IRR of Republic Act No. 11647 on Foreign Investments

Key definitions and defined concepts

The rules define “Act” as Republic Act No. 7042, entitled “An Act to Promote Foreign Investments, Prescribe the Procedures for Registering Enterprises Doing Business in the Philippines, and for other Purposes” (also known as the Foreign Investments Act of 1991), as amended.
The rules define “BOI” as the Board of Investments.
The rules define “Central Business Portal (CBP)” as a centralized online system to receive applications and capture business-related transaction data involving primary and secondary licenses and business clearances, permits, certifications, or authorizations issued by LGUs, with DICT primarily responsible for establishing, operating, maintaining, and/or prescribing CBP-related technology.
The rules define “Doing business” to include soliciting orders, service contracts, opening offices (liaison offices or branches), appointing representatives/distributors under full control, participating in management/supervision/control of domestic businesses, and other acts implying continuity of commercial dealings; the rules enumerate specific acts not deemed “doing business,” including mere investment as a shareholder, having a nominee director/officer, appointing a representative who transacts in its own name and account, general advertisements, maintaining a stock of goods solely for processing by another entity, consignment of equipment for export processing, collecting information, and servicing/installing on an isolated non-continuing contract basis.
The rules define “Foreign investment” as an equity investment by a non-Philippine national in the form of foreign exchange (FX) or the peso equivalent of other assets actually transferred to the Philippines and duly registered with BSP; for foreign ownership determination, peso investments by non-Philippine nationals are considered; for monitoring, existing foreign investment and flows are tracked through BSP and investment promotion agencies (IPAS), and rules implement the linkage to provisions on foreign ownership and monitoring.
The rules define “Foreign Investment Negative List (FINL)” as a list of areas of economic activity whose foreign ownership is limited to a maximum of 40% of the equity capital of the enterprises engaged therein.
The rules define “Export enterprises” as enterprises exporting 60% or more of output (manufacturing/processing/service including tourism), or traders exporting 60% or more of purchases.
The rules define “Export ratio” differently depending on whether the enterprise is manufacturing/processing, service-oriented, or merchandise trading.
The rules define “Paid-in equity capital” as the total paid-in investment in a corporation/partnership/sole proprietor (cash or property), and it refers to inward remittance or assigned capital in the case of foreign corporations.
The rules define “Philippine national” using ownership/control thresholds, including a 60% (sixty percent) Filipino ownership and voting entitlement test, beneficial ownership requirements, and rules on ownership where entities hold shares in a SEC-registered enterprise (including the control test application).
The rules define “Strategic industries” as foreign investments in military-related industries, cyber infrastructure, pipeline transportation, or similar activities threatening territorial integrity and the safety, security, and well-being of Filipino citizens—particularly when made by a foreign government-controlled entity/state-owned enterprise (except independent pension funds, sovereign wealth funds, and multinational banks) or located in geographical areas critical to national security.
The rules define “Transferee of private land” as a person to whom ownership rights of private land are transferred through voluntary or involuntary sale, devise, or donation (including sales on tax delinquency, foreclosures, and executions of judgment).

Inter-Agency Investment Promotion Coordination Committee (IIPCC)

The Inter-Agency Investment Promotion Coordination Committee (IIPCC) integrates promotion and facilitation efforts to encourage foreign investments in the country.
The IIPCC Chairperson, through the Secretariat, convenes the IIPCC after the issuance of these rules.

IIPCC composition and private sector participation

The IIPCC is composed of: (a) Secretary of DTI as Chairperson; (b) Secretary or Undersecretary of DOF as Vice-chairperson; (c) BOI Managing Head; (d) Director-General of DTI-PEZA; (e) Undersecretary of DFA for Multicultural Affairs and International Economic Relations (DFA-OUMAIER); (f) Secretary of Socioeconomic Planning of NEDA; (g) Secretary of DICT; (h) Chairperson of CHED; (i) Director-General of TESDA; and (j) four (4) private sector representatives (one each from National Capital Region, Luzon, Visayas, and Mindanao).
The principal members may designate primary and secondary alternates whose acts are treated as acts of the principals when the principals are unavailable.
Private sector representatives are selected from nominees of known competence, probity, integrity, and expertise in investment, advertising, banking, finance management, or law, with at least ten (10) years of management/leadership experience, and are recommended by nationally recognized leading industry/business chambers or the largest private sector organization by geography, sector, and membership.
The nominees list is endorsed to the President; once the President approves and issues appointments, the representatives take an oath and commence duty.
Private sector representatives serve for three (3) years, subject to reappointment for another three (3) years; replacements for vacancies serve only for the remainder of the term.
Private sector nominees undergo appropriate security clearance and background checks as a condition to serve.

