Duterte signs EO updating foreign investment limitations

Update

President Rodrigo Duterte has signed an executive order updating the list of investment areas, which prohibits or limits foreign ownership in the Philippines.

The President signed Executive Order No. 65, promulgating the 11th regular foreign investment negative list on October 29 but was released to media only on Wednesday.

No foreign equity is allowed under the following:

• Mass media (except recording) and internet business
• Practice of professions
• Retail trade enterprises with paid-up capital of less than US$2, 5000, 000
• Cooperatives
• Organization and operation of private detective, watchmen, or security guard agencies
• Small-scale mining
• Utilization 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
• Ownership, operation and management of cockpits
• manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons  and anti-personnel mines
• Manufacture of firecrackers and other pyrotechnic devices

Foreigners are allowed 25-percent equity in private recruitment, whether for local or overseas employment, and contract for the construction of defense-related structures.

Under the EO, a 30-percent foreign equity on advertising remains.

A 40 percent cap on locally-funded public works and private radio communications network sector is now allowed up from the previous 25 percent and 20 percent.

Duterte also allowed 40-percent foreign equity in the following areas:

• Exploration, development, and utilization of natural resources
• Ownership of private lands
• Operation of public utilities, except power generation and supply of electricity to the contestable market and such other like businesses or services not covered by the definition of public utilities
• Educational institutions other than those established by religious groups and mission boards
• Culture, production, milling, processing, trading except retailing, of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof
• Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or municipal corporation
• Operation of deep sea commercial fishing vessels
• Ownership of condominium units

In a statement on Wednesday, Presidential Spokesperson Salvador Panelo confirmed that “the restriction involving contracts for the construction and repair of locally-funded public works was liberalized from 25 percent to 40 percent foreign equity.”

“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,” Panelo said.

He said the latest Foreign Investment Negative List was “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.”

He said the list “is a product of extensive discussions and we made certain that the same is in accordance with our Constitution.”

“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,” he said. /muf/ac