THE updating of the regular foreign investment negative list (RFINL) will have to take a backseat given government efforts needed to recover from the pandemic, according to the National Economic and Development Authority (Neda).
Neda Undersecretary for Planning and Policy Rosemarie G. Edillon said that Neda and other key government agencies are currently busy working on ReCharge PH, the government’s efforts to recover from the pandemic.
Edillon said, however, that the Neda will start reviewing the existing RFINL which was released in 2018 and saw the opening of several professions to foreign nationals.
“The last RFINL was issued in 2018. We would have worked on the new one, but we were overtaken by events,” Edillon told the BusinessMirror. “We’ll work on it next year. Hopefully, we will already be able to incorporate proposed amendments to FIA [Foreign Investments Act], PSA [Public Service Act] and RTLA [Rice Trade Liberation Act].”
The RFINL consists of a list of areas or sectors and professions where foreign investment is not allowed or limited in the country.
It consists of two categories and the first is List A, or areas of investment where foreign ownership is not allowed or limited by mandate of the Constitution and specific laws.
List B, meanwhile, cites areas where foreign ownership is limited due to national security, health, morals, and as protection for small and medium enterprises.
Edillon said that with the postponement of the RFINL updating moved to next year, the existing RFINL will continue to be in effect.
She said the President does not need to issue a new Executive Order to extend the validity of the existing RFINL. The President signed Executive Order 65 on October 29, 2018, which promulgated the 11th RFINL.
Under RA 7042 or the Foreign Investment Act of 1991, Neda has “the right and sole responsibility to determine whether to recommend to the President to promulgate the area of investment” in the RFINL.
“Section 9 of Republic Act 7042 states that amendments to the list cannot be made more often than once every two years,” Edillon said.
“We are focused on ReCharge PH [NEDA and the other government agencies]. Even then, we are still committed to the reform agenda on expanding more economic opportunities,” she added.
The 11th RFINL reflected amendments in existing laws such as reciprocity provisions in certain laws on professions, such as pharmacy and forestry, limitations on foreign participation in investment areas/activities provided in new laws (e.g., RA 10635 for marine deck/engine officers), and exclusions from limitations on foreign participation in some investment areas/activities identified that do not need legislative action.
The current negative list liberalized foreign participation in Internet businesses, which have been excluded from mass media; teaching at higher education levels, provided the subject being taught is not a professional subject (i.e., included in a government board or bar examination); and training centers that are engaged in short-term high-level skills development that do not form part of the formal education system.
The existing negative list also liberalized foreign investment in adjustment companies, lending companies, financing companies and investment houses and wellness centers, which has been excluded in item 4 of List B.
EO 65 allows up to 40 percent foreign participation in contracts for the construction and repair of locally funded public works, subject to applicable regulatory frameworks, and private radio communications network. The 10th RFINL allowed only up to 25 percent and 20 percent foreign participation, respectively, in these areas.