Historical Timeline

A critical way to show respect for another person's culture is to have knowledge of their country's history and current affairs. Table 11.1 on pages 240–241 outlines a few key events related to the Philippines, together with concurrent world events.

Full Country Name and Location

The Republic of the Philippines is an archipelago in Southeastern Asia comprising more than 7,100 islands. Luzon and Mindanao are the largest of the 11 main islands with the highest populations. The total land area is approximately the size of Italy or the State of Arizona in the U.S. Taiwan lies to the north, Indonesia to the south, and Vietnam to the west. Surrounding waters include the South China Sea, Sulu Sea, Celebes Sea, and the Philippine Sea.

Government/Political Structure

The Philippines is a republic with a representative bicameral legislature and a president who serves as both the head of state and head of government. The president and vice president both hold office for a single six-year term. The last elections held in May 2010 were the country's first nationwide automated elections. Next elections are scheduled May of 2016.

Population and Economic Centers

The population is approximately 107.7 million, according to CIA World Factbook estimates (July of 2014). The country consists of 80 provinces and 39 chartered cities, including the capital Manila, with 48.8 percent of the population living in urban areas.⁵

The ethnic makeup of the Philippines is Tagalog (28.1 percent), Cebuano (13.1 percent), Ilocano (9 percent), Bisaya/Binisaya (7.6 percent), Hiligaynon Ilonggo (7.5 percent), Bikol (6 percent), Waray (3.4 percent), and other (25.3 percent).⁶

The major business centers and populations (2010) are outlined in Table 11.2.⁷

^* The 2010 Census of Population and Housing does not cover all cities/towns, only main districts. See the Philippine Statistics Authority website for more information.⁸

Economy

The Philippines is ranked 95th out of 189 economies in terms of ease of doing business, according to the World Bank Group's Doing Business 2015 report.⁹ Its 2013 GDP was ranked 40th by the World Bank¹⁰ and the composition of its GDP by sector was services (57.2 percent), industry (31.6 percent), and agriculture (11.2 percent).¹¹

Corruption Perceptions Index

The Philippines ranked 94th least corrupt out of 177 countries and territories with a score of 36 out of 100.¹² This annual index, compiled by Transparency International, measures perceived levels of public sector corruption.

The Office of the Ombudsman is the anti-corruption agency that conducts investigations in the Philippines.

Human Development Index

The Philippines ranked 117th out of 187 countries and territories.¹³ The HDI, compiled by the United Nations Development Programme, is a composite index of life expectancy, education, and income statistics.

Global Gender Gap Index

The Philippines ranked 9th out of 142 countries in terms of gender equality with a score of 0.7814.¹⁴ This annual index, compiled by the World Economic Forum, assesses gender gaps based on economic, political, educational, and health-based criteria.

Climate

The Philippines has a tropical, humid climate with three seasons. The rainy season occurs June through November, with frequent typhoons. March through May is the hot dry season, whereas December through February is cool and dry.

Languages

The native language of the Philippines is Filipino (Tagalog), and English is the lingua franca of business, government, and education. Approximately 172 languages are acknowledged, including Arabic and Spanish. It is insulting to assume Spanish is the native language in the country. Major dialects include Cebuano, Ilocano, Hiligaynon or Ilonggo, Bicol, Waray, Kapampangan, and Pangasinan.

Belief Systems, Philosophies, and Religions

The country breakdown is as follows: Catholic (82.9 percent: Roman Catholic 80.9 percent; Aglipayan 2 percent), Islam (5 percent), Evangelical (2.8 percent), Iglesia ni Kristo (2.3 percent), other Christian (4.5 percent), Other (1.8 percent), Unspecified (0.6 percent), None (0.1 percent) (2000 census).¹⁵

The Philippines is predominantly Catholic after four hundred years of Spanish rule, although the base layer of animism is never far from the surface.¹⁶

For an overview of belief systems, philosophies, and religions please refer to Chapter 4, pages 64–65.

