Philippine investment policy aims to attract, promote, and welcome productive foreign investments in activities that significantly contribute to national industrialisation and socio-economic development to the extent allowed by the Constitution and relevant laws. This policy is set forth in the Foreign Investments Act of 1991, which provides for the formulation of a Foreign Investment Negative List (“Negative List”). The Negative List enumerates economic activities where foreign equity is either prohibited or limited to a certain percentage, and is amended at least every two years.

On 29 October 2018, President Rodrigo Duterte signed Executive Order No. 65 (“EO 65”) to issue the 11^th Foreign Investment Negative List (“11^th Negative List”). The 11^th Negative List updates the 10^th Negative List, which was promulgated more than 3 years ago under Executive Order No. 184.

Compared to the 10^th Negative List, the 11^th Negative List is less restrictive since it now allows full foreign participation in 5 investment areas or activities and relaxes foreign equity restrictions by allowing up to 40% foreign participation in 3 sectors. The following table outlines the changes introduced by the 11^th Negative List in the following investment areas:

The foregoing is a non-exhaustive enumeration of the sectors/activities that are subject to foreign equity limitations, which have been otherwise retained by the 11^th Negative List.

Meanwhile, there are pending bills in the Philippine Congress intended to lift any restriction on foreign participation in the telecommunications sector. House Bill No. 5828 and Senate Bill No. 1754 are measures aimed to exclude telecommunications from the definition of public utilities, which is still subject to a 40% foreign equity restriction.

If you have any questions or require any additional information, please contact Felix Sy or Lorybeth Baldrias Serrano or the ZICO Law partner you usually deal with.

This alert is for general information only and is not a substitute for legal advice.