McKinney&Company

Research Report
Submitted to Professor Jos Miguel Costa on 20/05/2015

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McKinney&Company

Where to go?
The West versus The East
Entering Chile or the Philippines

Institute of Corporate Research

Lisbon
May 2015

ABSTRACT
COOPERATE, a producer of copper wire and tubes, needs to relocate its production from
Portugal to one of two countries: either Chile or The Philippines, in order to reduce costs. Our team
performed an analysis concerning the most important features that can directly or indirectly influence
the company during and after its establishment. Subjects such as political relations and stability,
economic performance, labour market, institutions, culture, infrastructures, transportations, taxation
and incentives were analysed for both countries. Chile, as developed country, presented stronger
economic and legal systems accompanied by robust political relations as well as better institutions and
more skilled labour. On the other hand, the prospects for The Philippines are better, it is a growing
economy with cheap labour, more attractive incentives, and more stable exchange rate. Our team
reached the conclusion that The Philippines was more suitable for the investment due to two key
factors: cheaper labour force and the banishment of mineral ores export (applicable to the companys
suppliers).

Research Report by
Diva Oliveira, Associate, 12005
Joo de Arajo, Associate, 12607
Milton Figueira, Associate, 12048

Table of Contents
Introduction .................................................................................................................. 2
Methodology ................................................................................................................. 3
To the West: Chile ........................................................................................................ 4
o International Politics and Economic Ties ............................................................ 4
o Investment Opportunities ...................................................................................... 4
o Economic Overview................................................................................................ 5
o Labour Force .......................................................................................................... 5
o Institutions and Governance ................................................................................. 6
o Culture..................................................................................................................... 7
o Transports and Infrastructures ............................................................................ 7
o Taxation and Incentives ......................................................................................... 7
To the East: The Philippines ....................................................................................... 9
o International Politics and Economic Ties ............................................................ 9
o Investment Opportunities ...................................................................................... 9
o Economic Overview.............................................................................................. 10
o Labour Force ........................................................................................................ 10
o Institutions and Governance ............................................................................... 11
o Culture................................................................................................................... 12
o Transports and Infrastructures .......................................................................... 12
o Taxation and Incentives ....................................................................................... 13
Conclusion ................................................................................................................... 13
References ................................................................................................................... 15
Appendix ..................................................................................................................... 18

The Client
The client is called COPPERATE Inc., a large company established in southern Alentejo,
Portugal. The company is a producer of copper wire and tubes and currently sells half of its production
in Europe, 30% in Africa and 20% in Latin America. Moreover, it runs a sole unit of production, i.e.
factory, plus the regular administrative office, which comprises functions from finance to operations.
In total, it involves 358 employees, excluding the CEO.
The production process (Appendix A) is the following: mining firms extract copper ore from
mines, which afterwards is bought locally by COPPERATE. This raw material is then smelted and
refined

(purified)

and

finally

shaped

into

wires

and

tubes

of

different

diameters.

McKinney&Companys team was hired to advise its client COPPERATE into deciding whether to
move to Chile or the Philippines, countries previously selected by the company.

Introduction
In order to answer the clients demands, McKinneys team decided to macro and micro
analysing each selected country by the CEO. The objective was to compare and contrast both business
environments so as to help deciding which of the two countries would ultimately be the best option for
COPPERATE to expand to.
In this report, you may find mirrored information about the two countries regarding the
following topics: International Politics and Economic Ties, Investment Opportunities, Economic
Overview, Labour Force, Institutions and Governance, Culture, Transports and Infrastructures, and
Taxation and Incentives.
McKinney exerted the effort so as to find out the best location for COPPERATE to set up its
new manufacturing facility. Moreover, the CEO clarified that all production in the new location is to
be exported to different places all over the globe (keeping current sales distribution). He still added
that the company wants to set up a production unit with capacity for nearly trice its current employees,
at least a thousand (hired locally), from scratch. As observable, we are dealing with a green-field
investment.

Methodology
This chapter shall discuss the research methods used for the report and what is applicable for
us to use to decide between both business environments.
Our research was based on information collected from papers and several websites.
Moreover, our team contacted both Embassies so as to foster discussion and ask for their contribution.
Both of them respectfully answered us, providing us with a series of resources. The team went on a
meeting with Mr. Gines Gallaga, First Secretary and Consul General of The Philippines in Portugal,
on the 21st April of 2015.
In the name of McKinney&Company, the team recognizes their support and help, therefore
thanking them for its participation.

