Duterte’s FINL allows 100% foreign investment in five activities

The Duterte administration has opened five activities to 100-percent foreign participation under the country’s 11th Foreign Investment Negative List (FINL).

President Rodrigo Duterte signed on Monday, October 29, Executive Order No. 65 promulgating the 11th FINL and covering the updated list of sectors limited to foreigners.

Copies of EO 65 were released to the media on Wednesday.

The 11th FINL, the first under the Duterte administration, allows 100 percent foreign participation in five investment areas or activities:

• Wellness centers

• Internet business

• Teaching in higher education

• Training centers outside the formal education system

• Adjustment companies, lending companies, financing companies, and investment houses

The list allows local companies to take in up to 40 percent foreign participation in contracts related to the construction and repair of locally funded public works, subject to applicable regulatory frameworks, and private radio communications network.

The 10th FINL allowed only up to 25 percent foreign investment in the construction and repair of public infrastructure and 20 percent in private radio communications network.

This, however, is subject to applicable regulatory frameworks and does not cover infrastructure or development projects under Republic Act No. 7718, as well as projects which are foreign-funded or -assisted and required to undergo international competitive bidding.

"While the cited area of liberalization is not exclusively intended for the Build Build Build program of the government, we accorded due consideration to the reality that construction is one of the most important sectors today in view of the demand arising from the said program and the support given by the Filipinos to it," presidential spokesperson Salvador Panelo said in a statement.

Foreign investors are also allowed up to 40 percent ownership in the following activities and investment areas:

• Ownership of private lands

• Ownership of condominium units

• Deep sea commercial fishing vessel operations

• Exploration, development, utilization of natural resources

• Educational institutions other than those established by religious groups and mission boards

• Public utilities operations, except power generation and electricity supply in contestable market and similar businesses or services not defined as public utilities

• Culture, production, milling, processing, trading—except retailing—of rice and corn and acquiring by barter or purchase rice and corn and the commodities’ by-products

• Supply contracts of materials, goods, and commodities to government-owned or controlled corporation, company, agency or municipal corporation

EO 65 specified that areas prohibited to foreign investors under the Constitution are:

• Mass media

• Cooperatives

• Small-scale mining

• Professional practice

• Ownership, operation, and management of cockpits

• Manufacture of firecrackers and other pyrotechnic devices

• Retail trade enterprises with paid-up capital of less than $2.5 million

• Manufacture, repair, stockpiling and distribution of nuclear weapons

• Organization and operation of private detective, watchmen or security guard agencies

• Manufacture, repair, stockpiling and distribution of biological, chemical and radiological weapons and anti-personnel mines

• Use of marine resources in archipelagic waters, territorial sea and exclusive economic zone, as well as small-scale utilization of natural resources in rivers, lakes, bays and lagoons

“We are very happy to see the 11th RFINL finally approved and signed,” Socioeconomic Planning Secretary Ernesto Pernia said in a separate statement, referring the list as the Regular Foreign Investment Negative List.

“This will help raise the country’s competitiveness, and allow us to be closer to parity with other ASEAN member-states by opening up more areas to foreign investment ... particularly those that will introduce new technology and stimulate innovation,” he added.

The 11th FINL will benefit the country in the long run, according to Philippine Chamber of Commerce and Industry (PCCI).

“What has been tweaked to allow more foreign investors, that is good,” PCCI president George Barcelon told GMA News Online, noting that the list may entice more foreign investors to enter the Philippine market.

But the chamber wanted the Duterte administration to relax the foreign participation in companies operating in the country to more than 40 percent ownership.

“We were hoping that the government can be a bit more competitive compared to other ASEAN nations as to how much foreign ownership they are extending,” Barcelon noted.

The government must also consider easing the restrictions on such sectors as artificial intelligence and agricultural technology, he said.

Panelo said the 11th FINL is meant to liberalize as many sectors as possible "to keep up with domestic and global demands, and designed to be consistent with the policy of easing restrictions on foreign participation in certain industries or activities."

"The list is a product of extensive discussions and we made certain that the same is in accordance with our Constitution," he said. — Ted Cordero with reports by Jon Viktor D. Cabuenas and Virgil Lopez/VDS/BM, GMA News