Malacañang releases updated list of foreign ownership limits

MANILA, Philippines – Malacañang on Thursday, April 16, released an updated list of industries where foreign ownership is limited or prohibited.

Executive Order No. 113 promulgated the 13th Regular Foreign Investment Negative List (RFINL), which identifies sectors where foreign participation is restricted.

It is the first update to the RFINL under the administration of President Ferdinand Marcos Jr.

The latest RFINL classifies restrictions into two categories: those limited by the Constitution and specific laws, and those regulated for reasons of security, defense, risks to health and morals, and protection of small- and medium-scale enterprises.

Several industries, including mass media, cooperatives, private security agencies and small-scale mining, remain closed to foreign investors.

The new list allows full foreign ownership in telecommunications operations, subject to reciprocity requirements, or whether the foreign country allows Filipinos to own and manage telecommunications firms there.

In other words, foreigners may own and manage a telecommunications company in the Philippines if their home country grants Filipinos the same right. If it does not, foreign equity is capped at 50%, up from 40%.

The adjustment to foreign ownership limits for telecommunications firms follows the March 2022 amendment to the Public Service Act, which reclassified telecommunications as a public service rather than a public utility. (READ: Duterte signs law allowing full foreign ownership of telcos, airlines)

Under the amended law, foreigners are also allowed to own airlines, railways, toll roads, shipping lines, and transport network vehicles. These originally had a 40% foreign ownership limit.

Other refinements stemming from recent reforms such as continued foreign ownership for certain renewable energy projects were integrated into the new list.

For Rappler’s resident economist JC Punongbayan, the updated list is more “useful housekeeping” than it is a major breakthrough.

“It updates the investment regime and reflects earlier liberalization measures, but by itself it is unlikely to produce a dramatic surge in foreign direct investment unless deeper structural problems are also addressed,” the University of the Philippines’ School of Economics assistant professor told Rappler.

Some of the structural issues that the government must address, according to Punongbayan, include weak rule of law, high costs, and inadequate infrastructure. – Rappler.com