To the West: Chile

Chile is a country located in South America, whose capital is Santiago. It has a particular
strategic location relative to the South Pacific Sea and neighbouring Peru, Bolivia and Argentina.
According to the estimates of census 2014, it has a population of about 17 millions. The official
language is Spanish and 10,2% of population speaks English and, regarding religion, 66.7% are
Roman Catholic and 16.4% are Evangelical or Protestant (CIA, 2014). The currency in Chile is the
Chilean Peso (XE, 2015).

International Politics and Economic Ties

Chile is an active participant in many important international organizations, including the
United Nations, Organization of American States (OAS), Asia Pacific Economic Cooperation
(APEC), Organisation for Economic Development and Cooperation (OECD), International Monetary
Fund (IMF), World Bank, the World Trade Organisation (WTO), Union of South American States
(UNASUR), Caribbean States (CELAC) and is also member of a regional trade block called Pacific
Alliance (CIA, 2014).
Moreover, Chile was the first South American country setting up diplomatic ties with China,
in 1970, and its interest in trading with Asia has been supported by a growing list of free-trade and
economic agreements, mainly with China, Japan, South Korea, Vietnam, Hong Kong and Malaysia.
(Appendix B)

Investment Opportunities
The most attractive investment opportunities in Chile are in sectors such as mining, services,
food industry, construction, tourism and energy.
Regarding the mining sector, Chile has gained the name of a mining country and it is the
worlds main producer of copper (32%) and accounts for 28% of global copper reserves. In terms of
investment attractiveness, mining companies are planning to invest beyond the huge amount that it
accumulates by now (CIE Chile, 2015).

Economic Overview
Chile is universally recognized for his solid economic growth. According to World Bank data,
its GPD was approximately US$ 278 billion in 2013 and there is an estimated GDP growth of 4.1%
annually (Ernst & Young, 2013). Chile, in 2014, had an inflation of 4.4% in terms of consumer goods
(World Bank, 2014). Regarding sovereign debt and credit rating, both are considered to be stable by
S&P (Trading Economics, 2015). As for exchange rates, 1 euro currently trades for 671,59 pesos
while 1 dollar trades for 603,89 pesos. Over the last 10 years it has been having an irregular behaviour
(against the euro) (XE, 2015) which does not provide much confidence to investors such as
COPPERATE (Appendix C) who seek long term stability.
According to the Doing Business ranking, Chile moved to the 27th position in 2012 thus
representing an interesting opportunity to start a business and to attract foreign investment. 18% of the
acceleration of GDP growth between 2010 and 2012 is due to the start of new businesses. Still
according to the World Bank, Chile currently ranks 41st for Ease of Doing Business, 59th for Starting a
Business and 40th for Trading Across Borders.
The flows of foreign direct investment in Chile had been growing since 2010 and have now
reached the countrys record levels (Appendix D). According to the UNCTAD, in 2014 Chile ranked
17th in terms of FDI attractiveness (11th in 2012) (Appendix E). Most of these positive perspectives
are explained due to Chiles macro-economic stability, its growth perspective, the low level of risk
(Appendix F) and openness to trade.
Regarding Chiles natural resources, copper has been attracting many investors, being the
reason for 44,9% of total FDI between 2009-2013 (Appendix G).

Labour Force
In 2005, 34,7% the Chilean workers were overqualified for its current work and 15% were
underqualified for their jobs (OECD, 2015). The unemployment rate in the industry sector is 5,7%
which means practically full employment (MacroPress, 2012).
Chiles minimum monthly wage is equivalent to 427,79 USD. Still, the minimum working age
is 18, so to contract 16-17 year-old employees, the company must sign contracts that guarantees the
safety and development of these workers. The ratio of minimum wage to value added per worker is
relatively low (0,23), indicating high productivity (World Bank, 2015).

Chile ranked 64th in Enforcing Contracts, which is important to assure labour contract are
respected, as well as other contracts such as supplying contracts (World Bank, 2014). There is no
premium for night work or for working at weekly rest days that allows the factory to operate 24/7 with
no extra costs. Moreover, the standard workday is 9 hours per day for a maximum of 6 days a week
(World Bank, 2015). (Appendix H)
The social security system in Chile is dominated by private fund chosen by the workers.
Nonetheless, employers are obliged to pay 10% of the workers gross salary to the pension fund
administrator. Workers can make voluntary contributions to boost their pension, if they wish
(InterNations, 2014). Besides pension funds, employees must also pay 7% (of gross salary) to the
workers health institution (Rodriguez, Droguett, & Posa, 2012).

