Scribd
Upload
12 views2 pages

Foreign Investments

Uploaded by

Sairyl Parcio Rufino
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
12 views2 pages

Foreign Investments

Uploaded by

Sairyl Parcio Rufino
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Foreign Investments

Republic Act (RA) 7042, also known as the Foreign Investments Act
(FIA) of 1991, is the basic law that governs foreign investments in
the Philippines.

Key features of the FIA

 Concept of a negative list


 Opened domestic market to 100% foreign investment except
those in the Foreign Investment Negative List (FINL)
 Redefined “export enterprise” to mean at least 60% for export
 Allowed 100% foreign ownership of business activities outside
FINL but without incentives

Under this law, foreign investors are allowed to invest 100% equity
in companies engaged in almost all types of business activities
subject to certain restrictions as prescribed in the FINL, which is a
shortlist of investment areas or activities that may be opened to
foreign investors/reserved to Filipino nationals.

Classifications of the FINL

 List A - consists of areas of activities reserved to Philippine


nationals where foreign equity participation in any domestic or
export enterprise engaged in any activity listed therein shall be
limited to a maximum of 40% as prescribed by the Constitution
and other specific laws.
 List B - consists of areas of activities where foreign ownership
is limited pursuant to law such as defense or law enforcement-
related activities, which have negative implications on public
health and morals, and small and medium-scale enterprises.

The FIA clearly states that if the activity to be engaged in is not


included in the FINL, is more than 40% foreign-owned and will cater
to the domestic market, the capital required is at least US$200,000.
The capital may be lowered to US$100,000, if activity involves
advance technology, or the company employs at least 50 direct
employees.

If the foreign company will export at least 60% of its output, or a


trader that purchases products domestically will export at least 60%
of its purchases, the required capital of US$200,000 paid-in is not
applicable.

If the company is at least 60% Filipino - 40% foreign-owned and will


cater to the domestic market, paid-in capital can be less than
US$200,000.

Specific areas of equal investment rights for former Filipino


nationals
While most areas of businesses have limits for foreign investors,
Section 9 of the Amended FIA of 1991 lists the following types of
businesses where natural-born Filipinos can enjoy the same
investment rights as a Philippine citizen.

 Cooperatives
 Thrift banks and private development bank
 Rural banks
 Financing companies

Former natural born Filipinos can also engage in activities under


List B of the FINL. This means that their investments shall be
treated as Filipino or will be considered as forming part of Filipino
investments in activities closed or limited to foreign participation.

The equal investment rights of former Filipino nationals do not


extend to activities under List A of FINL, which are reserved for
Filipino citizens under the Constitution.

Natural born Filipinos have also been given the right to be


transferees of private land up to a maximum of 5,000 square meters
in the case of urban land or 3 hectares in the case of rural land to
be used for business or other purposes.

You might also like