What's new: A new law for filipino creatives

What’s New? A New Law for Filipino Creatives

Art Fair Philippines, (2020), [Collage of Visayan Artworks], [Photograph]1

Hollywood just featured the first film starring a Fil-Am cast in “Easter Sunday.” Years ago, the sensational song “Let It Go” was composed by a FilAm talent. Filipinos are working for Disney animation, Rachelle Ann Go is a successful theater actress in London, and Lea Salonga is one well-known Broadway actress for decades now. Clearly, the Filipinos do not lack creative talent. 

Assistant Secretary Glenn Peñaranda of DTI said “there are approximately 2 to 3 million creative freelancers working locally, while 1.5 million creatives handle international projects” 2. As early as 2009, the Creative Industries contributed 5.44% of the country’s GDP3 and has seen an increase as of present time. In 2019, the creative industry had a projected value of P1.27 trillion and accounts for 7% of the GDP (Gross Domestic Product) of the country.4

With the rise of the “gig economy”, where one does not have to be fully employed to work for any company, Filipinos have been able to secure multiple projects at a time which includes jobs for both domestic and international clients through digital means. Payment gateways Paypal, Payoneer, and Upwork estimate 1.12 to 1.5 million Filipinos are receiving salaries through creative gigs.5 Imagine the number of Filipinos that are highly productive already in this industry! It is also worth noting that due to the pandemic, a portion of the labor force lost their jobs and moved to contractual jobs that are home-based. While there is no official data yet regarding this, you can just observe your circles of family and friends and can attest that indeed, the creative industries have opened so many opportunities for profitable work.

We see that the country does not run low on talents, while the private sector, both locally and abroad, continues to need the creative work that Filipinos provide. Now, the government has taken notice and has taken the next step by legalizing provisions focused on growing the industry. The creative future looks bright as the Joint Foreign Chambers in the Philippines (JFC) affirms that “[w]ith the enactment of RA 11904, the Philippines is well-placed to reach its goal of becoming the leading creative economy in Southeast Asia by 2030.” 6

Number One Creative Economy in Southeast Asia in 8 years, are we ready?

Fortunately, Congress has begun to boost the Philippines to catch up with the fourth industrial revolution – as inevitably, the future is creative. The Philippine Creatives Industries Development Bill was authored and sponsored in July 2021 by a creative, Congressman Toff De Venecia. After a year of diligent work with various industry stakeholders, it became law on July 28, 2022, as Republic Act 11904 or the Philippine Creative Industries Development Act (PCIDA).

Rep. Christopher V.P. De Venecia on House of Representatives of the Philippines, Author and Sponsor of the Bill in Congress7

As the roll-out begins, we can expect more activity, visibility, and impact in the next months and years to come. We are hopeful that the present administration allocates sufficient budget so that the interesting and beneficial provisions of this law may serve the Filipino creatives. 

Dr. Bernardo M. Villegas, an expert in Economics, states that the implementation strategy should include working with the private sector and the academe. To grow the creative economy from  6.52% of GDP to 15% by 2030, a focus on exporting creative talents should be prioritized- this means that the academe must create programs centered on honing creative expertise among students, the local government and tourism offices shall create creative zones and cities where encouraging local businesses to invest in creative enterprises, events and festivals shall be an area of focus as well. [e]

There is no doubt that the Filipinos are talented. Private businesses are continually opening and expanding businesses that provide creative services. What we look forward to most now, especially with the passing of PCIDA, is an aggressive boost from the government’s efforts. Let us discuss this new law.

Is this law for you?

Creative industries are defined in the law as trades involving persons that produce cultural, artistic, and innovative goods and services originating in human creativity, skill, and talent and having a potential to create wealth and livelihood through the general and utilization of intellectual property.

Let us establish the various categories that belong in the creative industries:

  • Audiovisual Media Domain
  • Digital Interactive Media Domain
  • Creative Services Domain
  • Design Domain
  • Publishing and Printed Media Domain
  • Performing Arts Domain
  • Visual Arts Domain
  • Traditional Cultural Expressions Domain
  • Cultural Sites Domain
  • Other domains and industries that may be determined by the Philippine Creative 
  • Industries Council (Council)

What Should I Expect From It?

