The National Economic and Development Authority on Wednesday welcomed President Rodrigo Duterte’s signing of Executive Order No. 65 that would allow full foreign investment participation in five areas.
The EO 65 promulgates the Eleventh Regular Foreign Investment Negative List which reflects amendments in existing laws (e.g., reciprocity provisions in certain laws on professions, such as pharmacy and forestry), limitations on foreign participation in investment areas/activities provided in new laws (e.g., RA 10635 for marine deck/engine officers), and exclusions from limitations on foreign participation in some investment areas/activities identified that do not need legislative action.
“We are very happy to see the 11th RFINL finally approved and signed. This will help raise the country’s competitiveness, and allow us to be closer to parity with other ASEAN member-states by opening up more areas for foreign investment into the country, particularly those that will introduce new technology and stimulate innovation,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement.
Pernia said the Philippines is one of the most restrictive countries in ASEAN in terms of foreign direct investments but this is about to change with the recently signed EO.
Five investment areas/activities will now allow up to 100 percent foreign participation under the EO. These are Internet businesses, which has been excluded from mass media; teaching at higher education levels provided the subject being taught is not a professional subject (i.e., included in a government board or bar examination); training centers that are engaged in short-term high level skills development that do not form part of the formal education system, adjustment companies, lending companies, financing companies and investment houses; and wellness centers, which has been excluded in item 4 of List B.
These five areas may be amended by executive power, and do not require legislative action.
EO 65 also allows up to 40 percent foreign participation in contracts for the construction and repair of locally-funded public works, subject to applicable regulatory frameworks, and private radio communications network.
The 10th RFINL allowed only up to 25 percent and 20 percent foreign participation, respectively, in these areas.
Meanwhile, legislative actions to lift restrictions on foreign participation in other investment areas/activities identified in the President’s Memorandum Order No. 16, series of 2017 are already being undertaken.
House Bill 5828, which seeks to amend the Public Service Act, was approved on third reading by the House of Representatives on September 2017, transmitted to, and accepted by, the Senate on the same month. Senate Bills 695, 1261, 1291, 1441 and 1594 also seek to amend the Public Service Act.
“All told, these are still marginal improvements in our effort to attract FDIs. If we really want to be sufficiently competitive with our ASEAN neighbors, more drastic amendments in our restrictive laws are called for,” said Pernia.