Explainer: Can foreigners own businesses in the Philippines?

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Ever wondered why there’s an influx of expatriates and foreign workers in the country? Or why the e-commerce sector continues to grow here in the Philippines? The 11th Regular Foreign Investment Negative List may be a factor for the sudden increase in foreigners.

11th Regular Foreign Investment Negative List

Signed in October 2018, the 11th Regular Foreign Investment Negative List issued in Executive Order No. 65 sets limitations on foreign equity. Although for some sectors, it eases the restrictions on foreign ownership and allowable professions to be practiced. 

This includes investment areas and activities that can be 100% owned by foreigners. These are:

• Internet businesses
• Teaching higher education levels (for non-professional subjects)
• Training centers for short-term high-level skills development that are not part of the formal education system
• Adjustment companies, lending companies, financing companies, investment houses
• Wellness centers

In addition, the Negative Investment List declares that up to 40% foreign equity is allowed in contracts for construction and repair of locally-funded public works except for infrastructure projects covered in Republic Act No. 7718. Foreign ownership of up to 40% is also allowed for private lands, condominium units, and private radio networks. 

It’s important to note that some sectors are restricted from foreign ownership, including mass media and cooperatives.

House Bill 78

Moreover, the House of Representatives passed House Bill No. 78, which amends the 1936 Public Service Act. HB 78 opens up major industries such as transportation and water supply systems to foreign investment.

Impact of foreign investments on the economy

The increase in foreign investments will generate more jobs, foster the transfer of tech know-how, and solve issues like housing and transportation. Ultimately, foreign investments will support the livelihood of thousands of Filipinos and promote economic growth.

Sources:

Official Gazette, Rappler, Business World, Business Mirror, Senate of the Philippines, Philippine News Agency, DLSU Research Congress 2017, Department of Tourism, Deloitte (Doing Business in the Philippines)