This new law mandates the national government to promote the developments and the rights afforded to the Philippines’ creative industry and Filipino creatives. Primarily, this law will execute the creation of a Philippine Creative Industries Development Council (PCIDC), an attachment agency to the Department of Trade and Industry (DTI).

How important is it for you to get acquainted with the PCIDC? Very! In fact, we suggest following them the moment PCIDC activates its online pages,  so you can track the different programs of this agency. Keep in mind that their mandate is to protect and nurture the excellence of the movers of the Philippine industry. As a vital contributor to the economy, it would be right for creatives to take advantage of the programs that will be funded and executed through the Council.

Who or What is PCIDC?

The Council is created to take charge of the promotion, development, and expansion of opportunities for the creative industries in the country. It has been given authority and is in charge of planning and policy formulation, issuance of guidelines in relation to private sector participation, and assistance in monitoring and protection of intellectual property rights and indigenous cultural properties being utilized for commercial purposes, among others.

The law further protects creative industries by establishing a Creative Workers’ Welfare Committee, which shall be responsible for ensuring that creative freelancers and workers have access to sustainable and dignified work in the creative industries.

Here is a run-through of all other rights provided under this law:

Infrastructure Support. Shared service facilities, infrastructure support programs to be provided under DTI and the Philippine Innovation Act. This will include provisions for subsidized rental schemes for studios and venues. Co-working spaces and other similar facilities and hardware that may be accessed by the creatives. The government shall give preference for Micro, Small, and Medium Enterprises (MSMEs) in fulfilling these.Research and Development (R&D) and Innovation Support. Entities may avail of the research and development support program of the Department of Science and Technology (DOST) that includes financial support for research projects related to the creative industries. 
Digitalization of the Creative Industries. This will include access to digital services and training platforms. Technical and financial assistance programs for digital content distributors, provision of high-speed infrastructure and bandwidth through the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC). Access to Credit and Financial Statements. Government-owned, -controlled, or -supported financial institutions are mandated to give priority to creative industries in providing credit assistance and guarantee schemes.
Other Fiscal Incentives. Entities whose activities are listed in the Creative Industries Investment Priority Plan (CIIPP) may avail of fiscal incentives provided under the Corporate Recovery and Tax Incentives for Enterprises Act.Creative Voucher System. Creative voucher system shall be created in order for institutions to have a more systematic means of giving aid and support to creative industries entities. Again, MSMEs are to be given preference as suppliers.
Creative Instruction and Education. The Department of Education (DepEd), Commission on Higher Education (CHED), and Technical Education and Skills Development Authority (TESDA) are mandated to establish a Creative Educational Plan and supporting programs towards human resource development, audience capacity-building, and consumer empowerment. One-Stop Registration Center. The Negosyo Centers in LGUs shall extend its services as a one-stop shop for creative industries MSMEs or entrepreneurs in availing government services such as, but not limited to, intellectual property registration, product and business registration, loans, grants, and benefits programs.
Creative Industry Data and Information Management. The Philippine Statistics Authority shall set up a satellite account and a system of data collection and management for creative industries.The Philippine Creative Cities Network (PCCN). PCCN shall aid in incubating cities that wish to explore their creative resources, and in accelerating emerging creative cities towards the accreditation by the UNESCO to form part of the UNESCO Creative Cities Network.
Local and Cultural Arts Councils. All local government units (LGUs) shall establish a Local and Cultural Arts Council for better and more efficient implementation of this law.

Remember September!

Philippine Creative Industries Month is also established as a provision of this lawthis will be the month every year when raising awareness and the celebration of the creative industries is highlighted.

Sounds exciting right? 

It seems like our lawmakers want to maximize opportunities, support, and provisions for the creative industries and we are all onboard! We see both the demand from businesses and supply from talents grow. Now with the government’s laid out strategies and focus, this law is meant to be impactful in the day-to-day operations and growth of so many professionals. The nation’s goal is to continue to expand this industry and secure our spot as the top creative hub in Asia by 2030. We’re excited to catch up with the rest of the world!

