Food is imperative to survival—on a personal level and economic level. In a 2019 study conducted by Flanders Investment & Trade, it was found that food makes up nearly half of the manufacturing industry’s total output in the Philippines and that it has an 8-10% annual growth rate. Food manufacturing is also listed in the Philippines’ 2020 Investment Priorities Plan, a document detailing which industries are subject to tax incentives. Even amidst a global pandemic where most businesses struggled, the food manufacturing sector thrived. With an industry worth 35.8 billion USD, tax incentives, and a strong consumer base; the food manufacturing industry in the Philippines is an attractive industry to any businessperson. The question now is, how do you break into the industry?
While the food manufacturing industry seems intimidating at first, Philippine Food & Drug Administration (FDA) records show that of its roughly 500 food and beverage registered processors, most are micro to medium-sized businesses— indicating that the industry does not have such a high pay gate as one would expect.
To start the venture into the industry, the first step is to set up and register a company. For the registration of a food manufacturing company in the Philippines, the best corporate structure is the age-old and stable domestic corporation. The domestic corporation structure is what some of the country’s biggest businesses utilize and it provides the benefits of limited liability as well as a relatively fast setup time. Registration requirements are simple for both Filipinos and foreign nationals alike; these include company name, business address, a draft of the articles of incorporation and by-laws, a bank account, and other simple documentation. This type of corporate structure is also the best for businesspeople who think big and want to expand the business overseas after experiencing success in the Philippines.
For foreign investors already in the food manufacturing industry and who want to tap into the Philippine market, a branch office is also worth exploring. The branch office setup allows for the parent company to retain full control and ownership over the business in the Philippines and is entitled to earn income from here and overseas. The Philippines already has a great consumer base, but it is also a port for expansion into other Southeast Asian markets. The documentary requirements are similar to those of the requirements for a domestic corporation, with the addition of documentations from the parent company. These include a board resolution granting authority for the establishment of a branch office, the parent company’s audited financial statement, and proof of applicable inward remittance, among others.
Once the company has been set up with the Securities & Exchange Commission (SEC) and local government units, the next step is to register the company with the Food and Drug Administration and apply for a License to Operate (LTO) as a Food Manufacturer. This step is mandatory for any company involved in the making of foods meant to be stored and sold to the market. The granted authorized activities of such an LTO are end-to-end from the procurement of raw materials (even importing of materials for processing) to the distribution of the products manufactured. In applying for the LTO as a Food Manufacturer, it is important to note that there are stringent documentary requirements and operational standards that the FDA demands. These include, but are not limited to, a site master file, a location plan, the food safety officer’s certifications, and the list of products to be produced, etc. A site inspection will also be requested by the FDA. The complete process of how to apply for the LTO may be found in FDA Circular No. 2016-004.
Finally, after the registration of a company and the granting of the LTO, the company would need to obtain Certificate of Product Registration (CPR) for each of its manufactured products. This CPR is a stamp of safety and quality provided by the FDA to the manufacturer. This CPR is a prerequisite for the company to sell, market, and distribute its products. To recap, setting up a food manufacturing company in the Philippines involves 3 steps: 1) Registering a company in the Philippines, 2) Applying for an LTO as a Food Manufacturer with the FDA, and 3) Applying for a CPR (per product) with the FDA.
Triple i Consulting has successfully registered more than 350 CPRs and has been able to process more than 75 LTOs with the FDA just in the last 5 years— and that’s a perfect record of approvals.
***
Are you ready to take a slice of the Food Manufacturing pie for yourself? Contact us now. Send us an email at info@tripleiconsulting.com or give us a call at +63 (02) 8540-9623 for an initial consultation with one of our experts!
