4_FOREIGN_INVESTMENTS_2020.pptx

1. FOREIGN
INVESTMENTS
in the Philippines

2. REPUBLIC ACT NO.
7042
salient points

3. REPUBLIC
ACT NO.
7042
•
•
An act known as the
“Foreign Investments
Act of 1991”
An act to promote foreign
investments, prescribe the
procedures for registering
enterprises doing business
in the Philippines, and for
other purposes

4. REPUBLIC
ACT NO.
7042
• Republic Act 7042 as
amended by RA 8179, is
the basic law that governs
foreign investments in the
Philippines.
• It is considered a
landmark legislation
because it liberalized the
entry of foreign
investments into the
country.

5. DEFINITION OF TERMS
•
•
Investment - equity participation in any enterprise organized or
existing under the laws of the Philippines.
Foreign Investment - shall mean as equity investment made by a non-
Philippine national in the form of foreign exchange and/or other
assets actually transferred to the Philippines and duly registered
with the Central Bank which shall assess and appraise the value of
such assets other than foreign exchange.

6. DEFINITION OF TERMS
• Philippine national – a citizen of the Philippines or a domestic
partnership or association wholly owned by citizens of the
Philippines; or a corporation organized under the laws of the
Philippines of which at least sixty percent (60%) of the capital
stock outstanding and entitled to vote is owned and held by
citizens of the Philippines; or a trustee of funds for pension or
other employee retirement or separation benefits, where the
trustee is a Philippine national and at least sixty (60%) of the
fund will accrue to the benefit of the Philippine nationals.

7. DEFINITION OF TERMS
• Export enterprise – an enterprise wherein a manufacturer,
processor or service (including tourism) enterprise exports
sixty percent (60%) or more of its output, or wherein a trader
purchases products domestically and exports sixty percent
(60%) or more of such purchases.

8. DECLARATION OF POLICY
• It is the policy of the State to attract, promote and welcome
productive investments from foreign individuals, partnerships,
corporations, and governments, including their political subdivisions,

9. DECLARATION OF POLICY
in activities which significantly contribute to national
industrialization and socio- economic development to the extent
that foreign investment is allowed in such activity by the
Constitution and relevant laws.

10. DECLARATION OF POLICY
• Foreign investments shall be encouraged in enterprises that:
– significantly expand livelihood and employment opportunities
for Filipinos;

11. DECLARATION OF POLICY
• Foreign investments shall be encouraged in enterprises that:
exports and their
– enhance economic value of farm products;
– promote the welfare of Filipino consumers;
– expand the scope, quality and volume of
access to foreign markets; and/or
– transfer relevant technologies in agriculture, industry and
support services.

12. POINTS TO PONDER…
• Can a foreign company
invest in the Philippines?
• What is the percentage of
foreign equity allowed
under the FIA?

13. DECLARATION OF
POLICY
• As a general rule, there
are no restrictions on
extent of foreign
ownership of export
enterprises.
• In domestic market
enterprises, foreigners
can invest as much as
one hundred percent
(100%) equity except in
areas included in the

14. DECLARATION OF
POLICY
• Foreign owned
firms catering
mainly to the
domestic market
shall be
encouraged to
undertake
measures that will
gradually increase
Filipino

15. DECLARATION OF
POLICY
o taking in Filipino
partners, electing
Filipinos to the board
of directors
o implementing
transfer of
technology to
Filipinos
o generating more
employment for
the economy
o enhancing skills of
Filipino workers

16. REGISTRATION OF INVESTMENTS
OF NON-PHILIPPINE NATIONALS
• A non-Philippine national must register with:
– Securities and Exchange Commission (SEC), or
– Bureau of Trade Regulation and Consumer Protection
(BTRCP) of the Department of Trade and
Industry in the case of single proprietorships
• Any enterprise seeking to avail of incentives under
the Omnibus Investment Code of 1987 must apply
for registration with the Board of Investments (BOI)

17. KEY FEATURES OF THE FIA
•
•
Concept of a negative list
Opened domestic market to 100% foreign
investment except those in the Foreign
Investment Negative List (FINL)
Redefined “export enterprise” to mean at least
60% for export
Allowed 100% foreign ownership of business
activities outside FINL but did not specify
incentives
•
•

18. EXECUTIVE ORDER NO. 65
by Pres. Rodrigo Roa Duterte

19. EXECUTIVE ORDER NO.
65
Promulgating the Eleventh
Regular
Foreign Investment Negative List

20. FOREIGN INVESTMENT
NEGATIVE LIST
•
•
also known as “Negative List”
a shortlist of investment areas or activities
which may be opened to foreign investors
and/or reserved to Filipino nationals
a list of areas of economic activity whose
foreign ownership is limited to a maximum of
•
forty percent (40%) of the equity capital of
the enterprise engaged therein.