Time Zones/Daylight Savings

The Philippines has a single time zone, Philippine Time (PHT). The Philippines is eight hours ahead of GMT (Greenwich Mean Time)/UTC (Coordinated Universal Time). It does not operate under Daylight Savings.

It is 13 hours ahead of U.S. Eastern Standard Time (12 hours ahead in Daylight Savings Time). See www.timeanddate.com/worldclock.

To calculate time in the Philippines, add eight hours to UTC/GMT.

Telephone Country Code and Internet Suffix

The Philippine telephone country code is 63, and the Internet suffix is .ph.

Currency

The Philippine currency is the Philippine Peso (PHP). One peso is divided into 100 centavos.

Fiscal Year

The fiscal year in the Philippines is January 1 to December 31. Dates are written as day, month, year; April 1, 2020 is written 01/04/20.

Working Week

The typical work schedule is outlined in Table 11.3. Some private offices are open Saturdays 9:00–12:00.

Holidays and Festivals

Some Philippine holidays change from year to year. Floating holidays are designated with an asterisk. On specific holidays, an office may remain open with limited staff. Check with your embassy or trade office before planning business travel. Common holidays and festivals are outlined in Table 11.4 on page 246.

Business Dress/Appearance

Personal appearance and grooming is crucial; some Filipinos shower three or four times daily. Over- or underdressing may cause a loss of face. Dress well to leave a good impression. Some professional Filipino men wear the traditional barong, a lightweight, embroidered shirt that your host may encourage you to wear. Women's traditional costume is the terno, a long dress with puffy sleeves and a scoop neckline.

For business, men should wear a two-piece suit, especially for initial meetings. Shirts and ties with or without a coat are acceptable for subsequent meetings and less formal occasions. Follow your Filipino colleague's lead.

Women wear pantsuits, dresses, or skirts for business, and pants or a skirt when casual. When visiting Muslim areas, women dress modestly with long sleeves, pants, or skirts knee-length or longer. Suits and cocktail dresses are worn to formal dinners.

News Sources

Some of the most popular news sources in the Philippines include the following:

• Philippine Star: www.philstar.com
• Philippine Daily Inquirer: www.inquirer.net
• The Manila Times: www.manilatimes.net
• Philippines News Agency: www.pna.gov.ph/index.php
• Business World: www.bworldonline.com
• Malaya Business Insight: www.malaya.com.ph

Business Cards

Business cards may be printed in English. Include your position or title because status and rank within the hierarchy are valued.¹⁷

Technology

According to Akamai Technology's State of the Internet Report, the Philippines ranked 108th globally for average Internet connection speed and 36th for average peak connection speed.¹⁸ The country was commended in the report for high improvement rates year-over-year. Latest figures rank the Philippines 34th worldwide for the number of Internet users¹⁹ and 52nd globally for the number of Internet hosts.²⁰

Gifts

Gifts are given at first meetings; bring gifts for everyone or give a group gift. Business gifts include company logo items, domestic crafts, office desk sets, pen sets, whisky, or other liquor. Never give cash or gifts to government officials.

In the Philippines, a gift from a male to a female should come with a card stating the gift is also from his wife, sister, or mother to avoid the appearance of impropriety. Send a gift or thank-you card the day after attending a dinner or social gathering. Wrap gifts in pastels; avoid black, chrysanthemums and white lilies.²¹

Introductions, Greetings, Personal Space, and Eye Contact

A handshake is the most common greeting; intergender handshaking is acceptable because men and women are considered business equals. Men greet with a pat on the back; however, avoid touching beyond a handshake until a relationship is established. Moderate eye contact is acceptable. Mano po is a sign of respect to elders by bringing the back of their hand to your forehead.

Useful Phrases

Table 11.5 covers phrases that may be useful for travel in the Philippines.

