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                     Key Economic Indicators
        (Millions of U.S. dollars unless otherwise noted)

                                    1992      1993      1994 1/

Income, Production and Employment:

Real GDP (1985 prices)            38,632    39,393    41,047
Real GDP Growth (pct.)               0.3       2.0       4.2
GDP (current prices)              52,982    54,068    62,364
By Sector:  (current prices)
  Agriculture                     11,561    11,723    13,533
  Energy/Water                     1,284     1,343     1,497
  Manufacturing                   12,812    12,891    15,092
  Construction                     2,664     2,952     3,368
  Dwellings/Real Estate            3,380     3,633     4,054
  Financial Services               2,084     2,159     2,495
  Other Services                  18,559    18,755    23,979
  Government Services              3,670     3,491     3,804
  Health/Education (private)       1,169     1,329     1,534
Net Exports of Goods & Services   -2,403    -4,612    -5,301
Real Per Capita GDP (1985 prices)    595       592       602
Labor Force (000s)                26,290    26,884    27,600
Unemployment Rate (pct.)             9.8       9.2       9.0

Money and Prices:  (annual percentage growth)

Money Supply (M2) 2/                11.0      24.5      19.0
Weighted Ave. Loan Rate 3/          19.4      14.6      15.0
Weighted Ave. Savings Rate 3/        0.6       8.3       8.5
Retail Price Index (Manila)          5.1       2.0       7.8
Wholesale Price Index (Manila)       4.5      -1.2       8.5
Consumer Price Index (Phil.)         8.9       7.6       9.9
Exchange Rate (Pesos/USD)
  Official (interbank rate)        25.51     27.12     26.95
  Parallel (and buying rate)       25.40     27.07     26.90

Balance of Payments and Trade:

Merchandise Exports (FOB)          9,824    11,375    13,050
  Exports to U.S. (Phil. data)     3,832     4,371     4,950
Merchandise Imports (FOB)         14,519    17,597    20,600
  Imports from U.S. (Phil. data)   2,620     3,522     4,100
Bilateral Aid, U.S. 4/               322       160       179
Bilateral Aid, Others              1,312     1,727     1,530
External Public Debt              30,934    34,282    36,300
Debt Service Payments (paid)       3,137     3,533     4,270
Gold and Foreign Exch. Reserves    5,218     5,801     7,250
Trade Balance                     -4,695    -6,222    -7,550
  Trade Balance with U.S.          1,212       849       850

1/ 1994 figures are estimates based on partial data available
as of October 1994.
2/ Growth rate of year-end M2 levels.
3/ Actual ave. annual interest rates, not changes in them.
4/ Inflows of bilateral official loans and grants per balance
of payments.  Figures for U.S. are net of inflows from the U.S.
Veterans Administration (USVA).

Sources: National Economic and Development Authority, Bangko
Sentral ng Pilipinas, Department of Finance.

1.  General Policy Framework

    The Philippines is an archipelago of over 7,000 islands
with an estimated population of 68 million.  Poverty remains a
major concern, with nearly 40 percent of Filipino families
estimated to be living below the poverty threshold. 
Agriculture contributes about 23 percent of Gross Domestic
Product (GDP) -- less than industry (33 percent) and services
(44 percent) -- but absorbs the bulk (45 percent) of the
employed.  The country also has had to grapple with a boom and
bust economic growth pattern, with high growth periods
subsequently slowed by the emergence of macroeconomic
imbalances.  For the past decade and more, low savings,
investments and exports have contrasted with the performance of
Asia's economic dragons.  In the past year, however, a more
soundly based economic rebound has begun to emerge.

