Negative list overhaul urged to expand foreign role in infra projects

THE PHILIPPINES should consider relaxing its restrictions on foreign participation in infrastructure procurement to attract more private sector financing, the Organisation for Economic Co-operation and Development (OECD) said.

In a report, “Addressing Legal and Regulatory Barriers to Quality Infrastructure Investment in India, Indonesia and the Philippines,” the OECD recommended that the Philippine government revisit its Foreign Investment Negative List (FINL), which outlines the industries where foreign investment is restricted due to national security, public safety, and public health concerns.

“The government may wish to reconsider the limitations included in the Foreign Investment Negative List relating to infrastructure procurement projects,” it said on Oct. 7.

“This could encourage more foreign private sector involvement in infrastructure financing in the Philippines, in line with (Quality Infrastructure Investment) QII Principle 2 on raising economic efficiency to ensure value for money over the project life cycle,” it said.

The OECD noted that in List A of the FINL, foreign investors are restricted to 40% ownership in infrastructure projects, private land, or public utilities, in compliance with its constitution.

It also noted the restrictions on joint ventures formed by two or more foreign entities, which require that at least 75% of the ownership be held by a Filipino person or entity.

Republic Act No. 12252, signed in September, now allows foreigners to lease land in the Philippines for up to 99 years.

“Leased land, especially for agricultural purposes, faces additional restrictions under the comprehensive agrarian reform law. Local government regulations, such as permits for agricultural land reclassification, further influence land use,” the OECD said.

“These constraints apply across all sectors, so even industries open to 100% foreign ownership under the Public Service Act must consider land-related limitations in infrastructure projects.”

The OECD said that although some reforms are in progress, the Philippines still faces challenges in land acquisition for infrastructure projects, including right-of-way acquisition, fair market value appraisals involving multiple entities, and time-consuming land conversion procedures.

The organization also recommended that feasibility studies should assess risks related to Indigenous Peoples’ land rights, highlighting the need for inclusiveness and respect for human rights. — Aubrey Rose A. Inosante