Meetings, quorum, disclosure

The IIPCC meets at least semi-annually; special meetings may be convened by the Chairperson.
Quorum requires a majority or at least seven (7) members present, with at least two-thirds (2/3) of members present being government representatives, and with either the Chairperson or the Vice-chairperson present.
Resolutions require signature by two-thirds (2/3) of IIPCC members and either the Chairperson or the Vice-chairperson.
The Chairperson may invite representatives of relevant agencies/sectors as resource persons in a non-voting capacity when necessary.
Members with personal and pecuniary interests in matters on the agenda must disclose the interest to the IIPCC and withdraw from the meeting when that matter is taken up, consistent with Republic Act No. 6713.

IIPCC powers, functions, and technical committee

The IIPCC establishes a medium- and long-term Foreign Investment Promotion and Marketing Plan (FIPMP) that coordinates investment development plans under the BOI, PEZA, and various IPAs, investment promotion units of LGUs, and other agencies into a single national framework and strategy.
The IIPCC designs comprehensive marketing strategies and campaigns to promote the country as a desirable investment area aligned with the FIPMP.
The IIPCC coordinates and, when necessary, partners with and assists IPAs and similar authorities (including those created by law) in promoting foreign investments.
The IIPCC supports inbound and outbound foreign direct investment or trade missions to promote the Philippines as a premier investment location.
The IIPCC encourages and supports research and development in priority investment areas indicated in the FIPMP.
The IIPCC creates a technical committee to lead strategic industry review.
The IIPCC monitors actual performance against measurable and time-bound FIPMP targets, including job generation, revenue generated, realized investments, and other related indicators.
The IIPCC submits annual evaluation and reports to the President and Congress on IIPCC activities.
The IIPCC establishes and regularly updates an online database/directories of ready local partners from priority sectors under the FIPMP for business matching in local supply chains.
The IIPCC supports LGU efforts to promote foreign direct investments, facilitate processing of national requirements to expedite compliance for highly desirable projects, and address safeguards/services requested by foreign investors in their localities.

IIPCC Technical Committee functions

The IIPCC Technical Committee is headed by the DOF as Chairperson and the National Security Council (NSC) as Co-Chairperson, with NEDA and DTI as permanent members.
The Technical Committee undertakes risk-assessment studies to identify and recommend: (a) strategic industries and (b) geographical areas critical to national security, and recommends the list to the President for approval; once approved, these form part of the initial list of strategic industries/geographical areas critical to national security, and the list may be amended by President approval when necessary.
Upon order of the IIPCC, the Technical Committee conducts an initial risk assessment of foreign investment transactions meeting conditions under Section 69, Rule XXII.
Upon order of the IIPCC, the Technical Committee conducts a comprehensive national security review of foreign investments.
The Technical Committee submits its findings/recommendations to the IIPCC.
The Chairperson of the IIPCC Technical Committee provides leadership, calls meetings, ensures informed decisions, and may request participation of other departments/agencies, LGUs, NGOs, and local business chambers as needed.

IIPCC coordination mandate

The IIPCC aligns the FIPMP with the Strategic Investment Priority Plan (SIPP).
The IIPCC coordinates with the Office of the President prior to issuance of any order reviewing foreign investments with national security implications under Section 16 of the Act and Rule XXII.
The IIPCC solicits information from the Fiscal Incentives Review Board (FIRB) on whether foreign investments are registered, applying for registration, applying for registration with an IPA, or applying for fiscal incentives under Title XII of the National Internal Revenue Code (NIRC), as amended.
The IIPCC coordinates with the NSC regarding foreign investments with national security implications.
The IIPCC coordinates with the Philippine Competition Commission (PCC) for review of foreign investments involving mergers and acquisitions and with the Governance Commission for GOCCs (GCG) for review involving GOCCs, when investments meet policy parameters under Section 16 and applicable rules.
The IIPCC aligns the FIPMP with the Philippine Development Plan (PDP), Regional Development Plans (RDPs), and other relevant sectoral plans.
The IIPCC coordinates with IPAs, LGU investment promotion units, and other agencies to harmonize investment promotion/marketing initiatives and streamline processes toward ease of doing business.
The IIPCC coordinates with other interagency committees/councils and bodies where coordination is required by its mandate, functions, or scope.

