FOREIGN

INVESTMENTS
in the Philippines
REPUBLIC ACT NO.
7042
salient points
 • An act known as the
“ Fo r e i g n I nve s t m e n t s
REPUBLIC Act of 1991”
A C T NO. • An act to promote foreign
investments, prescribe the
7042 procedures for registering
enterprises doing business
in the Philippines, and for
other purposes
 • Republic Act 7042 as
a m e n d e d by R A 8179, is
REPUBLIC the basic law that governs
foreign investments in the
A C T NO. Philippines.
7042 • It is considered a
landmark legislation
because it liberalized the
entry of foreign
investments into the
country.
 DEFINITION OF TERMS

• Investment - equity participation in any enterprise organized or

existing under the laws of the Philippines.
• Foreign Investment - shall mean as equity investment made by a non-
Philippine national in the form of foreign exchange and/or other
assets actually transferred to the Philippines and duly registered
with the Central Bank which shall assess and appraise the value of
such assets other than foreign exchange.
 DEFINITION OF TERMS

• Philippine national – a citizen of the Philippines or a domestic

partnership or association wholly owned by citizens of the
Philippines; or a corporation organized under the laws of the
Philippines of which at least sixty percent (60%) of the capital
stock outstanding and entitled to vote is owned and held by
citizens of the Philippines; or a trustee of funds for pension or
other employee retirement or separation benefits, where the
trustee is a Philippine national and at least sixty (60%) of the
fund will accrue to the benefit of the Philippine nationals.
 DEFINITION OF TERMS

• Export enterprise – an enterprise wherein a manufacturer,

processor or service (including tourism) enterprise exports
sixty percent (60%) or more of its output, or wherein a trader
purchases products domestically and exports sixty percent
(60%) or more of such purchases.
 DE CLA R A T I ON OF P O L I C Y

• It is the policy of the State to attract, promote and welcome

productive investments from foreign individuals, partnerships,
corporations, and governments, including their political subdivisions,
DE CLA R A T I ON OF P O L I C Y

in activities which significantly contribute to national

industrialization and socio- economic development to the extent
that foreign investment is allowed in such activity by the
Constitution and relevant laws.
 DE CLA R A T I ON OF P O L I C Y

• Foreign investments shall be encouraged in enterprises that:

– significantly expand livelihood and employment opportunities
for Filipinos;
 DE CLA R A T I ON OF P O L I C Y

• Foreign investments shall be encouraged in enterprises that:

– enhance economic value of farm products;
– promote the welfare of Filipino
consumers; exports and their
– expand the scope, quality and
– volume ofrelevant
transfer access technologies
to foreign
in agriculture, industry and
markets;services.
support and/or
P OI N T S TO P O N D E R …
• Can a foreign company
invest in the Philippines?
• What is the percentage of
foreign equity allowed
under the FIA?
DECLARATION OF
POLICY
• As a general rule,
there are no
restrictions on extent of
foreign ownership of
export enterprises.
• In domestic market
enterprises, foreigners
can invest as much
as one hundred percent
(100%) equity except
in areas included in
DECLARATION OF
POLICY
• Foreign owned
firms catering
mainly to the
domestic market
shall be
encouraged to
undertake
measures that
will gradually
increase Filipino
DECLARATION OF
POLICY
o taking in Filipino
partners, electing
Filipinos to the
board of directors
o
implementing
transfer of
technology to
Filipinos
o generating
more
employment for
the economy
REGISTRATION OF INVESTMENTS
OF NON-PHILIPPINE NATIONALS
• A non-Philippine national must register with:
– Securities and Exchange Commission (SEC), or
– Bureau of Trade Regulation and Consumer Protection
(BTRCP) of the Department of Trade
and Industry in the case of single
• Anyproprietorships
enterprise seeking to avail of incentives under
the Omnibus Investment Code of 1987 must apply
for registration with the Board of Investments (BOI)
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 did not specify
incentives
EXECUTIVE ORDER NO. 65
by Pres. Rodrigo Roa Duterte
EXECUTIVE ORDER NO.
65
Promulgating the Eleventh
Regular
Foreign Investment Negative List
 FOREIGN INVESTMENT
NEGATIVE LIST
• also known as “Negative List”
• a shortlist of investment areas or
activities which may be opened to
and/or reserved to Filipino nationals
foreign investors
• a list of areas of economic activity whose
foreign ownership is limited to a maximum of
forty percent (40%) of the equity capital of
the enterprise engaged therein.
 FOREIGN INVESTMENT
NEGATIVE LIST
• List A*
– Areas of activities reserved to
Philippine nationals by mandate
of the Constitution and specific
laws
– Foreign ownership is limited by mandate
of the constitution and specific laws
See link:
..\..\..\..\Downloads\20181029-EO-65-RRD
11th Negative List.pdf
 FOREIGN INVESTMENT
NEGATIVE LIST
• Any amendment to List A may be
made at any time to reflect changes
instituted in specific laws while
amendments to List B shall not be
made more often than once every
two years
S P E C I F I C A R E A S O F E Q UA L
INVESTMENT RIGHTS FOR
FORMER FILIPINO
N• AT I O N A L S
Types of businesses where former natural-
born Filipinos can enjoy the same investment
rights as a Philippine citizen.
1. Cooperatives
2. Rural banks
3. Thrift banks and private
development banks
4. Financing companies
S P E C I F I C A R E A S O F E Q UA L
INVESTMENT RIGHTS FOR
FORMER FILIPINO
N AT I O N A L S
• 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.
S P E C I F I C A R E A S O F E Q UA L
INVESTMENT RIGHTS FOR
FORMER FILIPINO
N AT I O N A L S
• Former 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 three (3)
hectares in the case of rural land to be used for business or
other purposes.
NATIONAL AGENCIES
CONCERNED
 SECURITIES AND
EXCHANGE COMMISSION
• The Securities and Exchange
Commission (SEC) or the Commission
is the national government regulatory
agency charged with supervision over
the corporate sector, the capital
market participants, the securities
and investment instruments market,
and the investing public.
 BOARD OF INVESTMENT
• An agency of the lea
attached DTI, d
government agency for the
responsible
• pArsosmisotstion theof ifnoretih
iPnhvielisptp
venture and prosper in
ipnivneostmeaareas
desirable
Fili nntds of gne
economic
insesto.
activities.
or
• A one-stop shop doing business in
in the Philippines
BUREAU OF TRADE REGULATION
AND CONSUMER
PROTECTION
• The BTRCP functions as a policy-
making body and oversees the
overall implementation of trade
and consumer protection laws.
• It renders the following services
through its three divisions:
1. Fair Trade Division
2. Consumer Welfare
Division
3. Business Regulatory
YES OR NO?

