President Duterte has instructed his economic team to further liberalize certain investment areas, such as private recruitment and contracts for construction and public works, as part of efforts to bolster foreign participation in the country.
In a bid to raise the country’s level of competitiveness and accelerate higher economic growth within Southeast Asia, the President has directed the National Economic and Development Authority (Neda) Board and its member-agencies to “take immediate steps to lift or ease existing restrictions on foreign participation” in certain investment areas. As the Chief Executive, Duterte chairs the Neda Board, and is assisted by the socioeconomic planning chief.
Under Memorandum Order 16, the President wants to eliminate, if not relax, restrictions in private recruitment for both local and overseas employment; practice of specific professions, where the entry of foreign players will affect public benefit; contracts for the construction and repair of locally funded public works; and public services, except for public utilities, such as power transmission and distribution, water-pipeline distribution system and sewerage-pipeline system.
Under Executive Order (EO) 184, Series of 2015, or the 10th Regular Foreign Investment Negative List (RFINL), private recruitment and contracts for construction and public works are open to foreign investors to up to 25-percent ownership.
Practices of pharmacy, radiologic and x-ray technology, criminology, forestry and law have no foreign equity.
The presidential memorandum also mandates the Neda Board to ease foreign participation in culture, production, milling, processing and trading, except retailing, of rice and corn; retail-trade enterprises; teaching at higher education levels; and domestic market enterprises. Under the 10th RFINL, culture, production, milling, processing and trading, except retailing, of rice and corn is listed under 40-percent foreign equity, while retail-trade enterprises with paid-up capital of less than $2.5 million are not allowed for foreign investors.
Domestic market enterprises with paid-in capital of less than $200,000 are open to up to 40-percent foreign ownership. The same restriction applies to domestic market enterprises that make use of advanced technologies or employ at least 50 direct employees with paid-in capital of less than $100,000.
“The members of the Neda Board are hereby directed to earnestly support, in a coordinated manner, such legislative efforts as may be necessary to eliminate or relax the aforesaid restrictions, including pending legislation seeking to clarify the definition of public utilities,” the memorandum read.
Socioeconomic Planning Secretary Ernesto M. Pernia in July said Duterte is determined to permit foreign investors to own up to 70 percent in telecommunication companies and public utilities in fulfillment of his campaign promise to attract more foreign investors to establish business in the country.
Under the 10th RFINL, foreign investors are allowed to own to up to 40 percent in operation of public utilities, with respect to Article 12, Section 11 of the 1987 Constitution. The highest law of the land, however, does not define what public utilities are.
On top of this, the President is asking the Neda Board to immediately advise him on restrictions on foreign ownership that may already be lifted or eased through an executive order. Once advised, Duterte intends to repeal EO 184, Series of 2015, and issue a new RFINL.
Image credits: Alysa Salen