Duterte signs law relaxing foreign investment restrictions

President Rodrigo Duterte has signed into law a measure that effectively eases several restrictions on foreign investment.

Republic Act 11647, which amended the Foreign Investments Act of 1991, was signed by Duterte on March 2, but a copy of the law was only released to the media on Friday.

Among the salient features of the law are the following:

• Foreigners are allowed 100% ownership of enterprises involved in advanced technology, startups or startup enablers, those enterprises where majority of direct employees are Filipinos but shall not be less than 15 and have a minimum paid-in capital of $100,000.
• Investment areas reserved for Philippine nationals are limited to 1) defense-related activities such as the manufacture, repair, storage, and distribution of firearms and ammunition, explosives, lethal weapons, among others; and 2) micro, small domestic market enterprises with paid-in capital of less than $200,000.
• Foreigners in export enterprises are allowed 100% foreign ownership, except in areas reserved for Filipinos. However, they are ordered to comply with their export requirements. Non-compliance will result in reduction of their domestic market sales to not over 40% of their total production.
• Creation of the Inter-Agency Investment Promotion Coordination Committee to be led by the Department of Trade and Industry

The law also mandates a review of the Foreign Investment Negative List every two years, and liberalizes the practice of certain professions, so that enterprises that would otherwise be unable to do business in the Philippines without foreign talent would now be able to set up shop in the country.

A series of amendments to the 85-year-old Public Service Act (PSA), which also aims to further open up the economy to foreigners, are awaiting Duterte’s signature.

The Senate and the House of Representatives ratified last month the bicameral conference committee report on the bill seeking to modernize the PSA.

The bill seeks to clear ambiguity surrounding the terms “public utility” and “public service,” identifying public utilities as the following: the distribution and transmission of electricity; petroleum and petroleum products pipeline transmission systems; water pipeline distribution systems and wastewater pipeline systems, including sewerage pipeline systems; seaports; and public utility vehicles.

According to the proposed law, any industry not included among these will remain public services and will be liberalized or open to 100% foreign ownership. — VBL, GMA News