesses looking to promote their products or services in the Philippines can seek professional help from local and international advertising and media companies.

Digital payments

Digital payments have undergone substantial growth in the Philippines, accounting for only one percent of total payments in 2013 and surging to 57.4 per cent in 2024.

As smartphone penetration increases, digital payments will become a key enabler of consumer spending.

The Philippine digital economy is evolving rapidly. As of 2024, digital payments accounted for 57.4 per cent of total monthly retail payment volume and 59 per cent of total transaction value, exceeding the national target set under the Philippine Development Plan 2023– 2028. With increased investment in digital finance infrastructure and payment streams, the Philippines is expected to further move toward a cash-lite economy, supported by initiatives including Project Nexus, which aims to enhance cross-border payment interoperability across ASEAN.

The most popular B2C digital payment methods in the Philippines include digital wallets, A2A payments such as PESONet, debit and credit cards, and cash on delivery (Figure 5). The most popular app-based payment platforms are GCash, Maya and ShopeePay.

Digital payments can make financial transactions safer, cheaper and more convenient. As digital payment options continue to expand and evolve in the Philippine market, businesses should consider integrating them into their business model.

Figure 5: Payment methods for B2C e-commerce, % (2025)

A well-considered market entry strategy should take a systematic approach that supports long-term success. This section distils the factors businesses should consider when formulating an approach to the Philippine market into a series of key questions.

Asialink Business provides advisory services and capability training programs to help organisations understand and access opportunities in Asian markets. Should you have questions about any aspect of your Philippines market entry strategy, please contact us. Austrade’s Philippines office also provides services and support to Australian businesses with an interest in the Philippines (details can be found in Section 5.2)

Calibrating Ambition

• What is your company’s aspiration for the market?
• What are the challenges and risks you will need to mitigate?

Consumers

• What is the current or potential demand for your product or service in the Philippines?
• Who are the primary customers / consumers for your product or service in the market?
• How will you tailor your product or service to Filipino preferences?

Competitors

• Who are your competitors in the Philippines, and what is their offering?
• How does your product or service compare to competitors on price?

Sales, Brand and Marketing

• What is your unique value proposition for the Philippines?
• What is the ideal mix of marketing and sales channels to reach your target customers?
• Is your marketing strategy aligned with your identified consumer base and value proposition?

Mode of Entry

• What is the right market entry model for your business?
• What are the specific geographies you should target?

Delivery Partners

• Does your team have the right mix of skills and expertise to support your market entry?
• What partnerships will contribute to your business’ success in the market?
• What external advice do you need to commission?

Operating Model

• What changes do you need to make to your business across areas such as operations, HR, finance and IT?

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