President Rodrigo Duterte has signed into law a measure amending the Foreign Investment Act (FIA) to make the Philippines more accessible to foreign investors.
Signed by Duterte on March 2 and released Friday, Republic Act No. 11647 amends the Foreign Investments Act of 1991.
The new law allows qualified non-Philippine nationals to do business in the country or invest in a domestic enterprise up to 100 percent of its capital and liberalizes the practice of professions not governed by existing special laws.
The law also allows foreign investors to set up 100 percent ownership of all small- and medium-sized enterprises.
Albay Rep. Joey Salceda, who was a principal author of the House version, said the law could boost the country’s bid to be “a leading startup hub in Southeast Asia,” especially for technology and other companies seeking to solve long-standing problems in financial inclusion, agricultural productivity, health delivery, and other key services.
“The fact of the matter is that disruptions in the global economy now come from small, tech-driven startups. Under the FIA amendments, tech startups would be able to locate in the Philippines with less friction, move their professionals and experts in, and teach Filipinos and improve conditions in lagging sectors of the economy,” Salceda said.
Salceda said the law could be complemented by the establishment of special investors and experts’ visas for tech startups of the size that the FIA amendments now allow in the country.
“The current special investors’ resident visa allows foreigners who seek to invest $75,000 or more in the country. I strongly suggest that we alter that a bit to also allow startup founders who may not have met that investment criterion yet, but are willing to locate their desirable startups in the country,” he said.
He said the effect of a tech startup founders’ visa in the country is that while they may not necessarily be investors themselves, they may potentially attract investors with capital to invest in their own startups, which will be Philippine-based.
Salceda also said the FIA amendments pave the way for “expert and highly technical personnel visas,” similar to the EB-1 or Einstein Visas granted by the United States for people who are highly acclaimed in their field as well as respected academic researchers and multinational executives.
“Encouraging the world’s best to live and work in the Philippines could only mean well for knowledge transfer in the country. And the FIA amendments pave the way for that by liberalizing the practice of professions not governed by special laws,” he said.
AAMBIS-Owa Party-list Rep. Sharon Garin, meanwhile, said the country needs more foreign investments to come in and help supplement Filipino capital.”
“After 30 years, we now have an updated and relevant law that fits the needs of our country. Definitely, foreign direct investments (FDI) will play a big role in our post-pandemic economic recovery measures. This is part of the effort to gain more capital or investments and help grow ailing industries,” she said.
Garin expressed hope that the creation of more jobs will result in faster post-pandemic economic recovery.
She said she hoped that the Philippines will no longer be ranked the third most restrictive economy in the world by the Organization for Economic Cooperation and Development (OECD).
She said there is a trickle-down effect when the country experiences a generally good investment climate, as it generates more employment opportunities and will introduce innovation to industries that need to compete in the international market.
“Ultimately, you’ll have better buying power for everybody and will help the government provide better quality of goods and services. It’s definitely a win-win situation,” Garin said.
Trade Secretary Ramon Lopez welcomed the passage of the law.
“We in the economic team have always been in favor of reasonably opening up the economy and liberalizing as many restrictions that hinder the continuous and fast growth of the economy,” Lopez said in a statement Friday.
The Trade chief expects to attract more foreign investments with the enactment of the bill into law.
According to the Philippine Statistics Authority, approved foreign investments increased by 71.5 percent to P192.34 billion from P112.12 billion in 2020.
The top foreign sources of investment pledges last year were Singapore at P80.17 billion, the Netherlands with P26.9 billion, and Japan with P24.47 billion.
On the other hand, the Bangko Sentral ng Pilipinas reported that foreign direct investments rose 52.5 percent from January to November last year to $9.2 billion. \
Philippine Chamber of Commerce and Industry (PCCI) president George Barcelon said the law is crucial to create more jobs, which is what the country needs to support economic recovery.
“We are for the Foreign Investments Act. We just stepped out of COVID, and this piece of legislation is very important for us, for the country to move on,” he said.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the law would send a positive signal to the international investment community, “aligning the country’s regulations with the rest of the world, as well as with global best practices.”
“The entry of more foreign businesses in the country would also provide more choices for local consumers, businesses, and other institutions in the country, in terms of better product and service quality, lower prices, better technology, among others, as brought about by increased competition, thereby making them better off,” he said.
The Management Association of the Philippines (MAP) also welcomed the law’s approval.
“The FIA amendment had long been our advocacy,” MAP said in a statement.
MAP president Alfredo Pascual said the amended FIA brings the Philippines more in line with being investment-friendly like other developing countries in the region.
“It should make the country more attractive to foreign direct investments that will help strengthen and diversify the Philippine economy as we recover from the pandemic,” he said.
Specifically, the amendment will raise national competitiveness, create more jobs, broaden the manufacturing base, provide higher value-added products from agriculture and natural resources, and benefit local consumers with better products and services, the MAP said.