Institutions and Governance

In the 1990s Chile was subject to reforms, which made increase its macroeconomic stability as
well as its financial development. It is one of the most economically developed of Latin America and
the one with the highest financial development and strongest banking system. However, these reforms
were also structural meaning that they reformed institutions themselves. This fact not only reinforced
the Chilean success but also made it sustainable. Nowadays, Chilean institutions quality is
considerably high in comparison to other countries. With better institutions property rights
protection, governance, decrease in corruption and bureaucracy, rule of law, among others Chile was
able to better design policies, and enhance the support, credibility and effectiveness of implemented
policies (Corbo, Hernndez, & Parro, 2005).
Nevertheless, some problems still remain. The public administration has weak and inefficient
incentives and regulation mechanisms. Moreover, even though its political regime is a democratic
republic, the state does not take public opinion much into account. Therefore it does not provide
taxpayers with information about the usages of their taxes. In addition to that, a political elite that
comes from a narrow circle of families not only concentrates political but also economic power in
Chile. Nonetheless, corruption is lower than in other Latin America countries. Chilean legal
procedures and its judicial systems structure are considerably inefficient. Furthermore, Chile has an
oligopolistic media system strongly biased in the representation of different political, social and
economic opinions. Moreover, it is a very centralized country where both political and economic
powers are controlled in Santiago. Therefore, this is the area where COPPERATE should locate its
new facilities if Chile turns out to be the most favorable location (Saavedra & Soto, 2004).

Culture
Using the cultural dimensions identified by Geert Hofstede (Appendix I), Chile scored 63 out
of 100 in power distance which is lower than most of other Latin American countries but still an
intermediate to high position on this dimension. This can be explained by the hierarchical social
structure and common privileges for the power holders. For Individualism, it scored 23, which
indicates Chile is a more collectivist society. The Uncertainty Avoidance dimension is at 86,
indicating a strong preference to establish rules and structure life. It is also evident a feminine
character of Chilean society and a sense of belonging within the group (28 for masculinity). As for
long-term orientation, Chile scored 31 that represent a normative culture and its society is considered
to have a positive attitude and to be optimistic (Hofstede, 2012).

Transports and Infrastructures

Chile is globally connected with airports, highways, ports and telecommunication. According
to the World Factbook of CIA (2014), it has 7,082 km of railways, 1 Heliport, 3160 km in gas
pipelines, 985 km in oil and 722 km in refined products. Denser network are located near Santiago,
where goods can be transported at lower prices (Export.gov, 2012). Regarding airports, in 2013 it kept
481. It is well served in terms of seaports, through which are sent 97% of its exports. The major
seaports are close to Santiago (Too Far To Export, 2013). According to the World Bank (World Bank,
2014) , the costs to export are, per container, equal to 910 USD. The average price of gasoline in
4/05/2015 is of 1.24 USD per litre (above the average 1.11 USD) (GlobalPetrolPrices.com, 2015).
Furthermore, Chile is the biggest producer of copper in the world (MineralsUK, 2015).
Consequently, COPPERATE would have access to a huge raw materials market, saving in transport
costs and tariffs.

Taxation and Incentives

In the Chilean tax system the corporate income tax is divided into a First Category tax of
22.5% and a Global Complementary Tax or Additional Tax of 35%. The latter one is only applicable
when the profits are distributed. On the other hand, the First Category tax is always paid, however it
can be credited when the profits are distributed. The Value-Added Tax (VAT) is 19%. The custom
duties to countries, which do not have a free trade agreement with Chile, are equal to 6%

For investments over 2.500.000 USD (as in COPPERATEs case) the investment would enter
through the Foreign Investment Statute Decree Law 600 (DL600). This would allow choosing
between the aforementioned general tax regime and the special tax regime. The latter assures a
corporate income tax of 42% for 10 years (20 years if the investment exceeds 50.000.000 USD), on
distributed income only. This means (7%) higher but constant taxes (not amendable). If the special tax
regime has been chosen, it can be waived at any time, but once waived cannot be restored (KPMG,
2009) (PwC, 2014).

