Importing in the Philippines - A 101 guide for new entrepreneurs

Trade has long been the primary tool for encouraging a solid macroeconomic expansion in the Philippines. The country’s rising consumer income and soaring import demand are the best proof. Despite the COVID-19 pandemic, trade volumes have continued upward in the past few years. In turn, the country’s still attracting more entrepreneurs looking to fill in the rising demand for merchandise and consumer goods. If you’re looking to start importing in the Philippines, here’s a list of considerations. 

1. Fundamentals as a starting point

Entrepreneurship in the 21st century has its advantages but also some basic requirements. Arguably, the most crucial ones are creating a viable business plan outlining the mechanism for handling the rules and regulations in the market. In this case, starting entrepreneurship in the Philippines begins with creating a website and social media channels and registering as a business. In this regard, the Philippines have a standardized online system for business name registration.

Thereafter,  entrepreneurs wishing to start importing must acquire an Import Clearance Certificate from the Bureau of Internal Revenue. The Bureau of Customs (BOC) also imposes mandatory registration for all importers. Moreover, they must establish an account with the Client Profile Registration System (CPRS). An Import Clearance Certificate is part of the essential list of import documents for businesses importing into the Philippines.

2. Choice of product

Another crucial step is choosing a suitable product to import. Such a decision often requires thorough research of the market’s needs and demand. One of the most common mistakes new entrepreneurs make is to fail to identify a target market for their product. Usually, the best choices are products starting to become popular or showing decent potential.

It’s important to note that the Philippines follows the United Nation’s Standard International Trade Classification (SITC) with import tariffs that range from 0% to 65%. The average tax for non-agricultural goods is 6.7%. It is also worth noting that imported goods in sectors with high domestic production incur higher tariffs.

As the Philippines Customs have an application for value-added tax (VAT) on imported goods, which importers must account for. The VAT on imported goods imposed by the Philippines Customs is 12%, but entrepreneurs can benefit from no tariff or tax imposed on goods valued at less than P10,000 (US$200). Cash In Advance (CIA) policy is a common practice that allows importers to pay in advance. However, non-payment and delinquent accounts often spur businesses to use advanced collection agency services.

DHL Express solves such issues efficiently by offering Advanced Duties Collection (ADC). It allows users to safely pay their customs clearance duties online before shipping their goods. Consignees and receivers can get alerts on incoming deliveries and a detailed breakdown of the import costs. Ultimately, mobile and email messaging can help entrepreneurs maximize their cargo receiving process efficiency.

3. Viable suppliers

Finding viable suppliers delivering quality resources is the key to creating the ultimate product. Indeed, strong partnerships are crucial to ensure long-term success in the import business. However, such deals often require entrepreneurs to convince their suppliers to enter the market. Such agreements often require careful planning of the logistics and financial terms.

Fortunately, the Philippines is  very tolerant toward foreign businesses willing to outsource and export to the country. Moreover, the archipelago is a member of six regional Free Trade Agreements (FTAs), including one bilateral with Japan. The preferential tariff rates give entrepreneurs and micropreneurs an excellent opportunity to enjoy lower taxes when importing goods from the ASEAN members.

4.  Proper product pricing

Pricing products appropriately can significantly affect how businesses profit from importing goods. Typically, product pricing is derived from the supply and demand for the product. Pricing products too high may contradict what customers are willing to pay,  while low pricing can lead to financial instability and even bankruptcy for businesses. That’s why importers and exporters often take a 10% to 15% markup above the supplier’s pricing.

5. Customer reach

During COVID-19, social distancing and restrictions caused many brick-and-mortar businesses to close doors. But while the pandemic cracked down on traditional enterprises, online shopping and digital transformation became more popular. Many entrepreneurs and businesses increased their reach thanks to their vision. Digital marketing campaigns, IoT, and AI technology are merely a few ways to increase the number of customers.

6. Logistics

Undoubtedly, logistics is the most complex aspect of importing and exporting. Hiring trusted delivery service providers will typically ensure fast deliveries at preferential rates. In this regard, DHL Express is a leader in the industry that leverages the latest innovations in digital transformation. 

DHL Express’ Trade Automation Service (TAS), or Global Trade Services (GTS), empowers small businesses and growing e-commerce merchants to increase their global reach effortlessly. TAS is a set of free tools that helps small businesses understand the intricacies of international shipping, such as understanding custom duties, required paperwork, and determining classifications. With these tools, DHL Express aims to help small business entrepreneurs efficiently compete with larger enterprises, especially in global trading. 

Why is DHL the best choice for importation?

Following the start of the COVID-19 pandemic, fast and straightforward delivery services have grown increasingly crucial. DHL uses automated tools like on-demand delivery, the Trade Automation Service Toolkit, and advanced duties collection. These features guarantee efficiency, effectiveness, and convenience for customers and businesses. Discover the full range of DHL delivery services available in the Philippines and register an account with us today.