Meetings and Negotiations

Due to the focus on hierarchy and group-oriented thinking, meetings usually involve little problem solving or decision making, unless you are with the top decision maker. The pace of business negotiations is slower than in the West. Filipinos negotiate formally with a high value on precision, respect, and harmony.²²

Presentation Styles, Conversational Topics, and Humor

Filipinos appreciate innovation and current technology. Appropriate topics include travel, hobbies, food, music, language, sports, especially basketball, and culture. Inappropriate topics include politics, U.S. relations, family, sex, risqué jokes, and complaints.

Gestures

Here are some important points to remember about gestures in the Philippines:

• Laughing or smiling may indicate embarrassment.
• Raising the eyebrows may indicate hello.
• Jerking the head upward is an affirmative gesture.
• A downward jerk of the head indicates no.
• Point by gesturing with eyes toward object.
• Point by puckering lips and gesture with the mouth.
• Point by motioning with the whole hand.

Notable Foods and Dishes

Cuisine stems from a mix of South Asian, Chinese, Spanish, and American influences. Soups contain meat, vegetables, and noodles. Rice is popular. Lemon, kalamansi (lime) vinegar, fish sauce, shrimp paste, garlic, and onions are popular ingredients.

Specialty Dishes

Here are some well-known dishes from the Philippines:

• Adobo: National dish of the Philippines, a meat stew marinated in palm vinegar, bay leaf, garlic, and black pepper
• Pochero: Beef, sausage, pork in a sauce with sweet potatoes, tomatoes, cabbage, and chickpeas
• Sinigang: Soup with a variety of meats or fish, vegetables, and fruits
• Afritada: Beef in olive oil and tomato paste with olives and vegetables
• Kari-kari: Beef or seafood in spicy peanut sauce with vegetables
• Lechon: Barbequed whole pig stuffed with tamarind leaves
• Pancit Palabok: Rice noodles with shrimp-based sauce

Dining Etiquette

In the Philippines, three meals a day, with two snacks, or meriendas, between meals is common. Forks and spoons are used; knives are not. The fork is used in the left hand to push food onto the spoon in the right hand. Hosts often wait for the honored guest to start eating. Depending on the dish, it may be acceptable to eat with your hands. Be sure to clean your plate.²³

Drinking and Toasting

Cold beer, Scotch, gin, and liquor including brandy are popular. Drunkenness is frowned upon, and women rarely drink alcohol in public. Popular drinks include:

• Ginebra San Miguel: Locally brewed gin; world bestseller
• High-quality Scotch
• Lambanog: Potent (80- to 90-proof) Philippine liquor made of coconut

Toast to health or business prosperity in English or “Mabuhay” (mah-BOO-high) meaning ‘long life.’

Tipping and Bill-Paying

Tipping is expected from international travelers. Hotels and restaurants usually include a service charge of 10 percent. Tip porters and bellhops 50 to 100 pesos per bag. Tip maids, taxi drivers, and valets small change. Agree on a taxi fare before departing.

Taboos

The following are taboo in Filipino culture:

• Lack of personal hygiene (Filipinos shower several times a day.)
• Chewing gum
• Hands in pockets
• Public nose-blowing
• Publicly using a handkerchief
• Physical displays of affection
• Poor posture or slouching
• Speaking in a loud voice
• Drunkenness
• Standing with hands on hips
• Extended middle finger (considered an obscene gesture)

Heroes and Sports

Knowing about another country's heroes and sports offers opportunities to incorporate culture-specific references into your conversations and presentations.

1. How Do Filipinos Prefer to Act: Individually or as a Group?

I want our people to be like a molave tree, strong and resilient, standing on the hillsides, unafraid of the rising tide, lighting and the storm, confident of its strength.

