The customs and trade environment of the Philippines has become more open in the last few years to incentivise foreign investment. Partly because of this relaxed approach, the Philippines has experienced consistent GDP growth. Customs processes are relatively simple, but some of the procedures, such as duty refunds or rulings, can take a long time to finalise.
The Philippines has also experienced a shift in its manufacturing activities, moving to more complex value-added products. Historically, exports have been mostly agricultural. Current exports include products such as semi-conductor processors, chips and hard drives, as well as transport equipment, garments, copper products and petroleum products. The main export markets are Japan, United States , China and Hong Kong.
Average customs duty rates on import are relatively low due to the negotiation of various Free Trade Agreements with several countries such as all ASEAN member countries, China, Japan, Korea, Australia, New Zealand and India, granting preferential import duty rates, often at 0%, to imports originating in such territories. Moreover, companies enrolled with the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA), Customs Bonded Warehouse, Drawback program etc., can claim additional duty concession privileges subject to certain conditions. However, there are still a significant number of items with positive, sometimes high, rates of duty.
Philippine Customs has increased audits, mainly regarding compliance levels with customs valuation and classification. This means that many importers need to start taking correct classification and valuation of imports more seriously, and knowledge regarding current agreements with other territories as well as the general compliance level that they may have. Additional scrutiny is often complimented by a Voluntary Disclosure Program which may allow an importer to avoid the high penalties normally associated with duty underpayments.