November 09, 2018

Full Foreign Participation Now Allowed on New Investment Areas

The 11th Regular Foreign Investment “Negative List” or the Executive Order No. 65 released last October 29 allows new areas of investment or activities for foreign investments and equity. This includes internet businesses, training centers, investment houses, and wellness centers.

Executive Order No. 65

National Economic and Development Authority (NEDA) stated that the five areas “…may be amended by executive power, and do not require legislative action.” A lot has changed in the provisions compared to the 10th negative list issued in 2015.

Meanwhile, the 30 percent foreign equity for the advertising sector remains.

100 Percent Foreign Participation

Internet businesses;
Teaching at higher education levels;
Training centers that are engaged in short-term high-level skills development;
Adjustment companies, lending companies, financing companies, and investment houses;
Wellness centers.

Below is a quick rundown of the list as stated on the EO No. 65:

40 Percent Foreign Equity

Construction and repair of locally-funded public works;
Exploration, development, and utilization of natural resources;
Ownership of private lands;
Operation of public utilities;
Educational institutions for foreign diplomatic personnel and their dependents and other foreign temporary residents;
Culture, production, milling, processing, trading of rice and corn;
Contracts for the supply of materials, goods, and commodities to government-owned or controlled operation;
Operation of deep sea commercial fishing vessels;
Ownership of condominium units;
Private radio communications network.

25 Percent Foreign Equity

Private recruitment, whether for local or overseas recruitment;
Contracts for the construction of defense-related structures.

Under the Executive Order, no foreign equity is allowed on the following areas by mandate of the constitution and specific laws:

Mass media;
The practice of professions including radiologic and x-ray technology, marine deck officers and marine engine officers;
Retail trade enterprises;
Cooperatives;
Organization and operation of a private detective, watchmen or security guard agencies;
Small-scale mining;
Utilization of marine resources in archipelagic waters, territorial sea and exclusive economic zones;
Ownership, operation, and management of cockpits;
Manufacture, repair, stockpiling and/or distribution of biological, chemical, and radiological weapon and anti-personnel mines and;
Manufacture of firecrackers and other pyrotechnic devices.

Also read: Manila ranks third in ‘Top City Investment Prospects’ in Asia Pacific 2017 survey

The foreign direct investments (FDI) restriction chart from the Organization for Economic Co-Operation and Development (OECD) shows the Philippines as the most restrictive in 2017 /GRAPH OECD FDI Regulatory Restrictiveness Index database.

In 2017, the Organization for Economic Co-Operation and Development (OECD) ranked the Philippines as the most restrictive country for foreign investments. Therefore, in response to the rising domestic and global demands of competitiveness and job opportunities, the updated list is meant to liberalize as many sectors as possible.

The Executive Order No.65 includes the full list, exceptions, and an annex of professions that foreigners are allowed to practice in the Philippines. With this, the government sees an increase in foreign direct investments in the following years.

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