    The Ramos Administration, inaugurated in 1992, has
continued and expanded the reforms initiated by its
predecessor:  liberalizing the trade, foreign exchange and
investment regimes; privatizing parastatals; reducing entry
barriers in vital industries (most recently in banking,
telecommunications, and insurance); and encouraging private
sector investments in much needed infrastructure.  Real GNP,
which grew 5.1 percent during the first half of 1994, reflects
this rebound from a combination of exogenous shocks, political
disturbances, macroeconomic imbalances and crippling power
shortages which kept average real GNP expansion at 2.2 percent
from 1990 to 1993, slower than the rate of population growth. 
Although some political and social resistance remain, there is
a growing realization among government officials, private
sector leaders and legislators that the liberalization process
must continue for the economy to sustain its recent strong
recovery.  Many question marks remain, but optimism is growing
that the Philippines may, at last, be embarking on a path of
sustained strong growth.

    The Philippines is a member of the GATT, participated
actively in the Uruguay Round (UR), and became a founding
member of the World Trade Organization (WTO) on January 1, 1995.

    The government is working to achieve fiscal balance and
discipline as part of an overall program to improve and sustain
macroeconomic stability.  The fiscal deficit has been reduced
by a combination of new taxes and spending cuts.  In 1995, the
government hopes to achieve its first fiscal surplus in over
two decades.  Debt service's share of the budget pie has
declined in recent years from almost half to under a third
today.  The government has had some success with the issuance
of three-year floating rate treasury notes, but short-term debt
still makes up nearly 70 percent of outstanding government 

    In 1993, the government financially restructured the
Central Bank.  Previously, the instruments available for
monetary management were severely limited by the Central Bank's
mounting financial losses, compelling monetary authorities to
keep reserve requirements at high levels.  Now armed with a
clean balance sheet and a 220 billion peso portfolio of new
treasury securities, the "new" Central Bank (officially known
as the "Bangko Sentral ng Pilipinas") is in a position to
undertake open market operations effectively.  Since the 1993
restructuring, the Bangko Sentral has lowered bank reserve
requirements by six percentage points, from 25 to 19 percent.

2.  Exchange Rate Policy

    Except for a few remaining restrictions on foreign
investments and on foreign debt, most foreign exchange
restrictions were liberalized starting 1992.  The foreign
exchange rate is now set freely in the interbank market.

    The new regulations now allow immediate repatriation and
remittance privileges without requiring Bangko Sentral
approval.  Foreign exchange earners are generally free to buy
and sell foreign exchange, maintain foreign currency accounts
and transfer foreign exchange out of the country for deposit or
investment abroad.  To further liberalize the foreign exchange
system and encourage greater competition, the government
reintroduced off-floor forex trading in April 1992 using a
computerized dealing system.  However, the Bangko Sentral
imposes ceilings on individual banks' foreign exchange
positions, requiring excess forex holdings to be sold to the
Bangko Sentral or to other banks.  Investment abroad by
Philippine residents using foreign exchange purchased from the
banking system is limited to $3 million per investor per year.

3.  Structural Policies

    Prices of goods and services are generally determined by
internal market forces, with the exception of fuel and basic
public utilities such as transport, water and electricity.  The
government grants certain incentives (such as tax holidays
and/or tax and duty-free privileges on inputs and capital
equipment) to investors in government-preferred activities. 
While there are exceptions, private and government-owned firms
generally compete on equal terms.  An ongoing privatization
program is markedly reducing the government's role in many

    The Foreign Investments Act of 1991 allows full foreign
ownership of companies engaged in activities not covered by
investment incentives.  Previous regulations used to limit
foreign ownership in Philippine companies generally to
40 percent.  A much reduced "negative list" of sectors where
foreign ownership is either banned or limited remains.  (See
Section 5)

    Trade liberalization and tariff reform programs continue. 
The major exception is in agriculture, where 70 percent, by 
value, of major production remains protected from import
competition.  Recent reforms have improved access to important
service industries, most recently in telecommunications,
banking and insurance.  In May 1994, the government improved
its build-operate-transfer (BOT) law, first launched in 1990,
by expanding the number of BOT variations, simplifying rules
and regulations, and allowing more flexibility in pricing.