To the East: The Philippines

The Philippines is an independent island country in Southeast Asia located in the western
Pacific Ocean, whose capital is Manila. It comprises 300,000 square km covered by 7,101 islands.
With a population of about 92.23 million people, according to the 2009 census estimate, it consists in
one of the most populated countries in the world. According to the official document provided by the
Board of Investment (BOI) of the country (2014), the official languages are Pilipino and English and
its currency is the Philippine peso. In terms of religion, the population is mostly constituted by a
majority of Catholics (82.9%). Lastly, its local time is GMT + 8 hours.

International Politics and Economic Ties

At this moment, The Philippines belongs to numerous international organizations, with the
objective of boosting international trade and political cooperation. Some of them are United Nations,
Association of Southeast Asian Nations (ASEAN) a free trade area consisting in a market of 600
million consumers, Asia-Pacific Economic Cooperation (APEC), Asian Development Bank (ADB),
other Bretton-Woods institutions such as WTO, World Bank and International Monetary Fund, among
others (CIA, 2014).
The Philippines tries to maintain close relations with its Asian neighbours, namely in
economic, trade and political matters. Although true, the Philippian Consul in Portugal argued that the
situation with China is quite tricky, as there are on-going territorial disputes (BBC, 2015). Still, he
states the importance of maintaining ties with China, one of the biggest economies in the world
therefore addressing geo-political risk will be a major challenge for the Philippian Government.
Regarding Japan and South Korea, he argues that there are major relationships with each one of them
and both are considered to be fundamental pillars for the Philippian growth (Gallaga, 2015).
(Appendix J)

Investment Opportunities
In 2013, its Gross Domestic Product was equal to 272.2 billion US$ (BOI, 2014). As a
member of Next Eleven, a group of eleven emerging countries identified by Jim ONeil, it is capable
of matching smaller G7 countries, if it keeps growing at an average 5% rate (Goldman Sachs, 2013).
According to the World Bank (2014), it currently ranks 95th for Ease of Doing Business, 161st
for Starting a Business and 124th for Trading Across Borders. When asked to rank the ease to do
business in the Philippines from 1 to 10, the Consul gave it a 7.5 (Gallaga, 2015). (Appendix K)

As an emerging economy, The Philippines currently holds numerous opportunities, as there

are privatization and liberalization initiatives in the electricity, water and waste sectors taking place
according to Board of Investment (2014). Some other opportunities were identified in mining, energy
and electronics and semiconductors sectors.

Economic Overview
Philippines was part of the East Asian growth miracle, emerging as a leading destination for
inward investment, mainly because of the countrys strong business process outsourcing (BPO) due to
its English speaking people (MarketLine, 2014) and the several business opportunities that
materialized along the way. Regarding the exchange rate, one US Dollar currently prices 44,29
Philippine Pesos while one Euro is worth 48,76. Over the last 10 years the exchange rate has been
relatively stable and it has been following an appreciating trend (Appendix L). As COPPERATE
exports more to America and Africa, there are other currencies to take into consideration besides these
two.

The Philippines has also been attracting a lot of Foreign Direct Investment. FDI flows
increased almost 100% from 2011 to 2013 (Appendix M), and the main invested sectors in 2013 were
manufacturing sector (28,3%) and electricity, water and gas (27,2%) (Export Entreprises SA, 2015).
According to the World Bank (2015), the country won investment grade ratings from major
credit rating agencies as a result of sound macroeconomic fundamentals as sustained growth, inflation
of 4,1% and sound fiscal management (Appendix N). Not only it keeps building up its economy but it
has also proved to be resistant to food and fuel price hikes, the impact of typhoons and El Nio. Its
highly skilled, tech-savvy and educated work force made the Philippines a favoured investment
destination in 2013, according to the countrys Board of Investment (2014).

Labour Force
The Philippian Consul in Portugal (Gallaga, 2015) confirmed that it is unquestionably easy to
find skilled workers. The literacy rate is really high, reaching 95,4% (CIA, 2014). According to him, it
is one of the main reasons to do business in Philippines, using the motto Your Business, Our People.
The unemployment in the Philippines ranged from 6% to 8% in the last few years (Trade Economics,
2015). It seems a considerably low percentage but there is no unemployment protection scheme,
which worsens the situation.

