By Chloe Mari A. Hufana, Reporter
PRESIDENT Ferdinand R. Marcos, Jr. has eased foreign investment rules for retail trade by allowing overseas investors to own as much as 40% of enterprises with paid-up capital of lower than P25 million, under the Philippines’ 13th Regular Foreign Investment Negative List (RFINL).
The change, introduced through Executive Order (EO) No. 113, marks a shift from the previous list issued in 2022, which barred foreign equity in small retail trade, and reflects a broader effort to align foreign ownership rules with recent legislative reforms.
Under the updated negative list, retail trade enterprises below the P25-million capital threshold are not any longer fully reserved for Filipinos but remain subject to a 40% foreign equity cap.
Control of such firms must still rest with Philippine nationals, according to the Retail Trade Liberalization Act.
Within the April 13 order, Mr. Marcos cited the necessity to update the foreign investment framework “to reflect changes… consistent with the policy to ease restrictions on foreign participation in certain investment areas or activities,” following recommendations from the Department of Economy, Planning, and Development.
The brand new order also introduced the next equity ceiling for infrastructure projects.
Procurement for public works was capped at 40% foreign equity within the 12th RFINL under EO No. 175 signed by former President Rodrigo R. Duterte in 2022.
The 13th RFINL now permits as much as 75% foreign ownership in government infrastructure projects but limited only to projects that need special skills or technologies that local corporations lack.
The newest RFINL also permits government procurement of products with as much as 40% foreign equity.
Foreign bidders are eligible to participate if allowed under a treaty or international agreement, if their country grants reciprocal rights to Philippine suppliers, if the required goods aren’t locally available or if their participation is needed to forestall anti-competitive or trade-restricting conditions.
Government procurement of consulting services can now include as much as 40% foreign ownership under the brand new rules, allowing foreign consultants to be hired when local consultants would not have the needed skills and expertise, as decided by the Head of the Procuring Entity.
The Marcos administration also codified latest rules for the defense sector to bolster national security through domestic production as tensions rise within the South China Sea.
The 13th RFINL introduced a category allowing as much as 40% foreign equity for the event, production, manufacturing, assembly or operation of materiel (military materials and equipment), by in-country enterprises.
Under Republic Act (RA) No. 12024, or the Self-Reliant Defense Posture Revitalization Act, this provision covers military technology, weapons systems and armor, aiming to foster a neighborhood defense industry with limited international partnership.
The brand new rules also got here with wider liberalizations within the telecommunications and renewable energy sectors.
While the 12th RFINL capped radio networks at 40% equity, the 13th RFINL permits 100% foreign ownership in telecommunications management, provided there may be reciprocity from the investor’s home country.
The update is according to RA No. 11659, which allowed as much as full foreign ownership in key sectors equivalent to telecommunications, shipping and railways by narrowing the definition of “public utility.”
A Department of Energy’s 2022 circular also allowed full foreign participation in solar, wind, and hydro energy projects.
Rizal Business Banking Corp. Chief Economist Michael L. Ricafort said easing rules on retail trade will encourage more foreign investment.
“This development would indeed help provide a more conducive business/economic environment for more foreign investments to come back to the local retail trade industry that might give Filipinos more decisions/variety, lower prices, and higher products/services,” he said via Facebook Messenger.
He also noted that the Philippines’ consumption-driven economy, where household spending accounts for greater than 70% of the gross domestic product, combined with a population of over 114 million, makes the retail sector particularly attractive to foreign investors.
The 13th RFINL will take effect 15 days after its publication.
The RFINL is split into two categories: List A and List B.
List A covers industries where foreign participation is proscribed by the Structure and specific national laws. This includes mass media, small-scale mining, and using marine resources in archipelagic waters and the country’s exclusive economic zone. Foreign nationals are also barred from owning or managing cockpits, in addition to from engaging within the manufacture of nuclear, biological, and chemical weapons.
Then again, List B restricts foreign ownership to a maximum of 40% in areas deemed sensitive for reasons of national security, public health, and the protection of small- and medium-sized enterprises. These include the manufacture and distribution of firearms, explosives, and military hardware, in addition to the operation of gambling facilities and massage clinics.