According to the World Economic Forum Global Competitiveness Report 2010-2011, companies identify corruption as the most problematic factor for doing business in the Philippines. Corruption is often encountered when interacting with public officials. According to the World Bank & IFC Enterprise Surveys 2009, nearly 19% of surveyed companies report that they expect to make informal payments to public officials to get things done, and more than half of the surveyed companies are expected to give gifts in order to secure a government contract. According to the 2009 Social Weather Stations’ (SWS) survey of enterprises on corruption, as cited in a 2010 news release by SWS, the surveyed business managers perceive that the level of corruption in the private sector to be lower than in the public sector, while for the latter, the level of corruption is more widespread at the national level than at the local level. Other common types of private sector corruption in the Philippines are illegal donations to political parties and bribery in order to influence policy-making. However, compared to 2004, where a little less than one-fourth claim that these donations are made on a voluntary basis, a majority in 2009 claim that donations are ‘partly voluntary’, while a smaller percentage claim that the donations are solicited. The concentration of wealth within a small group of elite families, coupled with political donations, has led to concerns as to their undue influence on both Philippine politics and business life, as reported by the Bertelsmann Foundation 2010.

According to the 2009 SWS survey of enterprises on corruption, as cited in a 2010 news release by SWS, the majority of the surveyed business managers state that the level of transparency in bidding for a government contract had increased. It is also reported that solicitation of bribes in relation to getting local and national government permits and licences have decreased. Nevertheless, business executives surveyed by the World Economic Forum Global Competitiveness Report 2010-2011 report that government officials often favour well-connected companies and individuals when deciding on policies and contracts, and that public funds are often diverted to companies, individuals or groups due to corruption. Freedom House 2010 also notes that corruption and cronyism remain prevalent in business and government.

Companies that are planning to invest in or are already doing business in the Philippines are highly recommended to implement integrity systems and conduct extensive due diligence when entering into business partnerships or contracting agents to facilitate business transactions in the country. As illustrated by a 2008 press release by the US Securities and Exchange Commission, controlling corruption-risks is essential in order to avoid cases like that of a United States company, Con-Way Inc., that had to pay USD 300,000 in civil penalty, after having paid numerous illegal payments to foreign government officials at the Philippines Customs and the Philippine Economic Zone Area, as well as fourteen state-owned airlines between 2000 and 2003, through a Philippine-based companies in order to obtain favourable conditions. The Philippine private sector acknowledges that corruption is a major problem that companies will need to deal with. This is indicated in the 2009 SWS survey where companies state that they are willing to spend 5% of their net income on anti-corruption programs.

The Philippines is characterised by cumbersome bureaucracy. Business executives surveyed in the World Economic Forum Global Competitiveness Report 2010-2011 perceive the level of government administrative requirements as very burdensome. Although business start-up has been eased by the establishment of a one-stop shop at the municipal level, the average complexity and cost are still higher when setting up a company in the Philippines than it is in East Asia and Pacific region. Starting a company requires 15 procedures and 38 days, at a cost of 30.3% of the GNI per capita, as illustrated in the World Bank & IFC Doing Business 2011. According to the World Bank & IFC Enterprise Surveys 2009, senior management can expect to spend 9% of its time dealing with the requirements of government regulations. Foreign companies should note that foreign investment is restricted or limited in many sectors of the economy. Companies can consult the Department of Trade and Industry to see a full list of restrictions on foreign investment. The government has set up a Board of Investments (BOI) in an effort to promote foreign investment. The BOI offers investors regulatory and incentive system guidance. The Philippines is a member of the World Customs Organization (WCO) aiming to improve its administration of customs. According to the World Bank & IFC Doing Business 2011, the Philippine customs administration has become more efficient since the government improved the electronic customs system by adding functions such as electronic payments and online submission of declarations, reducing the time and cost of doing trade compared to previous years.

According to Transparency International's National Integrity System 2006, post-Marcos structural reforms were implemented in order to benefit economic development locally, such as deregulation, privatisation and decentralisation, and have reportedly resulted in an increase in corruption as well. Moreover, business executives surveyed in the World Economic Forum Global Competitiveness Report 2010-2011 indicate that it is a challenge to obtain information about changes in government policies and regulations affecting their industries. The level of corruption in dealing with inspectors from various government agencies is fairly high in the Philippines. According to Transparency International's National Integrity System 2006, in the process of deregulation, companies have offered bribes to government officials in order to protect their market and ward off competition. The privatisation process has resulted in irregular and corrupt bidding practices in order to acquire government-owned or government-controlled companies. According to United Nations Asia and Far East Institute Corruption Control in Public Procurement July 2008, despite the passage of the Procurement Reform Law, public procurements such as infrastructure projects and hospital supplies have been exposed to corruption, therefore companies should note that a lack of transparency still prevails in public procurement processes. Although Philippine Government Electronic Procurement System (PhilGEPS) has been set up to increase transparency of the procurement regime, companies are, nonetheless, recommended to conduct extensive due diligence during the procurement process in order to mitigate the corruption risks associated with public procurement in the Philippines.

According to the US Department of State 2011, foreign investors generally cite the Philippine judicial system as uncertain and inefficient, largely due to understaffing, corruption and long delays of court cases. Serious concerns have been raised concerning the sanctity of contracts and of property rights based on allegations that judges accept bribes to rule in favour of one or the other party in a trial. Many foreign companies view the judiciary as a disincentive to investing in the Philippines, since settling an investment dispute may take up to several years before reaching a final settlement. Therefore, many companies seek out alternative dispute resolution possibilities. The Philippines is a member of the International Centre for the Settlement of Investment Disputes (ICSID) and a signatory to the New York Convention 1958. Nevertheless, it is reported that Philippine courts are disinclined to abide by the arbitration process and that the enforcement of decisions may take several years. Several disputes have been raised over water rights in relation to agricultural and industrial production. Access the Lexadin World Law Guide for a collection of legislation in the Philippines.