10

The minimum wage for a full-time worker is around 304,93 US$, which is considerably low.
Still, according to the Consul, we have to consider that minimum wage depends on the regions. The
standard workday is 8 hours per day for a maximum of 6 days a week. The ratio of minimum wage to
value added per worker is considerably high (0,69) (World Bank, 2015). As for social security, the
employer is demanded to pay 7,37% and the employee pays 3,63%. Moreover, each one is demanded
to contribute with 1.25% of monthly salary credit for National Health Insurance Programme (First Life
Financial Company, 2015).
Due to its Latin and American heritage, the labour laws are strongly based in the Western
system. There are court sections specialized in labour disputes (World Bank, 2015). There is strong
protection of whistle-blowers; people that are an informant or that have knowledge of information that
constitutes of corruption. Although it seems to be on the right track, Philippines ranked a poor 124th
place in Enforcing Contracts, according to World Bank (2014).
Regarding property, the Philippian constitution does not allow foreign ownership of land; 50year leases are one way to solve the problem, according to the Consul (Gallaga, 2015). As for
environmental laws, the Environmental Management Bureau IX (2009) defined a document
explaining the importance of such laws in protecting and aiding people from all walks of life in pursuit
of balance and healthful ecology (Philippine Environmental laws).

Institutions and Governance

The political instability, mostly due to historic reasons and the dictatorship that took place
between 1972 and 1996, substantially decreased with the ruling of the liberal Party in both houses of
Congress. As a democratic and capitalist country, its economic policy is free trade, hoping that it is the
way to drive the economy.

Furthermore, Aquino, the current President, proposed legislative bills on priority basis
covering business, and pushing the economy to deal with its issues mainly to tackle limitations for
foreign investments and to boost the ease to do business (MarketLine, 2014).
Once known as the sick man of Asia, due to bad management, corruption and poverty, it is
now

getting

better

since

Aquino

took

the

steering

wheel

(MarketLine,

2014).

The current market conditions as high commodity prices, low real interest rates, solid global growth
and low market volatility favour the Philippian market (MarketLine, 2014).

11

In terms of market development, namely equities, interest rates and foreign exchange, it is
rated as relatively limited liquidity for the first two and there are still some capital restrictions in place
for foreign exchange but recently announced reforms and liberalizations might change this figure
(Goldman Sachs, 2007).

Culture
For this part, we assessed the 6 dimensions defined by Geert Hofstede, which you can find in
Appendix I. Regarding power distance, The Philippines was considered to be a hierarchical society,
where everyone has a place and there is no justification for things being that way. In terms of
individualism, it is considered to be a collectivistic society. The society is also considered to be
relatively pessimistic (indulgence). Moreover, it was classified as a masculine society, where
managers need to be assertive and decisive. As for long-term orientation, Philippines scored poorly.
There is a great respect for traditions and small propensity to save for the future (Hofstede, 2012).

Transports and Infrastructures

According to The World Factbook of CIA (2014), The Philippines possesses 995km in
Railways, 2 Heliports, 567 km in gas pipelines, 138 km in oil and 185 km for refined products. By
2013, it also kept 247 airports, mainly due to its geographic dispersion along the Pacific. There are 3
major ports, former US navy bases, and distribution is considered to be good, if you are located at an
industrial zone.
The consul (Gallaga, 2015) mentioned that utility and power costs are relatively high.
Multiple investments are being made in the Electricity, Gas, Steam and Air-conditioning Supply
sector, so as to change this figure. According to the 2013 Annual Report provided by the Consul,
47.51% of all investments approved between 2013 and 2013 were in this sector. Although electricity
and gas costs are considered to be high, gasoline is fairly cheap, costing 0.98 USD per litre, far below
the world average price of 1.11 USD per litre (GlobalPetrolPrices.com, 2015). Finally, the costs to
export are, per container, equal to 755 USD, according to the World Bank (2014).
The Philippines are the 23rd biggest producer of copper ore worldwide and has the fourth
largest copper reserves (Oxford Business Group, 2014). Moreover, it is banned since 2014 to export
mineral ores (Cruz, Francisco, & Pullin, 2014). Therefore, COPPERATE would not only have more
bargaining power but would also have a guarantee of a raw material market that is nearby, keeping
transportation costs low.

12

Taxation and Incentives

The corporate tax rate, the tax paid over the profits by the firm, is equal to 30%. The sales tax,
also known as the tax over the added value (VAT), is equal to 12% (PwC, 2012). There is also a fixed
environmental tax of 225 USD. The average custom duty tax is 7,07% (general) and 6,24% for
manufacturing products (MOFCOM, 2010). Still, there are free zones in the Philippines, which have
few or no taxes such as this (Gallaga, 2015).