    Over the last two years, the government adopted a number of
tax measures to beef up revenues.  It increased stock
transaction and documentary stamp taxes, restructured cigarette
taxes, imposed a minimum three percent tariff, and increased
various government fees and charges.  In May 1994, legislation
expanding the value added tax base (VAT) was signed into law,
extending the VAT to goods and services such as
telecommunications, lease and sale of real property,
restaurants/caterers/hotels, books, imported meat and,
eventually, to professional and financial services.  (Note: 
The constitutionality of the expanded VAT has been challenged
in the courts and implementation remains suspended by a Supreme
Court temporary restraining order.)

4.  Debt Management Policies

    The Ramos Administration has continued the firm commitment
to servicing the country's foreign obligations despite
occasional congressional and other political rhetoric calling
for debt repudiation and/or debt service caps.  Between 1990
and 1992, the government repurchased $2.5 billion in
obligations owed foreign commercial banks and converted
$3.2 billion dollars of eligible debt to long term bonds. 
These efforts enabled the Philippines to re-enter the voluntary
international capital markets in 1993 after a decade's absence,
issuing about $900 million dollars in Eurobonds.

    The International Monetary Fund (IMF) approved a three-year
extended arrangement in mid-1994, which the Philippines
envisions as an exit arrangement.  The agreement paved the way
for the fifth Paris Club debt rescheduling round, which was
limited to debt not previously rescheduled.  However, due to
upward pressure on the peso caused by a strong inflow of
foreign exchange, the Philippines decided not to pursue the
Paris Club agreement, but to make payments on schedule.  The
Philippines continues to benefit from various sector-specific
assistance and structural adjustment programs provided by
multilateral institutions such as the Asian Development Bank
and the World Bank Group.

    The growth of the Philippines' foreign debt has slowed
markedly since the mid-1980s, and foreign debt servicing is no
longer a severe problem.  As of March 1994, the debt was
$35.3 billion, or 50 to 55 percent of gross national product. 
The ratio of debt service to export receipts is now below
20 percent, from nearly 40 percent in the early 1980s.

5.  Significant Barriers to U.S. Exports

    Tariffs:  Independent of the Uruguay Round, in 1991, the
Philippines began programs to reduce, modify and simplify 
tariffs into four tiers of 3, 10, 20 and 30 percent.  With its
scheduled completion in November 1994 of the current tariff
reform program (Executive Order 204), the Philippines' nominal
tariff will average 20 percent.  The government is already
actively considering further comprehensive tariff reductions
stretching to the end of the decade.  The Philippines also
agreed to eliminate quantitative restrictions on agricultural
imports but will be implementing compensating tariffs (at an
estimated 100 percent level), applicable except for minimum
access quotas, which will continue to protect much of that

    Effective May 1, 1994, a minimum three percent tariff was
established for all imports.  While only 50 tariff lines had
been duty free, 2.5 percent of 1993 imports from the U.S.,
worth $88.5 million, were in those categories.  Electrical
generating sets, which made up 67 percent ($59.4 million) of
duty-free imports from the U.S. in 1993, will be subject to a
10 percent tariff beginning July 1, 1995.

    As part of a structural reform program intended to spur
investments in export industries, Executive Order 189 which
took effect August 22, 1994, lowered tariffs on capital
equipment, components and parts to a range of 3 to 10 percent. 
Equipment covered are used in various sectors including
garments and fashion accessories, electronics, pulp and paper,
sporting goods and processed foods.

    To boost the competitiveness of the domestic textile
milling and garments industry, Executive Order 204 will lower
import duties on 790 tariff lines including chemical inputs to
textile manufacturing, textile material inputs and garments,
effective November 17, 1994.

    About 208 "strategic" products will remain subject to
50 percent tariff and in some cases quantitative restrictions. 
This group, which includes rice, sugar, fruits, coconut oil,
and luxury goods such as liquor, tobacco, candy and leather
goods, represents about 3.5 percent of tariff lines.

