In mid-September 2021, the Philippine Senate unanimously approved Senate Bill 1156, a new bill that will amend the country’s foreign investment law, the Foreign Investments Act (FIA) of 1991. It is one of the key economic measures that President Rodrigo Duterte certified as urgent as it is expected to further open up the economy and promote foreign investments in the country.
Some key features of Senate Bill 1156 are:
- The required number of direct hires for foreign companies will be reduced to 15 from the current 50.
- It will also allow foreigners to invest 100% equity in domestic market enterprises except in areas included in the foreign investment negative list.
- Foreign investors will also be allowed to set up and own 100% of small and medium-sized enterprises (SMEs).
- Creation of the Investment Promotions Council, which will address foreign investors’ complaints such as lack of infrastructure and poor Internet and electricity connection. The council will also develop the Investment Priorities Plan to help potential foreign investors partner with local enterprises.
- The measure also stipulates that foreign e-commerce businesses can be treated as domestic enterprises and shall not fall under the constitutional prohibitions on foreign ownership of media and educational institutions, provided the greater part of their business is not conducted in the Philippines.
It should be noted that the Philippines’ foreign direct investment (FDI) rules are considered by the international investment community as the most restrictive among ASEAN countries. The Philippines currently ranks 3rd out of 83 countries on the 2020 FDI Regulatory Restrictiveness Index by the Organization for Economic Cooperation and Development (OECD). These proposed changes will help to improve the investment climate in the Philippines.
(Sources: BusinessWorld; CNN Philippines; Rappler)