Proposed Foreign Investment Liberalization Act up for PNoy’s signature

A measure that will allow foreigners to fully own lending, adjustment and financing companies, as well as investment houses cited in the Foreign Investment Negative List (FINL) is awaiting President Benigno Aquino III’s signature.

Congress recently transmitted to Malacañang the enrolled copy of the proposed Foreign Investment Liberalization Act for Aquino’s action.

The bill amends four laws: The Lending Company Regulation of 2007 for lending companies, the Insurance Code for adjustment companies, the Financing Company Act of 1998 for financing companies, and the Investment Houses Law.

Under the measure, all statutory laws and implementing rules and regulations imposing nationality requirements in the aforementioned industries shall be abolished.

In particular, the citizenship requirement and share of capital shall be removed as stated in Section 332 pertaining to the Adjusters section of Republic Act 10607 or The Insurance Code.

Similar amendments shall also be applied to Section 5 of RA 8366 or the Investment Houses Law and Section 6 of RA 9474 or the Lending Company Regulation Act of 2007.

With regard to the financing industry, foreign nationals may own 100 percent of such companies but the Securities and Exchange Commission (SEC) may adjust minimum paid-up levels warranted by its oversight requirements.

The measure gives Bangko Sentral ng Pilipinas (BSP) all the regulatory powers over the aforementioned industries following existing laws and regulations.

The bill defines the FINL as a list of areas of economic activity whose foreign ownership is limited to a maximum of 40 percent of the outstanding capital stock in the case of a corporation or capital in the case of a partnership.

Article XII of the 1987 Constitution limits foreign ownership to 40 percent.

Davao del Norte Rep. Anthony del Rosario, chair of the House committee on economic affairs which endorsed the measure for plenary approval, earlier said its passage into law is crucial to the financial sector because it will enable companies to obtain additional capital from foreign sources. —ALG, GMA News