    Imports of U.S. agricultural products have also been
constrained by the "Magna Carta of Small Farmers" which allowed
the Agriculture Department to ban import of goods produced in
"sufficient quantity" locally.  The government has acknowledged
this is in conflict with the implementation of the UR
Agreement/WTO and is making plans for necessary changes.

    Of particular interest to the U.S. is that the sale of
domestically produced meat is exempt from the expanded VAT
while imported beef (high-grade or manufacturing grade cut) is
subject to the tax.  The Finance Secretary has acknowledged
this too may contravene a GATT provision, and has indicated a
change will be made in accordance with the Agreement.

    Import Licenses:  Prior clearance is still required for
more than 100 restricted and controlled items (mostly
agricultural and industrial commodities) generally for reasons
of health, safety or national security.  The National Food
Authority remains the sole importer of rice.  A Board of
Investment (BOI) "authority to import" is required for
commercial vehicles and parts covered by its Progressive 
Industrial Development Program.  A Garment and Textile Export
Board (GTEB) "authority to import" is required for imports of
pre-cut fabrics and accessories for processing into finished
garments and textile products for export.

    Commodity imports financed with foreign credits still
require prior approval from the Bangko Sentral ng Pilipinas
(BSP).  The Philippines is a signatory to the GATT Import
Licensing Code.

    Services Barriers:  Banking - A new law, signed in May
1994, will relax restrictions in place since 1948.  A foreign
investor can enter either on a wholly owned branch basis or own
up to 60 percent of an existing domestic bank or new locally
incorporated banking subsidiary.  However, only six foreign
banks (plus four more with presidential discretion) will be
allowed entry on a full service, branch basis.

    Securities - Membership in the Philippine stock exchange is
open to any company (foreign or Filipino) incorporated in the
Philippines.  A foreign investor wishing to purchase shares of
stock is subject to foreign ownership limitations specified by
the constitution and other laws.  Foreign ownership in
securities underwriting companies is limited to a minority. 
Foreign firms are not allowed to underwrite securities for the
Philippine market, except under the provisions of the new
Banking Law, (which allows foreign bank branches to operate as
universal banks).  Foreign firms may underwrite Philippine
issues for foreign markets.

    Insurance and Travel Agencies - For at least two years
effective October 24, 1994, these sectors were opened to full
foreign ownership (See Section 5 - Investment Barriers). 
However, the implementing rules and regulations have not yet
been made public, so the conditions on market entry are not yet

    Legal Services:  Specific requirements to practice law in
the Philippines are Philippine citizenship, graduation from a
Philippine Law School, and membership in the Integrated Bar of
the Philippines.

    Standards, Testing, Labelling, and Certification: The
Philippine government, for reasons of public health, safety and
national security, implements regulations that affect U.S.
exports of drugs, food, textiles and certain industrial goods. 
Notable examples follow:

    (a) The Department of Health's (DOH) renewed campaign for
the full implementation of the "Generic Act" of 1988 focuses on
the vigorous promotion of cheap generic drugs.  The generic
name must appear above a drug's brand name.

    (b) Imports of high-grade beef, fresh fruits, vegetables
and seeds are controlled through phytosanitary certification
which is often costly.

    (c) Labeling is mandatory for textile fabrics, ready-made
garments, household and institutional linens and garment

    (d) Local inspection for standards compliance is required
for imports of about 30 specific industrial products, including
lighting fixtures, electrical wires and cables, sanitary wares
and household appliances, portland cement and pneumatic tires. 
For other goods, however, U.S. manufacturers'
self-certification of conformance is accepted.  The Philippines
is a signatory to the GATT Standards Code.

