The current regulatory frameworks regarding Foreign Investment in the Philippines and other Southeast Asian countries are undergoing a clear liberalization process in recent years. Even in those countries where, due to internal policies or social development needs, this process has been slower, such as Indonesia, Thailand, and the Philippines, significant progress is observed. A common aspect among these three countries has been the implementation of “Negative Investment Lists,” which have favored local entrepreneurs and business owners over foreigners. However, this protective approach is gradually being overcome, recognizing that competition strengthens competitiveness.
In the context of Foreign Investment in the Philippine Economy, it is crucial to analyze one of the most recent regulations: Presidential Decree No. 175, issued by Rodrigo Duterte. This decree introduces the Twelfth Negative Investment List, updating the previous version to reduce restrictions on foreign equity participation in certain sectors.
List “A” sets limits on foreign equity participation, with prohibitions in sectors such as media and certain professions unless bilateral agreements allow for greater openness. This list also outlines a scale-up in allowed participation in other sectors, reaching up to 40% in education, public services, and infrastructure projects. Notably, under certain conditions, Foreign Investment in the Philippines can reach up to 75% in infrastructure projects through joint ventures.
On the other hand, List “B” once again limits foreign participation to 40% for reasons of security, defense, or public health, particularly affecting the manufacture and distribution of sensitive products and small or advanced technology companies.
These restrictions should not be seen as insurmountable barriers to Foreign Investment in the Philippines. Collaboration with reliable local partners or nominal shareholders can be key to maximizing foreign participation. However, it is essential to proceed with due advice and caution when establishing partnerships or corporations.
This analysis highlights how recent legislative reforms are opening new avenues for Foreign Investment in the Philippines, fostering a more open and competitive environment for foreign investors.