—Manuel L. Quezon, president of the Commonwealth of the Philippines (1935–1944)

When asked this question, Mr. Michael Ozaeta, Chairman of the Board, All Medica Global Corporation, based in Manila, responded that the degree of consensus-seeking in the Philippines varies on a case-by-case basis. “More often than not, a group will be involved in making a business decision, but there are occasions when one individual will overrule them or make a decision on his or her own,” he says. “Decision making within large, family-owned conglomerates and big corporations occurs within a hierarchy. For example, the patriarch, chairman, or owner will have the last say, after considering the opinions and insights from those at the director level. Similarly, in smaller businesses run by entrepreneurs, decisions will tend to be made by a single individual.”

Making decisions that take into account group loyalties is reflected by Geert Hofstede's findings on the Individualism index (See Chapter 2, page 15) As he reported, the Philippines “collectivist” score of 32 reflects close long-term commitment to the member ‘group.’²⁵

Given the strong family group orientation within this Latin-based culture, directors may want to ensure that every Filipino impacted or involved in a decision is consulted. However, unless asked to do so, managers may not wish to take a position, share their opinion, or take action until an agreement is reached. In the Philippines, there is an element of self-esteem or self-pride involved known as hiya, somewhat similar to face. It is important for each person to hold high hiya and be seen to make beneficial contributions, which affords him amor-propio, or the sense of being a good team player.

2. How Are Power and Authority Viewed in the Philippines?

In the Philippines, power and authority are all about trust and track record, not seniority.

—Mr. Michael Ozaeta, AU Medica Global Corporation

Mr. Ozaeta says: “Someone at the director level who has the ear of those at the highest levels or the ‘big boss’ will have considerable long-term influence if they've made a couple of successful past decisions and made the company money.”

Mr. Ozaeta shared this story to illustrate: “The chairman of a Philippines telecommunications company, a very successful and prominent businessman in his sixties, acquired a new technology from a company whose founder was probably in his early thirties. They decided to retain the younger man who, like many Silicon Valley-style founders, came to work wearing flip-flops and shorts, in contrast to the chairman, who is always in a coat and tie. The younger man has a degree from Harvard, but it wasn't that which caused the chairman to respect his opinion and listen to him. It's because of his track record of having built a company that was acquired, as well as several other successful ventures. It is for these reasons that the chairman really respects him.”

It's a surprise to many business travelers to learn that although structure and hierarchy are present in all Filipino organizations, as well as educational, religious, and military institutions, one's stature may be improved. The difference in the Philippines is that while your rank and status are important for Filipinos to determine where you fit, your status may change based on trust and your track record, as mentioned earlier. This is a crucial distinction from other vertical or hierarchical-based Asian cultures where your seniority, class, or caste may be the primary or only factor that determines your status.

3. How Do Filipinos Compare Rules and Relationships?

Relationship-building is central to the Filipino culture.

—Ms. Jamie Nanquil, Austin branch manager, Social Media Delivered

Not surprisingly, in a country more reliant on human resources than agricultural or manufacturing products, and as one of the world's biggest service providers, relationships are key to doing business here.Pakikipagkapwa-tao is shared identity or interconnectedness with others in an ongoing relationship that demonstrates respect, concern and recognition of dignity. If pakikipagkapwa-tao is abused or compromised, trust is irreversibly lost.^26,27 As Mr. Ozaeta explains, “One of the fastest growing industries in the Philippines is the business process outsourcing industry (BPO). Within the BPOs, the back-office work is done mainly for the U.S. and some European countries, given our historical ties with the U.S. and the fact that people here speak English.”

He adds that in the Philippines it is relatively easy to be introduced to one or two people who will then connect you to everyone else you need to know. “There is a tight-knit top business club in the city of Makati, which is part of metro Manila, and once you break into that, you'll get to know the key people from the big conglomerates and business groups. Join the American Chamber of Commerce and the European Chamber of Commerce and you'll get to know all these people immediately. Developing relationships with key people in our country is pretty efficient.”