    Investment Barriers:  A more liberal foreign investment law
(the Foreign Investment Act of 1991, or FIA) for activities not
eligible or not seeking investment incentives allows foreign
equity beyond the 40 percent ceiling imposed by previous
investment regulations.  However, there are important
exceptions, one being that foreigners are not allowed to own
land except in partnership with Filipinos (in which case the
foreign investor's share is limited to 40 percent).  The FIA
also contains a foreign investment "negative list" with these

    A)  List A specifies activities in which foreign
participation is either excluded or limited by the Constitution
and other statutes.  Investments in mass media, the practice of
licensed professions (including legal services), retail trade,
cooperatives, small scale mining and private security agencies
are exclusively for Filipinos.  Varying foreign ownership
ceilings are imposed on companies engaged in, among others,
advertising, employee recruitment, construction, financing, and
the exploration and development of natural resources.

    B)  List B limits foreign ownership (generally to
40 percent) for reasons of public health, safety and morals,
and to protect local small and medium-sized firms.  To protect
small domestic enterprises, non-export firms must be
capitalized at a minimum of $500,000 to exceed the 40 percent
foreign ownership requirement.

    C)  List C limits foreign ownership in activities
"adequately served" by existing Philippine enterprises.

    Until October 23, 1994, the FIA was guided by a three-year
"transitory" foreign investment negative list.  The government
released the first "regular" negative list in June 1994, which
took effect on October 24, 1994.  Activities included under
lists A and B were unchanged.  Effective October 24, List C was
"empty", opening activities and services such as insurance,
travel agencies, tourist lodging establishments,
conference/convention organizers, and import and wholesale
activities not integrated with production to full foreign
ownership.  An "empty" list C also gives existing foreign
licensors in the Philippine market the option to establish
their own majority-owned subsidiaries.  In 1996, sectors can
petition for inclusion in negative list C under a process which
includes public hearings.

    The government imposes a foreign ownership ceiling of
40 percent for firms seeking incentives with the Board of
Investment (BOI) under the government's annual Investment
Priorities Plan (IPP).  While this ceiling may be exceeded in
certain cases -- i.e., the activity is defined as "pioneer", or
least 70 percent of production is for export, or the enterprise
locates in an area classified as "less developed" -- divestment
to the 40 percent foreign ownership ceiling is required within
30 years.  Industry-wide local content requirements are also
imposed under the government's progressive development program
for automobiles.  Current guidelines also specify that
participants in the automobile development program generate,
via exports, a certain ratio of the foreign exchange needed for
import requirements.

    Current Philippine regulations restrict domestic borrowings
by foreign firms.  The limits are set as maximum debt-to-equity
ratios (depending on the type of activity) which must be
maintained for the term of the debt.

    Government Procurement Practices:  In general, Philippine
government procurement policies do not discriminate against
foreign bidders.  However, preferential treatment is given in
the purchase of medicines, rice for government employees, corn
for domestic consumption, and iron and steel products for use
in government projects.  Petroleum requirements by government
agencies must be procured from government-owned sources.

    Awarding of contracts for government procurement of goods
and services have to pass competitive bidding.  For
infrastructure projects which require a public utility
franchise (e.g. water and power distribution, public telephone
and transportation system), the contractor must be at least
60 percent Filipino.  For other major contracts, such as
build-operate-transfer (BOT) projects, where operation may not
include a public utility franchise, a foreign constructor must
be duly accredited by its government to undertake construction
work.  To the benefit of U.S. suppliers, areas of interest
including power generation equipment, communications equipment
and computer hardware do not generally confront significant
restrictions.  The Philippines is not a signatory to the GATT
Government Procurement Code.

    Customs Procedures:  All imports valued at over US $500 are
permitted only with a pre-shipment inspection report called a
"Clean Report of Findings" issued by the authorized outport
inspector.  To fix import duties, the Bureau of Customs
utilizes Home Consumption Value (HCV).  This permits arbitrary
valuation which in many cases (according to extensive anecdotal
evidence) does not reflect the selling price.  Valuation is
inconsistent from country to country.

    The government has committed to replace HCV to conform to
its GATT obligations.  The shift is to be phased in over
several years, first by a move to a modification of the
Brussels definition of value in 1995.  Legislation to replace
the HCV system is pending before the Congress, and it is
doubtful that a change will be implemented before the year
end.  The Philippines is not a signatory to the GATT Customs
Valuation Code.

