There is an incredible business opportunity to invest in the Philippine eCommerce sector.
Almost 86% of Filipinos use the internet to purchase through local eCommerce apps – that’s enough reason to start thinking about shipping to the Philippines.
Additionally, there is a market for cross-border eCommerce because of the nation’s growing middle class. More citizens have higher spending power and a growing population of tech-savvy Filipino youth.
Philippines internet users now order various products from the US and other countries, including cell phones, clothing, and jewelry. Research is essential before entering the Philippine market to minimize costly shipping and delays with foreign shipments.
US government research shows that the Philippines’ eCommerce business is expected to grow to $24 billion by 2025. The nation imported items worth $12.49 billion in June 2022 alone. China, Indonesia, Singapore, the Republic of Korea, Japan, and other countries with substantial import and export volumes are this country’s main trading partners.
Although there is a sizable demand for imports and exports in the Philippines, firms must follow certain stringent regulations. The import and export industry is relatively reliant on several variables, including clearances and selecting the best delivery partner.
Getting Started with Shipping to the Philippines
There is a strong demand for online shopping in the country. Even with the Philippines ranking 80th globally for mobile speeds and 40th for fixed broadband connections, digitally savvy Filipinos increasingly favor online shopping. There are several online selling platforms that Filipinos enjoy using. Shopee received 71.94 million site views between January and March 2022, according to Statista. Lazada received 36.55 million over the same period.
Shipping to the Philippines: Product Information
But before you can even begin to introduce your products to the Filipino eCommerce community, you must first understand what can be imported. The local government has regulations on specific items to maintain the stability of the economy as well as for health and safety reasons.
Products that can be freely imported without the need for any additional licenses or permits.
Products require certain permits, seller licenses, and clearances before being imported and sold. These include some food products, plant, animal, and aquatic products. Used motor vehicles will need additional declarations. Finally, the government strictly monitors the entry of electronics and tobacco products into the country and is strictly monitored by the government.
These items are not allowed for import and sale unless authorized by the law. Gunpowder and ammunition must go through a lengthy process before being sold locally. Marijuana, opium, and narcotics are subject to local anti-drug laws and are only legal to sell for very specific cases.
Products that are outright illegal for both importation and exportation. These include written propaganda materials for treason and rebellion and obscene images. Mislabelled food products and improperly labeled precious metals are prohibited by law.
The geography of the Philippines has a significant impact on what mode of transportation will be used for shipping. Over 7,000 islands comprise the nation’s archipelago, with more than 2,000 populated. Therefore, it should be no surprise that seaports are essential to its shipping infrastructure. With total container traffic of 7.9 million TEU in 2022 alone, seaports outnumber airports in terms of the volume of cargo handled and the number of ports.
Three main groups of islands make up the Philippines. These are the Luzon Islands, the Visayan Islands in the middle, and Mindanao in the south. Luzon is the most populous of the three islands. All three regions have major seaports and airports, which will serve as the gateway for your products when shipping to the Philippines.
Understanding the Costs when Shipping to the Philippines
You won’t be charged customs and taxes for your shipment if the value is less than the de minimis value of US$200 (around Php 10,000) for the Philippines. Any load exceeding a de minimis value will be subject to charges and taxes at customs. This is done to promote national consumption.
You will be responsible for paying additional customs and taxes if your cargo is valued at more than $200. This usually includes a value-added tax (VAT) or Goods & Services tax rate of 12%. Import duties can also range between 0-20%, which brings the total tax percentage up to 32%.
Even if you send items in multiple packages, remember that your sample computations will be based on all your shipments in a single day.
The type of products you plan to import will also affect the import fees. The Philippines uses a classification system for commodities known as the Harmonized System Classification of Commodities (HS Codes) to identify the types of imports into the nation. The Philippine government has an official online tariff finder. You may use this free tool to determine the duties that will be applied to your shipment depending on its HS Code.
To fully illustrate total landed costs, let’s say you plan to bring a shipment of leather jackets into the Philippines. These jackets cost around P12,000, with a shipping fee of P1,600.
Because this is over the de minimis rate, you calculate your cost, insurance, and freight (CIF) duties to be around 15%. It should come out to P2,039.81. The 12% VAT tacks on an additional P1,889.51. Your carrier also charges an additional P1,000 for an advance fee and currency conversion costs.
Your total landed cost will be P18,529.32.
Shipping to the Philippines Made Easy
You must know existing government compliances to ensure easy expansion into the Philippine eCommerce market.
First, businesses must get an Import Clearance Certificate from the Bureau of Internal Revenue to register as importers. Then, importers create an account with the Client Profile Registration System (CPRS) and register with the Bureau of Customs (BOC). While the Customs Client Profile Accreditation must be updated yearly, the Import Clearance Certificate only lasts three years. The processing time for CPRS accreditation takes 15 working days and costs P1000 (about $20).
New exporters must register with the CRPS through the Philippine Exporters Confederation.
Firms must renew their CPRS accreditation annually. It usually costs P1000 and takes around 15 business days, much like with importers.
Also, the Philippine government requires additional registration for specific exporters. For instance, coffee exporters need to register with the Export Marketing Bureau. Companies operating out of free port zones must register with the relevant free port. Exporters operating out of special economic zones (SEZs) must register with the Philippine Economic Zone Authority (PEZA). After registering, exporters will also receive a Unique Registration Number, which is required for all export-related activities.
A rigorous document verification procedure is required when opening a business in a foreign nation, and this is also true for Philippine eCommerce. Prepare a list of the permits the authorities need and send it to them for confirmation. Here are the various taxes and licenses required by the Philippine government for importation:
- Duly endorsed Bill of Lading or Airway Bill or certification by the carrier.
- Commercial Invoice, Letter of Credit, or any document that verifies the evidence of payment.
- Packing list
- Duly notarized Supplemental Declaration on Valuation (SDV)
- Import permit or clearance
- Authority to Release Import Goods(ATRIG)
- Proof of Origin for Free Trade Agreements(FTAs)
- Copy of an Advance Ruling
- Load Port Survey Reports or Discharge Port Survey Reports
- Documents evidencing exemption from duties and taxes
- Tax Credit Certificate (TCC) or Tax Debit Memo (TDM)
Learn about the courier services that operate in the Philippines. The nation is served by international carriers such as DHL and FedEx. Smaller things can be delivered locally directly to clients using motorcycles. Find out the most effective services for your items to ensure the highest consumer happiness.
Make sure to reserve and pay for the precise service you require. Consider using a motorcycle courier if you can get by. Save the larger, more expensive stuff for the bigger, more expensive truck fleets. Getting your product to your clients will be accessible after you choose the ideal services for your company. Maximizing delivery times and managing accessorial costs can give you a bigger bottom line.
Expanding your market to foreign countries is a daunting task. You must familiarize yourself with numerous laws, regulations, and provisions. You’ll also have to deal with foreign customs to get your products into the country. However, you may speed up the import procedure and manage your eCommerce business effectively if you understand the Philippine importing rules and regulations.
Shipping to the Philippines presents excellent opportunities for your business because of the growing market of online shoppers. Working with third-party logistics (3PL) can help your entry into the Philippines become even easier. ZhenHub offers a wide range of logistics software solutions specifically designed for eCommerce. Ensure your products reach every corner of the Philippines with our global distribution network and cost-efficient shipping services. Sign-up at our website for free and get your products ready for shipping.