How Russian Exporters Can Access The Philippines Consumer Market
With Russian exporters and manufacturers now looking to access and develop markets in Asia, we can take a look at the potential for the Philippines market.
The Philippines is a popular light manufacturing, and tourism hub for foreign investors in Asia and the ASEAN region, which also includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand & Vietnam. It is also just over an hours flight to Manila from Hong Kong.
The ASEAN countries enjoy free trade between each other, meaning subject to rules of origin regulations, production in one country can be exported, duty free, to the other. ASEAN also has Free Trade Agreements with China and India. This means, given the right circumstances, a Russian-owned manufacturing entity could export, duty free to these additional markets from the Philippines. This is especially true of the Philippines to Indonesia, which is just situated to the south.
The Philippines is of specific interest to Russian investors as it has also expressed willingness to negotiate a Free Trade Agreement with the Eurasian Economic Union. Research on the potential for Russian exporters and manufacturers to assess the Philippines market should be underway for Russian businesses looking to expand into Asia.
The Philippines is a good choice as a developing trade and services partner for Russia, as English is widely spoken and there is a sizeable expatriate population. It has a growing per capita income level of US$3,160, and a population base of 105 million of which about 40% are considered to middle class standard. It is therefore a significant consumer market, with the additional benefit of being an ASEAN services centre. The largest cities in terms of domestic consumers of 1 million are Quezon, Manila, Davao, Caloocan, Zamboanga, Cebu, Antipolo, Taguig and Pasig.
There are popular tourism resorts at Cebu and Boracay.
It should be noted that the Philippines is also a popular outsourcing destination for English language online and call centre services, and has also signed a Free Trade Agreement with the European Free Trade Association which includes Iceland, Liechtenstein, Norway, and Switzerland. Russian investors in the Philippines can use this FTA to access these markets.
Current Russian trade trends with the Philippines are also on an upwards path, with current trade levels indicating about US$1.4 billion for 2022. Trade has been growing at rates of 23% over the past two years. In terms of exports to the Philippines, Russia currently sells a variety of products, ranging from oil and gas to fertilizers and automotive parts, with the main exported items being semi-finished iron, crude petroleum, and wheat.
It should be noted that there are Quality Control standards differences between Russia and ASEAN nations, and Russian exporters should be aware of these. We covered this in the article Quality Control Challenges For Russian Exporters To ASEAN.
Philippines Market Entry
A range of market entry options are available for those wishing to tap into emerging opportunities within the Philippines. However, regardless of the entry mode chosen by new entrants, corporate establishment can readily be achieved through compliance with up-to-date regulations. The two most common methods of entry to the Philippines are branches and representative offices (ROs). These allow liaison activities between the Russian Head Office and Philippines importers and distributors.
It is worth noting that Russia also has a Double Tax Treaty with the Philippines, which if used correctly can reduce profits taxes for Russian entities based in the country. Professional advise should be sought.
Market analysis, research and entry assistance into the Philippines can be obtained from our Manila offices where our firm has been assisting foreign investors and exporters for many years. Please contact for details.
Russia Briefing is written by Dezan Shira & Associates and is aimed at assisting Russian businesses and exporters develop markets throughout Asia. With 28 regional operations, and 30 years of experience, we can assist Russian businesses into the Philippines, ASEAN, India, and China. Please visit us at www.dezshira.com