Law Summary
Foreign Ownership in Domestic Market Enterprises
- Foreigners may own up to 100% in domestic market enterprises except where constitutionally or legally prohibited or limited.
- Restrictions are guided by the Foreign Investment Negative List.
Foreign Investment Negative List
- Divided into List A and List B.
- List A: Areas reserved strictly to Filipinos by the Constitution and laws.
- List B: Regulated sectors including:
- Defense-related activities requiring Department of National Defense approval.
- Public health and morals related activities (e.g., manufacture and distribution of dangerous drugs, gambling, nightlife-related businesses).
- Small and medium enterprises with paid-in capital below $200,000 are reserved to Filipinos, except when involving advanced technology or employing at least 50 direct employees which lowers threshold to $100,000 capital for foreigners.
- Amendments to List B require approvals and are limited to twice every two years post regularization.
Investment Rights of Former Natural born Filipinos
- Former natural-born citizens have same investment rights as Filipino citizens in coops, rural banks, thrift and private development banks, and financing companies.
- They are excluded from reserved activities such as exercise of profession, defense-related activities unless authorized, and sectors covered by specific laws (Retail Trade, Security Agency, Small Scale Mining, Rice and Corn industry, Cockpits Operation).
Land Acquisition Rights of Former Natural Born Filipinos
- Former natural-born citizens who lost Philippine citizenship may acquire private land for business or other purposes:
- Up to 5,000 sq. meters urban land or 3 hectares rural land.
- Married couples may avail the privilege but combined acquisition limits apply.
- Acquisition limited to two lots in different municipalities or cities, but total area must not exceed the limits.
- Cannot acquire both urban and rural land; restricted to one type.
Information Dissemination and Implementing Rules
- NEDA, with other agencies, tasked to prepare informational materials on the Act and amendments and distribute internationally and locally.
- NEDA to amend implementing rules and regulations of RA 7042 to reflect these changes.
Repeal and Amendments
- Previous Sections 9 and 10 of RA 7042 and inconsistent provisions repealed or modified.
- Severability clause ensures that invalidity of any part does not affect the remainder of the Act.
Effectivity
- The Act takes effect 15 days after publication in two newspapers of general circulation.