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Oct 19, 2011

God Bless the Philippines: Foreign Negative List to be Abandoned?

The Philippine Government has been slow to liberalize its foreign investment laws because of the power of large Philippine companies and their wish to keep the competition from foreign investors off their shores.

The situation has contributed to the Philippines being one the most corrupt and impoverished nations in world with an income disparity that makes many African nations feel good about their income disparity.

Times may be changing. Cayetano Paderang, the very capable Economic Planning Secretary, has announced that most areas of investment will not be restricted by nationality, with the exceptions of constitutionally restricted areas (real estate).

I have done work in the Philippines for companies and as we say in the states:  "I will believe it when I see it."

Presently, the Philippines maintains two “Foreign Negative Lists.” According, to Cayetano Paderang, the lists  will be amended.  Hopefully, the Constitution will also be amended. 


List A: Restriction Based on Nationality. Reserved Equity to Philippine Nationals.
  
1.  No Foreign-Capital Investment (Total Prohibition)
  • Mass Media
  • Professions
  • Retail Trade Enterprises with paid-in capital less than USD 2.5mill
  • Private Security Agencies
  • Small-scale Mining Operations
2.  20% Foreign-Capital/Equity Allowed
  • Radio Stations/Networks
3.  25% Foreign-Capital/Equity Allowed
  • Recruitment Agencies
  • Construction Companies engaged in Public Works Programs
  • Defense-Related Construction Companies
4.   30% Foreign-Capital/Equity Allowed
  • Advertising
5.  40% Foreign-Capital/Equity Allowed
  • Natural Resource Exploration
  • Ownership of Private Lands
  • Operation of Public Utilities
  • Educational Institutes
  • Deep See Commercial Fishing
6.  60% Foreign-Capital/Equity Allowed
  • Banking and Financial Institutions

    List B:  Foreign-Capital Investment Restrictions Based on Nationality

    1.   National Security and Defense;
    2.   Public Health, Safety and Morals.


    I assume from the comments of the secretary that an increase in the equity allowed by foreign investors will occur and List B will be eliminated. 
    _________
    SeanHayes@ipglegal.com