According to Ms. Jamie Nanquil of Social Media Delivered, “You shouldn't expect a contract to be signed without first building rapport. There will be definite roadblocks to progressing through business deals if you are not actively meeting with your Filipino partner in person.” The nurturing of relationships with regular trips overseas to manage the process is a part of meeting expectations.²⁸

Unlike in some Asian cultures where contracts are considered to be guidelines, after a contract is negotiated and signed in the Philippines, Filipinos stick to the contract.

It is people and circumstances, not universal laws or abstract rules, that determine how a Filipino decides to act. Utang (debt)na loob refers to the building and fulfilling of lifelong obligations among Filipinos and goes well beyond direct contractual obligations.²⁹ Do not confuse this with the direct, equivalent release of an obligation, which is a different concept relating to a single occurrence. These enduring obligations are the glue that bind Filipino society together and keep relationships flowing smoothly.

4. How Do Filipinos Regard Time?

We operate under the belief that “good things come to those who wait.”

—Ms. Jamie Nanquil, Austin Branch Manager, Social Media Delivered

“In big corporations, being late has become unacceptable. People are more punctual because we recognize that time is money,” says Mr. Ozaeta. “Even though traffic here is bad, it really shouldn't be an excuse. However, punctuality here is not as strict as you'll find in New York, Hong Kong, or Singapore, so new visitors need to keep a flexible attitude. Generally speaking, showing up 20 to 30 minutes late to a meeting is sometimes acceptable. At least with cell phones, you can call or text that you're running late.

“Filipinos who have been educated abroad are very particular about time. Everyone else has what we call a colonial mentality. This means that for an average Filipino, if my meeting is with an American, I'm going to show up on time. If I'm in the U.S., I follow the rules of the road. But if I'm in the Philippines and I'm meeting a Filipino, I can be 15 minutes late. It's rather like driving in the Philippines, where I don't have to stay in my lane. We all make a joke about how, in our own country we don't follow the rules, but the minute we land in America, we follow them to the letter.”

The dimensions of time are changing in the sense that, historically, the Philippines have been a polychronic culture. This means that numerous things happen simultaneously and Filipinos are able to multitask. Filipinos look toward the future, not the past, and appreciate it when today's actions show results.

5. How Direct Is Communication in the Philippines?

Some people will communicate “no” directly, but some will not. Listen carefully.

—Mr. Motokatsu Sunagawa, CEO, Eco-Merge

The advice that Mr. Motokatsu Sunagawa, chairman and CEO of Eco-Merge Philippines, Inc., offers about communicating in the Philippines is to pay attention to what is really being said. Mr. Sunagawa is originally from Japan and is based in Manila, having lived in the Philippines for five years: “Some people will communicate ‘no’ directly, but some will not. Listen carefully for expressions that are politely communicating ‘no,’ such as, ‘I would like to, but I can't;’ ‘Let me see;’ ‘I would like to, but it's very difficult.’ The unique phrase that Filipinos use a lot is, ‘I will try, and will let you know.’”

Similarly, according to Mr. Michael Ozaeta, avoid saying you cannot meet a deadline or offering an unequivocal ‘no,’ especially when a relationship is new. “Try not to make your answers too direct because Filipinos tend to be sensitive to those who just state, ‘This is what we want; this is what we don't want.’ They will think of you as cocky and arrogant, especially if they don't know you that well.

“If your first contact in a company or industry is with someone who has worked in the U.S. or places like Hong Kong that are more international, they'll be more used to direct communication. But as a rule of thumb, try to soften your language by saying something like: “I'll try, and I'll let you know.” Although, when you are dealing with someone in your own company or you have known for years, sometimes a direct ‘no’ is more appropriate.”

Communication during business meetings and negotiations is high-context, meaning it occurs indirectly through body language and other non-verbal signals. There is a word for smooth, harmonious interaction: pakikisama.