Conclusion
Starting with a general analysis of each countrys environment, Chile has advantage regarding
institutions, ease of doing business and is legally more suited to investment. It has a stronger economy,
however, since the Philippines is a developing country it might outperform Chile in the long run.
Furthermore, the Philippines have more attractive incentives to FDI and a stable and appreciating
exchange rate (against the Euro). This makes COPPERATEs investment in Philippine Peso increase
value over time.
Analysing the specific case of COPPERATE, though Chile has the greatest raw materials
market in the world, the Philippines raw material market is closed, cannot export. This is one of the
most important points, as COPPERATE is going to be a big facility negotiating with suppliers that
must sell their production intranationally (inside the country). Therefore its bargaining power will be
much greater than in Chile, where suppliers are huge exporting companies. Intranational transport
costs are also lower in the Philippines, justified by lower fuel costs and suitable infrastructures that
better connect COPPERATEs facility with suppliers.
Although Chile has more skilled workers, wages are considerably lower in the Philippines,
which turns out to be an interesting advantage for COPPERATE. As more than 1000 new employees
will be hired, these lower costs are of great importance in the decision-making process. Besides that,
social security contributions are lower in the Philippines.
Finally, regarding taxation, if COPPERATEs intention is to have high pay-outs, Philippines
taxation system is more favourable. If the opposite applies, Chile will be a better option. Finally,
although Chile has more trade agreements, the costs to export are lower in the Philippines, which are
considerably important taking into consideration that COPPERATE wants to export all of its
production.

13

All in all, our team has considered The Philippines to be the right choice, mainly due to the
banned exports of mineral ore, low labour cost and lower exportation cost. For a detailed analysis of
the decision-making process, we advise you to consult Appendix O, P and Q. Plus, the proposed way
to export and the tariffs under the most-favoured-nation are presented in Appendix R.

14

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Economics: http://www.tradingeconomics.com/country-list/rating
World Bank. (2014). Cost to export (US$ per container). Retrieved from World Bank:
http://data.worldbank.org/indicator/IC.EXP.COST.CD
World Bank. (2014, June). Economy Rankings. Retrieved from Doing Business:
http://www.doingbusiness.org/rankings
World Bank. (2014). Inflation, consumer prices (annual %). Retrieved from World Bank:
http://data.worldbank.org/indicator/FP.CPI.TOTL.ZG/countries
World Bank. (2015). Labor Market Regulation. Retrieved from Doing Business:
http://www.doingbusiness.org/data/exploretopics/labor-market-regulation
World Bank. (2015). Philippines Overview. Retrieved from World Bank:
http://www.worldbank.org/en/country/philippines/overview
XE. (2015). CLP - Chilean Peso. Retrieved from XE: http://www.xe.com/currency/clpchilean-peso

17

Appendix
Appendix A Value Chain of the Copper Wire and Tube Markets

LAUNCH TO
THE
MARKET

Refined copper
COPPERATE

Copper wire/
tube
COPPERATE

Copper ore
Mining firms
(suppliers)

INTERNATIONAL TRADE AND

COOPERATION

Appendix B International Trade and Cooperation Chile

18

APEC

Economic
Alliances

Mercosur
Pacific Alliance

BrettonWoods
Institutions

WTO
WB
IMF
UN

Other
international
organizations

OAS
OECD
UNASUR
CELAC

Other Freetrade and

Economic
Agreements

China
Japan
South Korea
Hong Kong

Appendix C Exchange rate EUR/CLP over the last 10 years

Appendix D Foreign Direct Investment: Chile

FDI Inward Flow

2011

2012

2013

23,444

28,542

20,258

172,699

206,021

215,452

72

84

96

(million USD)
FDI Stock (million
USD)
Number of greenfield
Investments

Source: https://en.santandertrade.com/establish-overseas/chile/foreign-investment

19

Appendix E The top 20 host economies 2012

Appendix F Chiles sovereign ratings (As of May 2013)

