Prominent Issues on Trade and Investment in the Philippines

1. Complex Import Licensing Regime - The Philippines' licensing system

remains complex, and fees vary by product and are collected by the agency
granting the license. There are non-automatic, automatic, and special
licensing systems. Under the non-automatic licensing system, only persons,
firms, and institutions registered as bona fide importers, domestic users,
breeders, producers, traders, etc. are eligible to apply for licenses; only the
Government or its entities/agencies may import certain products (e.g. rice,
which is largely state-traded by the National Food Authority). Under the
automatic system, all persons, firms, and institutions, are eligible to apply for
license as long as they meet the basic requirements/criteria. For certain
imports, persons or firms must be registered. According to the authorities,
this system aims to ensure that only qualified applicants are granted licenses.

Some licenses are issued for a particular shipment only, with a validity period
adequate to cover the import process. Others are issued with a validity
period identical to that of the period granted on the quota held. Validity
ranges from one month to one year and may be renewable upon written
application. Licenses are in the name of the applicant-importer and are non-
transferable. Import permit/clearance/authority is issued upon compliance
with the conditions/requirements imposed. Different licensing procedures are
in place for non-quota goods and for products subject to quotas.

2. Government Procurement Policy - Foreigners' participation in the

procurement of goods remains restricted, and seems to depend upon the
source of the funds for the project and the domestic availability of the
procured goods and services. The Constitution provides for a strong
preference to procure domestically.

In line with the economic policies enunciated in the Philippine Constitution,

particularly on the promotion of Filipino labor, domestic materials, and locally
produced goods, Republic Act No. 9184 (otherwise known as the
Government Procurement Reform Act), in consonance with Republic Act No.
5183, adopts as general principle the preference for Filipino nationals in the
award of Governments procurement contracts. This requires the State to give
preference to qualified Filipinos, and to promote the preferential use of
Filipino labor, domestic materials, and locally produced goods, as well as to
adopt measures that help make them competitive.

For example, the Government continues to procure official uniforms

containing Philippine tropical fabrics (stipulated under a law enacted in 2003,
Republic Act No. 9242 An Act Prescribing the Use of the Philippine
Tropical Fabrics for the Uniforms of Public Officials and Employees and for
Other Purposes); as well as footwear and leather goods (stipulated under
Republic Act No. 9290 signed into law in 2004 known as the Footwear,
Leather Goods and Tannery Industries Development Act) manufactured in the
Philippines as a means to support local industries.

Based on the 2016 Revised Implementing Rules and Regulations of

R.A. 9184 (Government Procurement Reform Act), for foreign-assisted
projects, overseas firms may bid, but there is a 15% price preference for
domestic suppliers. For other procurement projects, such as those funded
domestically, only firms with at least 60% (Procurement of Goods) or 75%
(Procurement of Infrastructure Projects) Filipino ownership or interest,
depending on the type of procurement, may participate. However, if the
goods are not available locally, or where there is a need to prevent unfair
competition, foreign suppliers may be invited to participate. In addition, in
the interest of efficiency and timely delivery of goods, the procuring entity
may give preference to the purchase of domestically produced and
manufactured goods, supplies, and materials that satisfy the specified or
desired quality.