6.  Export Subsidies Policies

    Enterprises (dominated by exporters) which register with
the BOI to obtain incentives are entitled to tax and duty
exemptions under the Philippine Omnibus and Investment Code of
1987.  These include income tax holidays, tax and duty 
exemptions for imported capital equipment, as well as tax
credits for purchases of domestically sourced capital equipment
and raw materials.  Export traders are entitled to tax credits
for imported raw materials required for packaging.

    Financing is available to all Philippine exporters and
there is no preferential rate for domestic companies.  Without
prior BSP approval, exporters may avail themselves of foreign
currency deposit unit (FCDU) loans from local commercial banks
up to 100 percent of the letter of credit, purchase order or
sales contract.  To cushion the impact of a strong peso
(between January and August 1994 the peso appreciated against
the US dollar by five percent from 27.724 to 26.313), the BSP
further eased export financing rules.  Recently, FCDU loans
were made available also to indirect exporters who are now
allowed to spend the dollar loan to cover not only their dollar
requirements, but also their peso requirements provided
proceeds of the loans will be used for the production of export

    An Export-Import Banking Program of the Development Bank of
the Philippines, launched primarily to address the needs of the
exporting community, reduced interest rates from 13 to
11.5 percent between August and September 1994.  In particular,
export-oriented activities that are labor-intensive and which
will utilize local raw materials benefit from this program. 
The Philippines is a signatory to the GATT Subsidies Code.

7.  Protection of U.S. Intellectual Property

    While Intellectual Property Rights (IPR) protection is
improving, serious problems remain, and the issue remains a
bilateral trade concern.  Current penalties for infringement
and counterfeiting are not real deterrents.  Insufficient
funding hampers the effective operation of agencies tasked with
IPR enforcement.  Joint government-private sector efforts have
improved administrative enforcement, but when IPR owners must
use the courts, enforcement is slower and less certain.

    In February 1993, President Ramos created the Inter-agency
Committee on Intellectual Property Rights as the body charged
with recommending and coordinating enforcement oversight and
program implementation.  The Philippine government is a party
to the Paris Convention for the Protection of Industrial
Property, the Patent Cooperation Treaty, and the Bern
Convention for the Protection of Literary and Artistic works. 
It is a member of the World Intellectual Property Organization.

    The Philippines was moved from the U.S. Trade
Representative's special 301 "priority watch list" to the
"watch list," following a bilateral IPR agreement signed in
April 1993 which commits the Philippine government to improve
its legislative protection and to strengthen enforcement
significantly.  The Philippine government has generally
complied with the agreement, except for legislative
improvements.  Legislation incorporating all legislative
commitments under the bilateral was targeted for submission to
Congress before June 1994.  The government did not, however,
meet the deadline, but remains committed to submitting the

    Patents:  The present law recognizes the possibility of
compulsory licensing two years after registration with the
Patent, Trademark and Technology Transfer Board, if the
patented item is not being utilized in the Philippines on a
commercial scale, or if domestic demand for the item is not
being met to an "adequate extent and on reasonable terms." 
Compulsory licensing is easier for pharmaceutical and food
products, because use, inadequate production for domestic
demand, etc. need not be established.  In the bilateral IPR
agreement of April 1993, the government committed to submit to
the Philippine Congress an amendment to the patent law which
will allow importation to satisfy "working requirements" for
patented goods.  Starting March 15, 1993, rules on royalty
payments were relaxed somewhat, granting automatic approval for
royalty agreements not exceeding five percent of net sales. 
Royalty rates higher than five percent may be allowed in
meritorious cases.  Naturally occurring substances (plants or
cells, for example) are not patentable.