6. How Formal or Informal Do Business People in the Philippines Tend to Be?

This is another area in which paying attention will reap benefits in terms of nurturing relationships with your Filipino colleagues and partners. According to Mr. Michael Ozaeta, “At the beginning of a relationship, the business environment is formal. Once it is established and more relaxed, it's okay to use first names. For people who are senior in rank, status, or age, for example, you would address them by Mr. or Ms. and allow them to say, ‘Oh, call me John,’ or ‘Call me Jill.’”

Adds Mr. Ozaeta: “The only titles we use are with people who are doctors, attorneys, ambassadors, and government officials' titles like senator or vice president: for example, ‘Dr. Schweitzer,’ although most people prefer to be referred to by their first or last names. We do not use architect or banker.”

Mr. Sunagawa has found that using first names is a common practice in the Philippines. Many people do not consider that to be an informality, but a way of making the relationship friendlier than using family names. This is perhaps not surprising in a country where a great majority of the population is under the age of 35, resulting in generational differences in the workplace.

However, as Ms. Jamie Nanquil points out, “Although Filipinos are friendly and hospitable, you should always show professionalism and respect. Filipinos are big on respect.”

7. How Aligned Are Filipino Social and Business Lives?

Socializing is very important for solidifying business relationships in the Philippines.

—Ms. Jamie Nanquil, Austin Branch Manager, Social Media Delivered

Visitors are thought of as guests (dayuan), not outsiders, and are often impressed by the friendliness and hospitality extended to them.³¹ However, the art of reciprocity is often seen as a surprising part of relationship building in the Philippines. Mr. Ozaeta explained how this is played out.

“If you're dealing with government officials, definitely it is the international business professional that needs to extend an invitation to have drinks. However, the government officials may not reciprocate. In the private sector, it depends. If a Filipino group is looking for business from the international visitor, then they would definitely extend an invitation from the start. But if the international visitor seeks information from the Filipino or wants to get to know them better, it would be nice if they extended the invitation first. Depending on their status, the Filipino may insist on paying the bill. When they do insist, it's okay to let them pay. In fact, they may have already done so before you know it. In which case, you should just say, “It's my turn next time,” advises Mr. Ozaeta. It is crucial to remember to extend another invitation and to make sure you do pay the bill on that occasion.

With respect to culture, Mr. Sunagawa shares that, “Most Filipinos respect their time with family. It is not common practice to socialize outside of office hours as it is in, say, my own country. In Japan, I was used to establishing business relationships and personal relationships frequently after office hours, for dinner or drinks. But this is not as common in the Philippines, where you may choose to take an alternative approach and join them in a church activity or sports.”

As Ms. Nanquil pointed out: “Filipinos tend to love singing and engage in a lot of karaoke, so if you are vocally blessed, you will be well-appreciated.”

8. How Is the Concept of Women in Business Handled in the Philippines?

With Western businesswomen, there is no difference at all between how men and women are treated in business. You can behave like you're behaving in the West.

—Mr. Michael Ozaeta, AU Medica Global Corporation

“In a country where two women have already been elected president—Ms. Maria Corazon Aquino (1986–1992) and Ms. Gloria Macapagal-Arroyo (2001–2010)—women can do exceptionally well in the business world,” says Ms. Jamie Nanquil. Ms. Aquino was also Asia's first female head of state. Although the Filipino culture values machismo, women here are considered equal to men in most business situations. Mr. Michael Ozaeta agrees, saying that women hold many prominent positions in government and in the private sector, and more of them are rising in professional occupations.

Ms. Nanquil's advice to successful international businesswomen women is, “Don't try to be too assertive or overzealous as it may be construed poorly.”

“There are no rules preventing women going for after-work drinks at a hotel bar, or being invited to dinner and then perhaps going on to a nice club with music,” advises Mr. Ozaeta. “The only exception to this would be going to a hostess bar. You only ever find businessmen attending them.”

He adds that: “In terms of after-work entertaining, an international woman will feel very much at home in Manila. If she is here to set up a business, the advice is the same as I would give to a man: Get well connected within the business community, with people who can introduce you to the key players in your industry and who can give you sound advice.”