If you are in this industry- whether old or new, we hope to remind you that you are entitled to valuable rights, not just as an artist but as one with business interests. There is a framework that  can allow you to commercialize your creative works and we can guide you through this so you may maximize the returns of your creative labor.  A legal team with knowledge and expertise in this specific industry can propel you and your team to navigate this industry better. As the country heads toward increasing opportunities for these creative industries,  our firm is eager to work and advocate for creatives like you to make sure that you are protected and can commercially benefit from your talents and hard work.

Indeed, the future is creative, what are you most excited about this new law? Share in the comments or send us a message if you have some questions!

FOOTNOTES

  1. Art Fair Philippines, (2020), [Collage of Visayan Artworks], [Photograph], link: https://www.adobomagazine.com/philippine-news/arts-long-overdue-visayan-art-takes-the-spotlight-in-this-years-art-fair-ph/
  2. Department of Trade and Industry, (12 August 2022), [Pinoy Creatives celebrate newly-adopted Creative Industries Development Act], [Article] link: https://www.dti.gov.ph/news/pinoy-creatives-celebrate-newly-adopted-creative-industries-development-act/
  3. Del Prados, (2015), [State of the Philippine Creative Industries], [Presentation] link: https://industry.gov.ph/wp-content/uploads/2015/05/8th-TID-Ms.-Del-Prados-Presentation-on-Creative-Industries.pdf
  4. Villegas, Bernardo, (29 March 2022), [A Strategic Plan for Creative Industries], [Article] link: https://www.bworldonline.com/opinion/2022/03/29/438841/a-strategic-plan-for-creative-industries/#:~:text=In%20a%202014%20Report%20by,the%202019%20GDP%20of%20P19.
  5. Villegas, Bernardo, (29 March 2022), [A Strategic Plan for Creative Industries], [Article] link: https://www.bworldonline.com/opinion/2022/03/29/438841/a-strategic-plan-for-creative-industries/#:~:text=In%20a%202014%20Report%20by,the%202019%20GDP%20of%20P19.
  6. Gomez, Eireene, (2022 August 16), [Foreign Chambers Laud RA 11904], (The Manila Times), [Article] link: https://www.manilatimes.net/2022/08/16/business/top-business/foreign-chambers-laud-ra-11904/1854721
  7. Press and Public Affairs Bureau, (2022) [Rep. Christopher V.P. De Venecia on House of Representatives of the Philippines], [Photograph] link: https://www.congress.gov.ph/photojournal/zoom.php?photoid=3600

Ready to be the Next Big Corporation?

Here’s what you need to know!

Are you one of the lucky ones who thrived as an entrepreneur during the pandemic?

Are you ready to launch a business idea you have been safekeeping all along?

Whether you are taking your venture to the next level or you are just getting started understanding how to get your business recognized as legit comes handy, let us walk you through it.

What are the kinds of business registrations in the Philippines?

In the Philippines, you may register your business as a sole proprietorship, partnership or corporation. Start-ups and ventures mainly owned by one person usually register as a sole proprietorship. Partnerships also has to kinds –  regular partnerships or general professional partnerships. If you are a licensed professional such as lawyer, public accountant, engineer and the likes- a general professional partnership could work for you. Let’s say you are running a retail business with a partner (there are two owners), this will fall under general partnerships, but if you are two dentists who would like to operate a clinic together, you would have to register as a general professional partnership. 

For other businesses where owners prefer to protect individual assets, work with more investors, issue shares and stocks of ownerships or if calling the business a corporation just appeals more, this is the right page and discussion.

Let’s get you started in the world of corporations!

We’ll give you an overview of getting a corporation registered legally  – where to process registration, requirements and timelines. First you need to meet the SEC.

Who is the SEC?

The government regulatory agency that registers and supervises the corporate sector or “corporations” is called the Securities Exchange Commission or SEC. This is your first friend in the government if you want to be legit.

What is the process for registration?

Step 1: Verification of corporate name with SEC via the SEC Company Registration System.

Step 2: Drafting and execution of the Articles of Incorporation with the assistance of a competent legal counsel.

Step 3: Deposit of cash received for subscribed shares of stocks in a banking institution in the name of the temporary treasurer-in-trust-for account. For some types of companies, you need the certificate confirming the successful opening of a TITF account, other types will not require this anymore.

