Legal reforms seen as key to national competitiveness

By Jomarc Angelo M. Corpuz, Special Features and Content Writer

Laws are often perceived as a set of rules put in place by a government to regulate the behavior of its citizens by establishing standards, maintaining order, and protecting liberties and rights. However, aside from its regulatory function, legal reforms also play a big hand in stimulating a country’s growth and boosting its economy.

This was deeply emphasized during the first Fireside Chat of the recently concluded BusinessWorld Forecast 2026. The conversation, themed “Legal Landscape 2026: Legal Reforms as Catalyst of Growth,” was headlined by DivinaLaw Founder and Managing Partner Atty. Nilo T. Divina.

“Legal reforms are not merely a set of new rules and policies. They are economic drivers,” Atty. Divina said in his presentation prior to the one-on-one interview. “They can accelerate growth, inspire innovation, attract investment, and create jobs. But, if implemented poorly or unfairly, they can only distort markets, discourage capital, and widen inequality.”

He then delved into the strengths and challenges of the country based on its current circumstances. Mr. Divina noted the Philippines’ young population and growing digital economy as some of the positives, while mentioning inflationary pressures, infrastructure gaps, and governance accountability issues and concerns as negatives. He concluded, then, that legal reforms with implementation must do the heavy lifting.

According to Atty. Divina, several laws passed in the past five years have positively impacted the country’s economy and growth. The first of which is Republic Act No. 11659, or the New Public Service Act. The reform updates the 85-year-old Commonwealth Act No. 146 (Public Service Act) by revising what qualifies as “public services” and allowing increased foreign participation in select industries, while preserving restrictions for key strategic sectors.

Another is Republic Act No. 11647, which amended the Foreign Investment Act of 1991. Perhaps the most important component of this measure is its clarification and expansion of opportunities for foreign participation in domestic enterprises. Under the amendment, non-Philippine nationals may now own up to 100% of the capital in a domestic business, provided that the enterprise is not part of the government’s foreign investment negative list.

Also cited by Atty. Divina are the Tax Reform for Acceleration and Inclusion (TRAIN), Corporate Recovery and Tax Incentives for Enterprises (CREATE), and Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Laws. These fiscal reform packages were crafted to modernize the country’s tax system, rationalize incentives, and create a more predictable environment for both local and foreign investors.

The TRAIN Law restructured the personal income tax system and adjusted excise taxes to generate revenues essential for infrastructure and social services. CREATE, on the other hand, reduced corporate income taxes and introduced performance-based, time-bound, and targeted incentives to attract investments. Its successor, CREATE MORE, further refined these incentives to address implementation gaps, bolster competitiveness, and strengthen investor confidence.

“But, as we know, reforms are not enough. They don’t operate in a vacuum. Exhibition is everything. We have seen examples of gaps in implementation, procurement, insertion to infrastructure projects, and blatant vulnerabilities. Difficult controversies and time-controlled projects remind us that transparency and accountability are indispensable,” Atty. Divina warned.

Upholding rule of law

As these reforms continue to reshape the country’s legal and economic landscape, they naturally lead to broader questions about what comes next and how these changes translate into long-term national competitiveness.

“So, we talked about demand last year [and] this year. Next year and beyond, what are we talking about? How do we create an environment that is coherent, predictable, and future-ready? How do we ensure reforms will bring real benefits? How do we make the Philippines compete, not just regionally, but likewise globally?” Atty. Divina asked.

In addressing these questions about competitiveness and the country’s future readiness, Atty. Divina emphasized that the effectiveness of any reform ultimately depends on the strength and integrity of the institutions tasked with upholding the rule of law, particularly the Judiciary.

“Rightly, the Judiciary plays a very important role because it provides credibility to these reforms. Without an independent Judiciary, these reforms mean nothing,” Atty. Divina said.

The DivinaLaw managing partner also highlighted that courts make a difference in three key areas. First, the enhancement of transparency, ensuring that legal processes are properly observed. Second, enforcement of accountability, where wrongdoing is met with appropriate sanctions and full legal proceedings, including prosecution, indictment, and conviction. Third, fair and efficient resolution of disputes, particularly concerning public funds, infrastructure, or contract implementation, which must adhere to clear legal standards.

“In other words — and I keep on saying — if the law is violated, the one who violated the law should be apprehended, caught, prosecuted, and convicted. No matter how good the lawyer he or she may be or have, if a crime is committed, that criminal should pay the price,” Atty. Divina explained.

Building on the role of the Judiciary in ensuring that reforms are credible and enforceable, Atty. Divina highlighted that the effectiveness of these laws ultimately depends on both their design and on how well they are implemented and monitored in practice.

“Well, these laws are good on paper. We all know that these laws modernize our tax system. They lower costs for public income tax, rationalize incentives, and make this environment predictable. But, you know, reforms are just a structure. The laws must make sure as well that each and every centavo raised from these laws is properly implemented and accounted for,” Atty. Divina asserted.

Much-needed updates

As for laws that still need updating, Atty. Divina pointed to areas such as foreign participation and data privacy, stressing the importance of adapting regulations to reflect the unique landscapes of legal commerce and the global talent pool.

“So, we should accommodate the foreigners, right? If they have the talent, expertise, why not help us?” he said.

“And then,” he continued, “I would say we need to modernize our Data Privacy Law. Data privacy has been there since 2010-something. They serve us very much. But given the realities, given the fact that legal commerce is going very fast, we need to make changes in our Data Privacy Law to take into account the realities of legal commerce.”

Moving from the specifics of legal updates, Atty. Divina, for his final words, stressed that the country’s success ultimately depends on the shared commitment of its people to work together and uphold these reforms.

“I know these are not legal words. But, perhaps, if we’re united, as far as happening in the country, if we’re going to work as hard as we can, I think we can… make the Philippines great again,” he concluded.