21. FOREIGN INVESTMENT
NEGATIVE LIST
• List A*
– Areas of activities reserved to
Philippine nationals by mandate of the
Constitution and specific laws
– Foreign ownership is limited by mandate
of the constitution and specific laws

22. See link:
........Downloads20181029-EO-65-RRD
11th Negative List.pdf

23. FOREIGN INVESTMENT
NEGATIVE LIST
• Any amendment to List A may be
made at any time to reflect changes
instituted in specific laws while
amendments to List B shall not be
made more often than once every
two years

24. S P E C I F I C A RE A S O F E Q U A L
I N V E S T M E N T R I G H T S F O R
F O R M E R FILIPINO
NATIO NALS
• Types of businesses where former natural-
born Filipinos can enjoy the same investment
rights as a Philippine citizen.
1. Cooperatives
2. Rural banks
3. Thrift banks and private development
banks
4. Financing companies

25. S P E C I F I C A RE A S O F E Q U A L
I N V E S T M E N T R I G H T S F O R
F O R M E R FILIPINO
NATIO NALS
• Former natural born Filipinos can also engage in activities
under List B of the FINL.
– This means that their investments shall be treated as
Filipino or will be considered as forming part of Filipino
investments in activities closed or limited to foreign
participation. The equal investment rights of former
Filipino nationals do not extend to activities under List
A of FINL which are reserved for Filipino citizens
under the Constitution.

26. S P E C I F I C A RE A S O F E Q U A L
I N V E S T M E N T R I G H T S F O R
F O R M E R FILIPINO
NATIO NALS
• Former natural born Filipinos have also been given the
right to be transferees of private land up to a maximum of
5,000 square meters in the case of urban land or three (3)
hectares in the case of rural land to be used for business or
other purposes.

27. NATIONAL AGENCIES
CONCERNED

28. SECURITIES AND
EXCHANGE COMMISSION
• The Securities and Exchange
Commission (SEC) or the Commission
is the national government regulatory
agency charged with supervision over
the corporate sector, the capital
market participants, the securities
and investment instruments market,
and the investing public.

29. BOARD OF INVESTMENT
• An
attached
agency of the lea
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for the
government agency
responsible
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venture and prosper in
desirable areas
activities.
of economic
• A one-stop shop in
the Philippines
doing business in

30. BUREAU OF TRADE REGULATION
AND CONSUMER PROTECTION
• The BTRCP functions as a policy-
making body and oversees the
overall implementation of trade
and consumer protection laws.
services
• It renders the following
through its three divisions:
1. Fair Trade Division
2. Consumer Welfare Division
3. Business Regulatory Division

31. YES OR NO?
• Can foreign corporations acquire
or own land in the Philippines?

32. YES OR NO?
• Can foreign corporations
Philippines?
acquire or own land in the
Yes, provided the following requirements are met:
a. It must be a private land, which means any land of
private ownership; and
b. the foreign equity in the corporation must not
exceed forty percent (40%).

33. YES OR NO?
• What will happen (to the private land) if foreign ownership
exceeds forty percent (40%)?
The effect would be that the foreign corporation
lose its capacity to hold the private land. They
however, be granted temporary rights such as a
contract which is not prohibited by the Constitution.
would
may,
lease

34. YES OR NO?
• Are foreigners and foreign corporations allowed to lease
lands in the Philippines?
Yes. Foreign corporations can acquire other
immovable or real properties such as buildings and other
improvements on the land, including condominium units.

35. ADDITIONAL INFO
What are the other exceptions to the ownership of
land by foreign investors and corporations?
•
•
Acquisition through hereditary succession;
Purchase by a former natural-born Filipino citizen
pursuant to the Dual Citizenship Law which states that
a former Filipino re-acquiring his Filipino Citizenship
shall be deemed not to have lost his Philippine
citizenship, thus enabling them to enjoy all the rights
and privileges of a Filipino;

36. ADDITIONAL INFO
What are the other exceptions to the ownership of
land by foreign investors and corporations?
•
•
• If a former natural-born Filipino who has become a
naturalized citizen of another state opts not to re-
acquire Filipino citizenship according to the Dual
Citizenship Act, he may nonetheless own land but
limited to the provisions of BP 185 and RA 8179.
Purchase of not more than 40% interest in a
condominium project; and
Ownership through Filipinos who are married to aliens
who retain their Filipino citizenship

37. SOURCE
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•
•
•
•
•
•
•
http: /boiown.gov.ph/db-main-final/foreign-investments/
http:/www.boi.gov.ph/pdf/laws/ra/RA%2070 42.pdf
http:/www.boi.gov.ph/pdf/laws/eo/EO%2098.pdf
http:/www.boi.gov.ph/pdf/laws/ra/RA%2087 99.pdf
http:/www.dti.gov.ph/dti/index.php?p=181
http:/www.sec.gov.ph/aboutsec/powerandfu nction.html
http://www.sec.gov.ph/about/mission-values-and-vision/
http://www.dptlaw.asia/forms/PRIMERS,%20GUIDES%20
&%20FAQs/FAQs%20on%20FOREIGN%20INVESTMENT%20IN%2
THE%20PHILIPPINES.pdf
https://www.sec.gov.ph/wp-content/uploads/2015/08/EONo.-
184-The-Tenth-Regular-Foreign-Investment-Negative-List.p
df
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