• Can foreign corporations acquire

or own land in the
Philippines?
YES OR NO?

• Can foreign acquire or own land in the

corporations Philippines?

Yes, provided the following requirements are met:

a. It must be a private land, which means any land of
private ownership; and
b. the foreign equity in the corporation
must not exceed forty percent (40%).
YES OR NO?

• What will happen (to the private land) if foreign ownership

exceeds forty percent (40%)?

The effect would be that the foreign corporation would

lose its capacity to hold the private land. may,
They lease
however, be granted temporary rights such as a
contract which is not prohibited by the Constitution.
YES OR NO?

• Are foreigners and foreign corporations allowed to

lease lands in the Philippines?

Yes. Foreign corporations can

acquire other immovable or real properties such as
buildings and other improvements on the land, including
condominium units.
ADDITIONAL INFO

What are the other exceptions to the ownership of

land by foreign investors and corporations?
• Acquisition through hereditary succession;
• Purchase by a former natural-born Filipino citizen
pursuant to the Dual Citizenship Law which states that
a former Filipino re-acquiring his Filipino Citizenship
shall be deemed not to have lost his Philippine
citizenship, thus enabling them to enjoy all the rights
and privileges of a Filipino;
ADDITIONAL INFO

What are the other exceptions to the ownership of

land by foreign investors and corporations?
• If a former natural-born Filipino who has become a
naturalized citizen of another state opts not to re-
acquire Filipino citizenship according to the Dual
Citizenship Act, he may nonetheless own land but
limited to the provisions of BP 185 and RA 8179.
• Purchase of not more than 40% interest in a
condominium project; and
• Ownership through Filipinos who are married to aliens
who retain their Filipino citizenship
SOURCE
• http: /boiown.gov.ph/db-main-final/foreign-
• investments/ http: /
• www.boi.gov.ph/pdf/laws/ra/RA%2070 42.pdf
• http: /www.boi.gov.ph/pdf/laws/eo/EO%2098.pdf
• http: /www.boi.gov.ph/pdf/laws/ra/RA%2087
• 99.pdf
• http: /www.dti.gov.ph/dti/index.php?p=181
• http: /www.sec.gov.ph/aboutsec/powerandfu nction.html
http://www.sec.gov.ph/about/mission-values-and-vision/
http://www.dptlaw.asia/forms/PRIMERS,%20GUIDES%20
•
& % 2 0 FA Q s / FA Q s % 2 0 o n % 2 0 F O R E I G N % 2 0 I N V E S T M E N T % 2 0 I N % 2
THE%20PHILIPPINES.pdf
https://www.sec.gov.ph/wp-content/uploads/2015/08/EONo.-
184-The-Tenth-Regular-Foreign-Investment-Negative-List.p df