QuestionsQuestions (EXECUTIVE ORDER NO. 175)
RA No. 7042 (Foreign Investments Act of 1991) mandates the formulation of a Regular Foreign Investment Negative List covering investment areas/activities either reserved to Filipino nationals and/or open to foreign investors with limitations.
It promulgates the Twelfth Regular Foreign Investment Negative List to replace the Eleventh Regular Foreign Investment Negative List, reflecting updates in List A and List B consistent with existing laws and the policy to ease restrictions in certain areas.
Only the investment areas and/or activities listed in the attached Negative List are reserved for Philippine nationals, subject to the exceptions and conditions indicated in the List.
Amendments to List A may be made at any time to reflect changes instituted in specific laws. Amendments to List B shall not be made more than once every two (2) years, consistent with Section 8 of RA No. 7042 and its IRR.
It refers to activities/areas where the Constitution and/or specific statutes restrict foreign equity or reserve the activity for Filipinos, with stated percentage limits or complete prohibitions.
Examples include: mass media (except recording and internet business); practice of professions (subject to exceptions allowed by law); cooperatives (with exceptions for former natural-born citizens); private detective/watchmen/security agencies; small-scale mining; utilization of marine resources in specified waters; cockpits; certain weapons-related activities; manufacture of firecrackers/pyrotechnic devices.
In the text, advertising is not 25% but up to 40%. Up to 25% appears for: private recruitment (Article 27 of PD No. 442) and contracts for construction of defense-related structures (CA No. 541). These restrictions are tied to the cited constitutional/statutory mandates.
List A indicates “Up to forty percent (40%) foreign equity” for advertising (Section 11, Article XVI of the 1987 Constitution) and procurement of infrastructure projects under RA No. 9184 IRR references.
No. Foreign participation in public utilities is restricted: Section 11, Article XII of the Constitution, plus Section 13 of CA No. 146 (as amended by Section 4 of RA No. 11659) and Section 2(a), 2(b), and 2(m) of RA No. 7718, with the requirement that executive/managing officers be Filipino citizens.
List B covers activities where foreign ownership is limited for reasons of security, defense, risk to health and morals, and protection of small and medium enterprises (SMEs).
Examples: (1) manufacture/repair/storage/distribution of products and ingredients requiring PNP clearance (e.g., firearms, gunpowder, dynamite, blasting supplies, explosives ingredients, sniper/similar devices) restricted due to security/defense; (2) manufacture and distribution of dangerous drugs restricted due to health risk. Also included are gambling (morals/security) and certain micro/small market enterprises (SME protection).
Generally, List A indicates foreign participation is limited by constitutional/professional laws, and the Annex on Professions lists professions where foreigners are not allowed to practice except when subject to reciprocity. Additionally, foreign professionals may practice only when authorized by relevant laws (e.g., RA No. 8981 rules for foreign professionals and reciprocity requirements), and corporate practice is governed by the cited professional regulatory laws.
Some professions may be practiced by foreigners only if subject to reciprocity as provided in pertinent laws. The notes specifically cite RA No. 5181 as prescribing permanent residence and reciprocity as qualifications for examination/registration for practice of any profession in the Philippines.
Examples include: Accountancy, Architecture, Civil Engineering, Nursing, Medicine, Engineering disciplines, and others listed in the Annex (any three).
List A includes “Ownership of condominium units (Section 5 of RA No. 4726).” The text implies restrictions are tied to the condominium law, which regulates foreign participation in owning condominium units (subject to its conditions).
The Annex includes corporate practice of professions with foreign equity restrictions under pertinent laws. It notes that for Architecture, “Section 37 of RA No. 9266” applies—qualified/licensed foreign architects cannot invest or own equity in a domestic architectural firm because only Filipino architects may form and register an architectural firm (as stated in the notes).