Fitch Ratings

A+

Standard & Poors

AA-

Moodys

Aa3

Source: Trading Economics

20

Appendix G FDI in Chile by Sector, 2009-2013

Appendix H Doing Business in Chile

Source: http://www.doingbusiness.org/data/exploreeconomies/chil

21

Appendix I Hofstede 6 Dimensions for The Philippines and Chile

Source: http://geert-hofstede.com

INTERNATIONAL TRADE AND

COOPERATION

Appendix J International Trade and Cooperation Philippines

22

ASEAN

Economic
Alliances

APEC
ADB
WTO

BrettonWoods
Institutions

Political
Relationships

WB
IMF
UN
China
Japan
South Korea
United States

Appendix K Doing Business in The Philippines

Source: http://www.doingbusiness.org/data/exploreeconomies/philippines

Appendix L Exchange rate EUR/PHP over the last 10 years

23

Appendix M Foreign Direct Investment Philippines

FDI Inward Flow

2011

2012

2013

2,007

3,215

3,860

25,480

28,687

32,547

74

90

100

(million USD)
FDI Stock (million
USD)
Number of Greenfield
Investments

Source: https://en.santandertrade.com/establish-overseas/philippines/foreign-investment

Appendix N The Philippiness sovereign ratings (As of May 2013)

Fitch Ratings

BBB-

Standard & Poors

BBB

Moodys

Baa2

Source: Trading Economics

Appendix O Why we chose The Philippines

MARKET OPPORTUNITY
BANNED EXPORT OF
COPPER ORE
INCREASED
BARGAINING POWER
OVER SUPPLIERS
MINING SECTOR ON
THE RISE

LOWER COSTS
VISION
LOWER WAGES
BETTER INCENTIVES
LOWER SOCIAL
SECURITY
CONTRIBUTIONS
LOWER TAXATION

24

EMERGING COUNTRY
FAST GROWING
ECONOMY
ECONOMIC REFORMS

Appendix P Face-to-face 1

25

Appendix Q Face-to-face 2

Chile

The Philippines

ECONOMY & GROWTH

Population

17,363,894

92.23 million

$277.2 billion

$272.1 billion

15,732.3

2,765.1

4.1%

7.2%

32.6%

27.9%

4.4%

4.1%

20,258

3,860

215452

32,547

Democratic Republic

Democratic Republic

Free Trade/Capitalist

Free Trade/Capitalist

Local Currency Rating

AA+

BBB

Foreign Currency Rating

AA-

BBB

T&C Assessment

AA+

BBB+

GDP (US$ 2013)

GDP per capita
(current US$ 2013)
GDP growth
(% annual 2013)
Exports of goods and services
(% GDP)
Inflation, consumer prices
(annual % 2014)
FDI Inward Flow
(million US$ 2013)
FDI Stock
(million US$ 2013)
POLITICAL REGIME
TRADE POLICY

RATING LIST: STANDARD

AND POORS

Most attractive sectors:

Mining, services, food

Mining, energy,

industry, construction,

electronics and

tourism, energy

semiconductors sector

RANKINGS
Ease of Doing Business

41

95

Starting a Business

59

161

Trading Across Borders

40

124

26

Enforcing contracts

64

124

IMD Competitiveness

31

48

20

105

34

86

427,79

304,93

Railways

7,082 km

995km

Airports

481

247

US$ 1.24 per litre

US$ 0.98 per litre

19%

12%

22.5%

30%

40%

5%-32% (progressive)

Scoreboard 2013

Corruption Perceptions Index

2012b
The Networked Readiness
Index 2014c
LABOUR
Minimum wage $US
TRANSPORTS &
INFRASTRUCTURES

Gasoline price (4/05/2015)

TAXATION
VAT
Corporate Tax Rate (2015)i
Income Tax Rate
Environmental tax (US$)

225 (fixed)

The World Competitiveness Scoreboard presents the 2014 overall rankings for the 60 economies

covered by the WCY. The economies are ranked from the most to the least competitive
b

http://www.transparency.org/cpi2012/results

The Networked Readiness Index measures, on a scale from 1 (worst) to 7 (best), the performance of

148 economies in leveraging information and communications technologies to boost competitiveness

and well-being

27

Appendix R How to do it from The Philippines

http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-ratestable.aspx

28

Name: Diva Oliveira

Date of entry: 9th September 2012

Background: BSc in Management

Areas

This page was intentionally left blank

TEAM
Name: Diva Oliveira

Date of entry: 9th September 2012

Background: BSc in Management

Areas of expertise: Marketing, Strategy

Name: Joo de Arajo

Date of entry: 9th September 2013

Background: BSc in Management

Areas of expertise: Finance, Strategy

Name: Milton Andrade Figueira

Date of entry: 9th September 2012

Background: BSc in Management

Areas of expertise: Finance, Strategy