President Duterte signs a new law that removes several restrictions on foreign investments. But what does this mean for Philippine businesses?

In a bid to help the Philippines recover from the onslaught of the COVID-19 pandemic, President Rodrigo Duterte signed into law a measure that removes several restrictions on foreign investments. With that, Malacañang released the signed Republic Act No. 11647—an “Act Promoting Foreign Investments”—just this Friday, March 4, 2022.

Based on amendments to the Foreign Investments Act of 1991, the goal of this new law is to make the country more attractive to foreign investors, especially after being deemed as one of the most restrictive countries in Southeast Asia and the world.

With more foreigners putting up businesses or investing in local ones, the government hopes that more jobs would be generated for Filipinos and that technological advancement and skills will be passed on to the country.

Overview of Republic Act No. 11647

But what exactly does the new law entail? First off, it reduces the list of investment areas that only Filipinos can invest in. This includes defense-related businesses like the manufacture, repair, storage, and distribution of firearms, ammunition, and lethal weapons, as well as small and micro domestic market enterprises with paid-up equity capital of less than $200,000 (around PHP10.39 million).

Secondly, the new law will also allow foreigners to own 100% of startup businesses and startup enablers, as well as enterprises that deal with advanced technology and businesses where the majority of its direct employees are Filipinos—at least 15 of them, that is.

Thirdly, a committee will be created. The Inter-Agency Investment Promotion Coordination Committee, which will be led by the Department of Trade and Industry, is in charge of creating plans that promote the country as a foreign investment destination. It’ll also be in charge of maintaining an online database of foreign investments and local businesses that can be partnered with, and it will help address the concerns of foreign investors.

And finally, export enterprises involving foreign investors that fail to meet export ratio requirements will need to reduce their domestic market sales to at most 40% of their total production—compared to the old law, which calls for at most 60%.

Next Plan of Action

Additionally, the Duterte administration requested amendments to the Public Service Act, which will allow full foreign ownership of key industries like telecommunications and transportation. As of writing, the measure has already been ratified by both houses and is awaiting the President’s signature.

RELATED STORIES:

It’s a Go: Duterte Approves Monthly Subsidy for Poor Households

Here’s How to Beat Fuel Price Hikes

Bitcoin or Gold: Which is a Better Investment