Legal Heads Up

New Areas of Activity for Foreign Investment in the Philippines

The Philippine Constitution gives the State authority to regulate foreign investments within its national jurisdiction. When the national interest so dictates, certain areas of investment are reserved to Philippine citizens or entities whose capital is at least 60% Filipino-owned.

In this regard, Congress enacted the Foreign Investments Act which prescribes a Regular Foreign Investment Negative List to delineate activities open to foreign investors and/or those reserved to Filipino nationals. The Negative List is divided into three components: List A enumerates activities reserved to Filipinos by mandate of the Constitution and statutes; List B is limited for reasons of security, defense, risk to health and morals, and protection of small and medium scale enterprises; and List C are areas that do not require further foreign investments.

The Negative List is approved by the President, upon recommendation of the National Economic Development Authority. Any amendments to Lists B and C shall not be made more often than once every two years. List A may be amended at any time to reflect statutory changes.

On October 29, 2018, the President released the 11th Regular Foreign Investment Negative List which updates the one issued back in May 29, 2015.

The 11thNegative List now allows full foreign participation in the following areas of activity:

  1. internet businesses
  2. practice of certain professions subject to reciprocity rules and in corporate practice
  3. teaching at higher education levels provided the subject being taught is not a professional subject (i.e., included in a government board or bar examination)
  4. power generation and supply of electricity to the contestable market
  5. short-term high-level skills development institutions that do not form part of the formal education system
  6. wellness centers

Foreign ownership of contracts for the construction and repair of locally-funded public works has increased from 25% to 40% under the 11th Negative List; while private radio communications networks also increased from 25% to 40% foreign ownership.

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