THE GOVERNMENT will immediately pursue amendments to current laws to further open them up to foreign participation after “marginal improvements” were realized in the latest Foreign Investment Negative List (FINL).
Socioeconomic Planning Secretary Ernesto M. Pernia said that the 11th FINL — the Duterte administration’s first — contained only “marginal improvements” and “baby steps” in further increasing foreign ownership in Philippine industries.
“We want to be sufficiently competitive with our ASEAN (Association of Southeast Asian Nations) neighbors. For that to happen there have to be some legislation or changes in some laws, amendments to our laws so more areas and activities can be opened to foreign participation,” Mr. Pernia said in a briefing on Monday.
“I wanted to encourage our legislators. The President also wants to encourage our legislators to liberalize some more so we don’t have to wait for the next round of revisions to this 11th FINL. If there is political will to change our investment milieu to make it more attractive… The word is always as soon as possible,” he added.
Mr. Pernia said that the government will no longer wait for the required two-year period before the next FINL to ease more foreign ownership restrictions, and has put in motion moves to amend special laws.
He cited pending bills in Congress such as the House-approved Bill No. 5828, or amendments to the Public Service Act, seeking to redefine public utilities and take out telecommunications from the industries restricted to foreign ownership; and several bills in both chambers of Congress lowering the paid-up capital threshold for the retail trade to $200,000 from the current $2.5 million under Republic Act No. 8762, or the Retail Trade Liberalization Act of 2000.
“That is the desire of the economic managers and that is what’s needed,” according to Mr. Pernia, a Cabinet-level official who also heads the National Economic and Development Authority (NEDA).
President Rodrigo R. Duterte signed Executive Order No. 65 on Oct. 29 promulgating the 11th FINL, about three and a half years after the previous negative list — which was largely unchanged from the preceding one.
Mr. Duterte’s FINL now allows full foreign ownership in Internet businesses, a category that has been excluded from the category of mass media, which otherwise remains completely barred to foreign ownership and participation; teaching at the higher education levels in non-professional subjects; training centers engaged in short-term high-level skills development that do not form part of the formal education system; insurance adjustment companies, lending companies, financing companies and investment houses; and wellness centers.
It also increased the foreign ownership cap to 40% on contracts for construction and repair of locally funded public works (except those that are foreign funded or assisted and required to undergo international competitive auction), from 25% previously; and private radio communication networks, from 20% previously.
Foreign business chambers have welcomed the more liberal FINL, but said that more needs to be done.
Mr. Pernia said that the FINL’s effects on foreign direct investment may start to be felt next year.
“We expect the total for the year to be greater than that of last year and this is even without the liberalization yet. It will take time for the easing of restrictions to take hold and be absorbed by the foreign investor community,” he said.
“I think next year we should see some fruition (in terms of) foreign investor interest in coming here to invest,” added Mr. Pernia.
FDI hit an all-time high of $10 billion in 2017. In the seven months to July, FDI totaled $6.67 billion, up 52.1% from a year earlier. — Elijah Joseph C. Tubayan