Question & AnswerQ&A (Republic Act No. 178)
The purpose of Executive Order No. 286 is to promulgate the Fourth Regular Foreign Investment Negative List, which designates investment areas and activities that may be either opened to foreign investors or reserved exclusively for Filipino nationals, reflecting changes in laws and government recommendations.
Republic Act (RA) No. 7042, known as the Foreign Investments Act of 1991, as amended by RA 8179, mandates the formulation of the Regular Foreign Investment Negative List.
The Regular Foreign Investment Negative List is effective for two years pursuant to Section 8 of RA 7042 as amended and its Implementing Rules and Regulations.
Investment areas such as mass media (except recording), practice of all professions listed (e.g., medicine, engineering, law), retail trade enterprises with paid-up capital of less than US$2,500,000, cooperatives, private security agencies, small-scale mining, certain marine resource utilization, ownership and operation of cockpits, manufacture and distribution of nuclear or biological weapons, and manufacture of firecrackers are reserved with no foreign equity allowed.
Foreign equity participation in private recruitment agencies is limited to up to 25 percent.
Retail trade enterprises with paid-up capital of less than US$2,500,000 do not allow foreign equity, those with paid-up capital between US$2,500,000 and less than US$7,500,000 allow up to 60 percent foreign equity, and full foreign participation is allowed after March 25, 2002, under certain conditions.
Manufacture, repair, storage, and distribution of firearms and related products requiring Philippine National Police clearance, manufacture and distribution of military equipment requiring Department of National Defense clearance, manufacture and distribution of dangerous drugs, sauna and steam bathhouses regulated for health and morals, and all forms of gambling are limited to up to 40 percent foreign equity.
Full foreign participation is allowed through financial or technical assistance agreements with the President of the Philippines.
Foreign equity participation in the ownership and operation of public utilities is limited to up to 40 percent.
Amendments to List A can be made at any time to reflect changes in specific laws, while amendments to List B can only be made not more often than once every two years.