    Trademarks:  Trademark counterfeiting is widespread.  Many
well-known international trademarks are copied, including denim
jeans, designer shirts, and personal beauty and health care
products.  Some US firms--for example Disney--have had success
in curbing piracy in cooperation with Philippine enforcement
agencies.  The National Bureau of Investigation (the Philippine
equivalent of the FBI) has been cited by the private sector for
its excellent cooperation recently in conducting raids against
trademark violators.  Under the terms of the U.S.-Philippine
IPR agreement, the government will seek amendments to the
Philippine trademark law to provide protection for
internationally well-known marks.

    Philippine law requires trademark owners to file an
affidavit of use or justified non-use with the Patents,
Trademark and Technology Transfer Board every five years to
avoid cancellation of trademark and registration.  Non-use of a
mark must be for reasons totally beyond the control of a
registrant.  (Import bans, for example, constitute justified
non-use.)  Current practice provides that internationally
well-known marks should not be denied protection because of
non-registration or lack of use in the Philippines.  Pending
legislation seeks to incorporate this practice into Philippine
law.  Trademark protection is limited to the manufacturing or
marketing of the specific class of goods applied for, and to
products with a logical linkage to the protected mark.

    Copyrights:  Philippine law is overly broad in allowing the
reproduction, adaptation or translation of published works
without the authorization of the copyright owner.  A
presidential decree permits educational authorities to
authorize the reprint of textbooks or other reference materials
without the permission of the foreign copyright holder, if the
material is certified by a school registrar as required by the
curriculum and the foreign list price converts to 250 pesos
(about US $10) or above.  This decree, especially for
textbooks, is inconsistent with the appendix of the 1971 text
of the Berne Convention.  However, the Philippine government is
expected, under the terms of the bilateral IPR agreement with
the U.S. reached in April 1993, to correct these deficiencies
through accession to the Paris Act of the Berne Convention, and
through amendments to its domestic legislation.

    Video piracy is a serious problem, but has declined from
about 80 percent of the market a few years ago to about
60 percent now.  The government's Videogram Regulatory Board
(VRB) is tasked with fighting video piracy.  Due to budget
constraints, the bulk of its efforts are focused in Metro
Manila.  Copyright protection for sound recordings, currently
30 years, is shorter than the internationally accepted norm of
50 years.  The government has committed to submitting
amendments to the Philippine Congress to bring the term of
copyright protection into conformity with international norms. 
Industry sources estimate that piracy of recorded music--mostly
cassettes, although imported pirated CDs from the UAE and China
are starting to show up in Metro Manila shops--has fallen to an
average of about 40 percent.  About 98 percent of all computer
software sold is pirated.  Computer shops routinely load
software on machines as a free "bonus" to entice sales.  The
Philippine government is probably the largest user of pirated
software, although some agencies are reportedly considering
shifting to legitimate versions.

    New Technologies:  Many shops rent video laser discs
purchased at retail stores in the United States without payment
of commercial rental fees.  More recent issues involve
copyright infringement complaints against cable television
stations which re-transmit copyrighted works without
authorization from or payment to the copyright owners.  The
bilateral IPR agreement of April 1993 commits the government to
fully enforce the protections afforded to audio-visual works
under Philippine laws and regulations.

8.  Worker Rights

    a.  The Right of Association

    The right of workers, including public employees, to form
and join trade unions is assured by the Constitution and
legislation, and is freely practiced without government
interference throughout the country.  Trade unions are
independent of the government and generally free of political
party control.  Unions have the right to form or join
federations or other labor groupings.  Subject to certain
procedural restrictions, strikes in the private sector are
legal.  Unions are required to provide strike notice, respect
mandatory cooling-off periods, and obtain majority member
approval before calling a strike.  A 1989 law stipulates that
all means of reconciliation must be exhausted, and the strike
issue has to be relevant to the labor contract or the law.

