QuestionsQuestions (LTO MEMORANDUM)
It amends RA 7042 to further liberalize foreign investments by changing (1) the definition of “Philippine national,” (2) rules on foreign investments in domestic market enterprises, (3) the Foreign Investment Negative List (FINL) and its procedures, and (4) investment rights of former natural-born Filipinos and natural-born citizens who lost Philippine citizenship, among others.
It includes a Philippine citizen; a domestic partnership/association wholly owned by Philippine citizens; a corporation organized in the Philippines with at least 60% of the voting capital owned by Filipinos; and a corporation organized abroad registered to do business in the Philippines under the Corporation Code with 100% of voting shares wholly owned by Filipinos (and certain trustee/fund conditions), plus a proviso requiring both the corporation and its non-Filipino stockholders (in an SEC-registered enterprise) to satisfy 60% Filipino ownership and 60% Filipino board membership.
Non-Philippine nationals may own up to 100% of domestic market enterprises, unless foreign ownership is prohibited or limited by the Constitution, existing laws, or the Foreign Investment Negative List under Section 8.
List A and List B. List A enumerates activities reserved to Philippine nationals by the Constitution and specific laws; List B covers areas regulated pursuant to law (e.g., defense-related with DND clearance; and activities implying public health and morals such as dangerous drugs manufacturing/distribution and gambling, among others).
Activities requiring prior clearance/authorization from the Department of National Defense, such as manufacture, repair, storage and/or distribution of firearms, ammunition, lethal weapons, military ordnance, explosives, pyrotechnics and similar materials—unless specifically authorized by the Secretary of National Defense for non-Filipino nationals with a substantial export component.
Examples include manufacture and distribution of dangerous drugs, all forms of gambling, and businesses such as nightclubs, bars, beer houses, dance halls, sauna and steam bathhouses, and massage clinics.
They are reserved to Philippine nationals. However, if they involve advanced technology as determined by the Department of Science and Technology or employ at least 50 direct employees, a minimum paid-in capital of US$100,000 shall be allowed to non-Philippine nationals.
Amendments to List B may be made upon recommendation of the Secretary of National Defense or Secretary of Health indorsed by NEDA, or upon recommendation motu proprio of NEDA, approved by the President, and promulgated by Presidential Proclamation.
They become effective 15 days after publication in a newspaper of general circulation. Each FINL is prospective in operation and does not affect foreign investments existing as of the date of its publication.
Amendments to List B after promulgation and publication of the first Regular FINL at the end of the transitory period shall not be made more often than once every two (2) years.
The Transitory FINL established in Section 15 of RA 7042 is replaced at the end of the transitory period by the first Regular FINL formulated by NEDA following the criteria and process in Sections 8 and 9; it must be published no later than 60 days before the transitory period ends and becomes effective immediately at the end of the transitory period.
For purposes of the Act, former natural-born citizens have the same investment rights of a Philippine citizen in cooperatives (RA 6938), rural banks (RA 7353), thrift/private development banks (RA 7906), and financing companies (RA 5980), but these rights do not extend to activities reserved by the Constitution and listed exclusions.
Excluded are (1) the exercise of profession; (2) defense-related activities under Section 8(b) unless specifically authorized by the Secretary of National Defense; and (3) activities covered by RA 1180 (Retail Trade Act), RA 5487 (Security Agency Act), RA 7076 (Small-Scale Mining Act), RA 3018 as amended (Rice and Corn Industry Act), and PD 449 (Cockpits Operation and Management).
Such person may be a transferee of private land up to maximum area: 5,000 sq. meters for urban land or 3 hectares for rural land, to be used for business or other purposes; in married couples, one may avail (if both, total acquired cannot exceed the maximum).
Yes. A transferee may acquire not more than two (2) lots situated in different municipalities/cities anywhere in the Philippines, with total land area not exceeding 5,000 sq. meters for urban or 3 hectares for rural, and if the transferee already acquired urban land, they are disqualified from acquiring rural land and vice versa.
Within 60 days after effectivity, NEDA in consultation with BOI, DTI, and SEC must prepare and issue necessary primer/campaign materials, and furnish/disseminate them to Philippine embassies/consulates/diplomatic offices abroad and to Filipino nationals, former natural-born Filipinos, and foreign investors.
It takes effect 15 days after publication in two (2) newspapers of general circulation in the Philippines.