Doing business in the Philippines: Philippine Foreign Investment Negative List

LIST A: FOREIGN OWNERSHIP IS LIMITED BY MANDATE OF THE CONSTITUTION AND SPECIFIC LAWS

No Foreign Equity

  • Mass media except recording (Art. XVI, Sec.11 of the Constitution; Presidential Memorandum dated 05 May 1994)
  • Practice of Professions (Art. XII, Sec. 14 of the Constitution, sec. 1 of RA 5181, Sec. 7.j of RA 8981)
    • Pharmacy (RA 5921)
    • Radiologic and x-ray technology (RA 7431)
    • Criminology (RA 6506)
    • Forestry (RA 6239)
    • Law (Art. VIII, Section 5 of the Constitution; Rule 138, sec. 2 of the Rules of Court of the Philippines)
  • Retail trade enterprises with paid-up capital of less than US$ 2,500,00 (Sec. 5 of RA 8762)
  • Cooperatives (Ch. III, Art. 26 of RA 6938)
  • Private Security Agencies (Sec. 4 of RA 5487)
  • Small-scale Mining (Sec. 3 of RA 7076)
  • Utilization of Marine Resources in archipelagic waters, territorial sea, and exclusive economic zone as well as small-scale utilization of natural resources in rivers, lakes, bays, and lagoons (Art. XII, Sec 2. Of the Constitution)
  • Ownership, operation, and management of cockpits (Sec. 5 of PD 449)
  • Manufacture, repair, stockpiling, and/or distribution of nuclear weapons (Art. II, Sec. 8 of the Constitution)
  • Manufacture, repair, stockpiling, and/or distribution of biological, chemical and radiological weapons, and anti-personal mines (various treaties to which the Philippines is a signatory and conventions supported by the Philippines)
  • Manufacture of firecrackers and other pyrotechnic devices (Sec. 5 of RA 7183)

Up to Twenty Percent (20%) Foreign Equity

  • Private radio communication network (RA 3846)

Up to Twenty-Five Percent (25%) Foreign Equity

  • Private recruitment, whether for local or overseas employment (Art. 27 of PD 442)
  • Contracts for the construction and repair of locally-funded public works (Sec. 1 of Commonwealth Act. No. 541, Letter of Instruction No. 630) except:
    • Infrastructure/development projects covered in RA 7718; and
    • Projects which are foreign-funded or assisted and required to undergo international competitive bidding of contracts for construction of defense-related structure.

Up to Thirty Percent (30%) Foreign Equity

  • Advertising (Art. XVI, Sec. 11 of the Constitution)

Up to Forty Percent (40%) Foreign Equity

  • Exploration, development, and utilization of natural resources (Art. XII, Sec. 2 of the Constitution)
  • Ownership of Private Lands (Art. XII, Sec. 7 of the Constitution; Ch. 5, Sec. 22 of CA 141; Sec. 4 of RA 9182)
  • Operation and management of public utilities (Art. XII, Sec. 11 of the Constitution; Sec. 16 of CA 146)
  • Educational institutions other than those established by religious groups and mission boards (Art. XIV, sec. 4 of the Constitution)
  • Culture, production, milling, processing, trading except retailing, of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof (Sec. 5 of PD 194)
  • Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or municipal corporation (Sec. 1 of RA 5183)
  • Facility operator of an infrastructure or a development facility requiring a public utility franchise (Art. XII, Sec. 11 of the Constitution; Sec. 2 (a) of RA 7718)
  • Operation of deep sea commercial fishing vessels (Sec. 27 of RA 8550)
  • Adjustment companies (Sec. 332 of RA 10607 amending PD 612)
  • Ownership of condominium units (sec. 5 of RA 4726)

LIST B: FOREIGN OWNERSHIP IS LIMITED FOR REASONS OF SECURITY, DEFENSE, RISK TO HEALTH, AND MORALS AND PROTECTION OF SMALL AND MEDIUM-SCALE ENTERPRISES

Up to Forty Percent (40%) Foreign Equity

  • Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine National Police (PNP) clearance:
    • Firearms (handguns to shotguns), parts of firearms and ammunition therefore, instruments or implements used or intended to be used in the manufacture of firearms
    • Gunpowder
    • Dynamite
    • Blasting supplies
    • Ingredients used in making explosives
      • Chlorates of potassium and sodium
      • Nitrates of ammonium, potassium, sodium barium, copper (11), lead (11), calcium and cuprite
      • Nitric acid
      • Nitrocellulose
      • Perchlorates of ammonium, potassium and sodium
      • Dinitrocellulose
      • Glycerol
      • Amorphous phosphorus
      • Hydrogen peroxide
      • Strontium nitrate powder
      • Toluene
    • Telescopic sights, sniper scope and other similar devices
However, the manufacture or repair of these items may be authorized by the Chief of the PNP to non-Philippine nationals; Provided that a substantial percentage of output, as determined by the said agency, is exported. Provided further that the extent of foreign equity ownership allowed shall be specified in the said authority/clearance (RA 7042 as amended by RA 8179)
  • Manufacture, repair, storage, and/or distribution of products requiring Department of National Defense (DND) clearance;
    • Guns and ammunition for warfare
    • Military ordnance and parts thereof (e.g., torpedoes, depth charges, bombs, grenades, missiles)
    • Gunnery, bombing, and fire control systems and components
    • Guided missiles/missile systems and components
    • Tactical aircraft (fixed and rotary-winged), parts and components thereof
    • Space vehicles and component systems
    • Combat vessels (air, land, and naval) and auxiliaries
    • Weapons repair and maintenance equipment
    • Military communications equipment
    • Night vision equipment
    • Stimulated coherent radiation devices, components, and accessories
    • Armament training devices
    • Others as may be determined by the Secretary of the DND
However, the manufacture or repair of these items may be authorized by the Secretary of National Defence to non-Philippine nationals; provided that a substantial percentage of output, as determined by the said agency, is exported. Provided further that the extent of foreign equity ownership allowed shall be specified in the said authority/clearance. (RA 7042 as amended by RA 8179)
  • Manufacture and distribution of dangerous drugs (RA 7042 as amended by RA 8179)
  • Sauna and steam bathhouses, massage clinics and other like activities regulated by law because of risks posed to public health and morals (RA 7042 as amended by RA 8179)
  • All forms of gambling (RA 7042 as amended by RA 8179) except those covered by investment agreements with PAGCOR (PD 1869 as amended by RA 9487)
  • Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000 (RA 7042 as amended by RA 8179)
  • Domestic market enterprises which involve advanced technology or employ at least fifty (50) direct employees with paid-in equity capital of less than the equivalent of US$100,000 (RA 7042 as amended by RA 8179)

Source: Security of Exchange Commission
Updated: September 18, 2017