    b.  The Right To Organize and Bargain Collectively

    The right to organize and bargain collectively is
guaranteed by the Philippine constitution.  The Labor Code
protects and promotes this right for employees in the private
sector.  The same right is extended to employees in
government-owned or controlled corporations.  A similar but
more limited right is afforded to employees in most areas of
government service.  Dismissal of a union official or worker
trying to organize a union is considered an unfair labor 
practice.  Nevertheless, employers sometimes attempt to
intimidate workers by threats of firing or closure.  Although
labor law and practice are uniform throughout the country,
including export processing zones (EPZs), unions have been able
to organize workers in only one of the EPZs.  Work stoppages
and total man-days lost to labor strife have been trending
downward, with 64 work stoppages (involving 390,000 workdays)
recorded in the first 8 months of 1994.  On an annualized
basis, this suggests current year totals some 20 to 30 percent
lower than those in 1993.

    c.  Prohibition of Forced or Compulsory Labor

    The Philippines prohibits forced labor.  As the world's
foremost "exporter" of both unskilled and trained labor, it is
sensitive to reports of abuse of Philippine workers overseas.

    d.  Minimum Age for Employment of Children

    Philippine law prohibits the employment of children below
age 15, except under the direct and sole responsibility of
parents or guardians, or where employment in
cinema/theater/radio or television is essential.  The
parent/guardian or employer is required to ensure the child's
health, safety, and morals, to provide for the child's
education or training, and to procure a work permit.  The Labor
Code allows employment for those between the ages of 15 and 18
for such hours and periods of the day as are determined by the
Secretary of Labor but forbids employment of persons under
18 years in hazardous work.  However, a significant number of
children are employed in the informal sector of the urban
economy or as field laborers in rural areas.

    e.  Acceptable Conditions of Work

    The Minimum Wage Act of 1989 authorized Tripartite Regional
Wage Boards to set minimum wages.  Rates were last revised in
late 1993, with the highest in Manila and lowest in rural
regions.  The minimum wage for workers in the National Capital
Region (NCR) was approximately US $5.60 (145 pesos) per day. 
Wage boards outside the NCR, in addition to establishing lower
minimum levels, also exempted employers according to such
factors as establishment size, industry sector, involvement
with exports, and level of capitalization.  This approach
excludes substantial numbers of workers (especially
agricultural workers, domestics, laborers, janitors,
messengers, and drivers) from coverage under the law.  Detected
minimum wage violations surged in the immediate aftermath of
1993 rate revisions, when inspectors found one in four
employers paying less than the minimum.  The standard legal
work week before overtime is 48 hours for most categories of
industrial workers and 40 hours for government workers.  The
law mandates a full day of rest weekly and overtime for any
hours worked over an eight per day limit.  Employees with more
than one year on the job are entitled to five days of paid
annual leave.  A comprehensive set of occupational safety and
health standards exists in law.  Enforcement statistics suggest
a downtrend in "technical safety standard" violations, from
20 percent of inspected units in 1992 to 18.2 percent in 1993,
and 15.4 percent in the first five months of 1994.  Statistics
on work-related accidents and illnesses are incomplete, as 
incidents (especially in regard to agriculture) are

    f.  Rights in Sectors with U.S. Investment

    American and other established multinational firms apply
U.S., European, or Japanese standards of worker safety and
health to meet the requirements of their home-based insurance
carriers.  They also treat their work force according to
professional employee management principles.  Firms in the EPZs
have resisted efforts to unionize their workers.

  Extent of U.S. Investment in Selected Industries.--U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993

                    (Millions of U.S. dollars)
              Category                          Amount          

Petroleum                                               (1)
Total Manufacturing                                     960
  Food & Kindred Products                   275
  Chemicals and Allied Products             386
  Metals, Primary & Fabricated               27
  Machinery, except Electrical               -2
  Electric & Electronic Equipment           161
  Transportation Equipment                    0
  Other Manufacturing                       114
Wholesale Trade                                         151
Banking                                                 368
Finance/Insurance/Real Estate                           (1)
Services                                               -196
Other Industries                                          6
TOTAL ALL INDUSTRIES                                  1,170    

(1) Suppressed to avoid disclosing data of individual companies
Source: U.S. Department of Commerce, Bureau of Economic


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