Step 4: Filling of the Articles of Incorporation with  the SEC together with the following:

  • Personal information sheet of the incorporators which is autogenerated after completing the SEC Company Registration System
  • Company By-Laws

Step 5: Payment of filing and publication fees. A payment form is generated after completing the SEC Company Registration System; the payment may be settled through the online payment portal that has been created to add convenience for new registrations.

“Sounds complicated, do I need to do all these by myself?”

Sure, you may! Looking at the steps, you may assume that anyone who knows how to comply with instructions could process this. BUT! Having an expert, like a lawyer with the right expertise and rigorous experience could be a lifesaver! Someone with experience can quickly prepare the requirements, foresee possible challenges, and address them even before going to the SEC. An experienced lawyer can save you from unnecessary (and possibly expenses!)  going back-and-forth with the SEC. Count the time and resources you can save. Hiring experts would actually save you time and money, as you skip the trial-and-error of a D-I-Y registration and ensure a more efficient experience overall.

Generally, what are the kinds of corporations? There are two:  Domestic and Foreign.

A domestic corporation is a corporation that is registered and existing under Philippine laws. A common misconception is that it cannot be domestic if owners are foreign. But this is not the case, because a domestic corporation can be Filipino-owned or foreign-owned. If more than 40% of the shareholders of the corporation are foreigners- then it is a foreign-owned corporation. So yes, you may have foreigners as owners of domestic corporations, which means you are also free to get shareholders from outside the country. In addition, the foreign owners do not need to be living in the Philippines to own and contribute to the corporation, but all documents need to be originally signed so if you have foreign owners, expect to be going through a lot of overseas mailing and coordination with the consular offices where the foreign owners are from.

If you are registering as a domestic corporation, the next step is to identify the class of the corporation, which will determine  the specific requirements that need to be prepared. Here is a list of domestic corporation classes:

  1. One Person Corporation

A One Person Corporation (OPC) is a corporation composed of a single stockholder who may be a natural person, whether a Filipino or a foreigner, a trust or an estate.

  1. Stock Corporation

Stock corporations, with two or more shareholders, are the most common corporate vehicle for persons establishing their businesses for profit. A stock corporation’s capital is divided into shares of stock representing proportional ownership of the corporation. Stock corporations may offer these shares of stock to the public and may distribute the surplus profits of the corporation to its shareholders.

  1. Nonstock Corporation

Nonstock corporations are created primarily for public good and welfare such as for charitable, religious, educational and social civic purposes. It does not issue shares of stock to its members and cannot distribute any profits to its members.

The second kind, foreign corporation, is a corporation formed, organized or existing under laws other than those of the Philippines. Imagine a business that started in another country and  ventures into the Philippines as part of its expansion. When that company  enters the Philippines, they are considered foreign corporations.

A foreign corporation may structure its organization by: incorporating a domestic corporation, registering a Branch Office, registering a Representative Office, registering a Regional/Area Headquarters, or registering a Regional Operating Headquarters. The path to your registration will depend on the route you’ll take as a foreign corporation.

How long is the business registration process?

A realistic timeline for the process of incorporation is two weeks to one month. We need to get all documents ready and submitted to the SEC, then our two weeks to one month countdown starts. If you have signatories who are outside the Philippines, additional time should be alloted. Documents would have to be sent to them for their original signature, then the Philippine consular office has to authenticate the documents before getting them back to the Philippines for submission with the SEC.

Once you have registered with the SEC, what’s next?

What’s next is the other government agencies! Baranggay and city level permits have to be processed. Depending on which city you’ll register, the documents and timeline may vary. Once these permits are done, we can proceed with the process with the Bureau of Internal Revenue (BIR). It will be a different ballgame once we’re in this step, and would call for a separate discussion.

“These all sound complicated!” If you’re fresh from your pandemic business’ success and this step overwhelms you, we understand. If you started with the mindset, “start small” and the thought of consulting or hiring a lawyer intimidates you, remember- there is no harm in just asking. More often than not, lawyers are more than happy to provide free initial consultation to assess your needs before you commit to anything, we highly suggest you drop us a message so you can get a picture of how we can help you. You’d even be surprised that fees are actually not as scary or heavy as you think.

The next steps to continue growing your  business can be a much easier and peaceful process by letting experts take care of the “complicated” parts, this way, you can focus on utilizing your resources to build your business and grow your sales and revenues.