On 29 October 2018, the Office of the President issued Executive Order No. 65, “Promulgating the Eleventh Regular Foreign Investment Negative List,” replacing the three-year-old Tenth Regular Foreign Investment Negative List issued by the former administration in 2015.
The Eleventh Foreign Investment Negative List indicates the investment areas or activities which are open to foreign investors and/or reserved to Filipino nationals. It provides for Lists A and B.
List A provides for investment areas reserved exclusively to Filipino nationals and areas where foreign ownership is limited by the constitution and specific laws. While, List B provides for investment areas where foreign ownership is limited to 40% for reasons of security, risk to health and morals and protection of small and medium scale industries.
List A may be amended at any time to reflect changes in laws and List B may be amended only once every two years as provided for in Section 8 of RA no. 7042.
The following are the notable new provisions, changes and omissions in the Eleventh Foreign Investment Negative List:
- The “Annex on Professions” provides for forty-three (43) professions where foreigners are allowed to practice in the Philippines subject to the principle of reciprocity; and fifteen (15) professions where corporate practice is allowed;
- Increased Foreign equity to 40% for contracts for the construction and repair of locally-funded public works (Sec.1 of CA No. 541, Letter of Instruction No. 630), except for projects covered by RA No. 7718.
- The following are not subject to the 40% foreign equity limitation:
i.) The power generation and the supply of electricity to contestable market (Sec. 6 and Sec. 29, respectively, of RA No. 9136) and such other like businesses or services not covered by the definition of public utilities are not subject to 40% foreign equity limitation.
ii.) Educational institutions established for foreign diplomatic personnel and their dependents, and other foreign temporary residents (Art. XIV, Sec. 4 of the Constitution), or for short-term high-level skills development that do not form part of the formal education system. - The following were altogether omitted from the list:
i.) Private radio communication network (RA 3846) (20%)
ii.) Facility operator of an infrastructure or a development facility requiring a public utility franchise. (30%)
iii.) Adjustment companies. (30%)
Kindly refer to the attached Executive Order (EO) No. 65 for the complete Foreign Investment Negative List.
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