Philippine President Rodrigo R. Duterte has signed into law a bill that relaxes restrictions on foreign investments.
Republic Act 11647, which he sigend on March 2, will change the three-decade-old Foreign Investments Act.
The trade liberalization law allows foreign investors to invest in a local enterprise up to 100% of its capital.
They may fully own small and medium-sized enterprises with a minimum paid-up capital of less than $100,000 or P5 million if majority of their direct employees are Filipinos. There must be at least 15 such employees.
The law cuts the list of investment areas reserved for Filipinos to just defense-related businesses and small and micro domestic market enterprises with paid-up capital of less than $200,000.
It creates a Trade department-led inter-agency committee that will promote the Philippines as a foreign investment destination. It will keep an online database of foreign investments and local enterprises. The agency will also help local governments attract foreign investments.
Enterprises whose foreign investors fail to meet export ratio requirements should cut their domestic market sales to not more than 40% of total production, compared with 60% now, according to the law.
The law also mandates export businesses to register under the National Internal Revenue Code so they ca avail themselves of any tax perks.
“The Securities and Exchange Commission (SEC) or DTI… shall not impose any limitations on the extent of foreign ownership in an enterprise additional to those provided by this act.“
In a statement, the Management Association of the Philippines said the law would make the country more attractive to foreign direct investments.
The group said it would boost competitiveness, create more jobs, broaden the country’s manufacturing base, provide higher value-added products from agriculture and natural resources and benefit local consumers with better products and services.