More industries now off limits to foreigners
MANILA, Philippines - Malacañang remains confident that foreign investors will still keep the Philippines on their radar despite the expansion of the list of industries they're not allowed to invest in, or industries where their investments are capped.
On October 29, President Benigno Aquino III signed Executive Order No. 98 to expand the list of investment areas and economic activities reserved for Filipinos under the 9th Regular Foreign Investment Negative list.
The "negative list" now considers real estate and psychological and respiratory therapy as industries where foreign investment or ownership is not allowed or limited.
"No, this will not discourage them. All the foreign investors are very cognizant about the laws that we have especially (this). This actually acts as a guide (for) them. (They know about the list) and this is available to everybody. Everybody looks to establish rules," Deputy presidential spokesperson Abigail Valte said on a radio interview on Friday, November 2.
In a statement, Executive Secretary Paquito Ochoa Jr. said the addition of real estate, psychology and respiratory therapy is based on foreign ownership and foreign practice limitations imposed under the following newly legislated laws:
- Real Estate Service Act of the Philippines (RA 9646),
- Philippine Respiratory Act (RA 10024),
- Philippine Psychology Act (RA 10029), and
- Lending Company Regulation Act of 2007 (RA 9474).
"Except for RA 9474, which allows foreign ownership of up to 49% in lending companies, the 3 others limit the practice of non-Filipinos in the areas of real estate and health care such as respiratory therapy and psychology, unless there is a reciprocity arrangement prescribed by a law," Ochoa noted.
The country's negative list, which is reviewed periodically by the National Economic and Development Authority (NEDA), is composed of sub-lists A and B. The new negative list replaces EO 858 or the 8th Regular Foreign Investment Negative list signed in February 2010.
List A specifies the areas of economic activity where foreign ownership is prohibited or limited by the Constitution or laws. These include:
- mass media,
- practice of all professions,
- private security,
- small-scale mining,
- private radio communications,
- private recruitment for local or overseas employment,
- ownership of private lands,
- financing, and
- investment houses regulated by the Securities and Exchange Commission (SEC).
List B contains limitations on economic activities regulated by law such as:
- small-and medium-scale domestic enterprises,
- defense-related industry (i.e., manufacture of firearms, etc.), and
- businesses that have implications on public health and morals (i.e., gambling, sauna, massage clinics, etc.).
"List A may be amended any time to reflect changes brought about by new laws. List B may be amended not more than once every two years upon the recommendation of the departments concerned and endorsed by the NEDA, or upon NEDA’s own initiative and recommendation, approved by the President and promulgated by a presidential proclamation," Ochoa said. "For now, List B stays while the changes to the negative list covers only List A."
Under the Foreign Investments Act of 1991 (RA 7042), foreign investors are allowed to own 100% equity in businesses excluded from the negative list, said Ochoa.
EO 98 takes effect 15 days after its publication in a newspaper of general circulation. - Rappler.com