Foreign Investment Promotion and Marketing Plan (FIPMP)

The FIPMP is consistent with the SIPP, PDP, and RDPs and provides strategies to promote the country as a premier investment destination, including: creating high-skilled jobs and a local enterprise pool (particularly MSMEs), increasing domestic product/service sophistication, expanding domestic supply sources, attracting significant foreign capital/investment, promoting export diversification, and accelerating countryside development.
The IIPCC formulates the FIPMP in consultation with IPAs and other government departments/agencies, LGUs, and business chambers/enterprises, based on the Philippines’ competitive advantages, natural resources, skill/educational development, traditional linkages, and international market potential; the IIPCC issues separate guidelines for formulation.
The IIPCC develops a comprehensive medium five (5)-year and long-term ten (10)-year FIPMP.
The first medium and long-term FIPMP is formulated within one (1) year after the effectivity of these rules.
Subject to consultation and publication requirements, the IIPCC reviews and amends the FIPMP every two (2) years and updates policies/strategies/programs/projects/activities including investment targets for the remaining plan period considering local and global market developments.
A monitoring tool integrated in the FIPMP includes investment targets, revenue generated, approved and realized investments, job generation, and relevant indicators, including indicators from the Sustainable Development Goals (SDGs) and future global indicator frameworks.
Education and skills development stakeholders direct curriculum and training efforts toward manpower requirements of the FIPMP, involving DepEd, CHED, TESDA, DOLE, PRC, and other training agencies involved in education and skills development.

Online single-portal and CBP link

The IIPCC establishes, operates, and maintains an online single-portal system containing IIPCC procedures (including contacts and schedules), the FIPMP, information on rights and obligations of investors and government, links to relevant government websites, and IIPCC issuances/resolutions/documents for public circulation.
The portal includes databases for investment-related statistics (including values/amounts of approved and actual investments that have materialized), local partners/enterprises for business matching, available land locations, and other needed databases.
The portal provides a registration link to the CBP to support filing/application of necessary registrations, clearances, or permits facilitating foreign investments.
The online single-portal is public-facing and functions as a tool for investment promotion and local supply-chain business matching, using FAQs, infographics, and other digital marketing tools.
The IIPCC, in consultation with DICT, operationalizes the online single-portal system to enhance efficiency in attracting and facilitating entry of qualified foreign investments; DICT provides assistance for technical requirements, and the IIPCC may formulate further guidelines.

Foreign investment registration: qualifications, process, and approvals

Any non-Philippine national may invest or do business in a domestic enterprise up to one hundred percent (100%) of its capital if the investment is: (a) in a domestic market enterprise in areas outside the FINL, or (b) in an export enterprise whose products/services do not fall within Lists A and A of the FINL (except defense-related activities, which may be approved pursuant to Section 8(b)(1) of the Act).
The rules require that, under existing laws, the applicant’s country/state must also allow Filipinos and Philippine corporations to do business therein.
A non-Philippine national qualified under the foreign equity rule who engages in more than one investment area where one or more areas are in the FINL may register under the Act but must not engage in FINL areas subject to foreign equity limits in the FINL.
Existing enterprises that are non-Philippine nationals at the time of effectivity of the Act and that seek to increase foreign equity participation beyond previously authorized levels must follow the general qualifications in the rule: increases beyond current holdings are allowed only if the existing investment area is not in the FINL; for enterprises engaged in multiple areas, increases are allowed only if none of the engaged areas is in the FINL.
Existing foreign corporations are allowed to increase capital even if their existing investment area is in the FINL.
Transfer of ownership from one foreign company to another is allowed even if the enterprise is in an area in the FINL, provided there is no increase in the percentage share of foreign equity.

Filing and acceptance of applications

Applications for registration are filed with the SEC for foreign corporations and domestic corporations/partnerships, and for sole proprietors: in Metro Manila with DTI-National Capital Region, and in provinces with extension offices of SEC for corporations/partnerships and provincial offices of DTI for sole proprietors.
Document pre-processing assists investors in determining completeness, and applications are officially accepted only upon submission of complete documents to either the SEC or the DTI.

Additional requirements for certain cases

For defense-related activities, applications must include clearance from the Department of National Defense (DND) or the Philippine National Police (PNP).
For non-Philippine nationals engaged in micro and small domestic market enterprises with paid-in equity capital of at least US$100,000 but not equal to or more than US$200,00, additional requirements may include: a DOST certificate that the investment involves advanced technology; or a certificate from DICT or DTI or DOST endorsing startups or startup enablers; or a certificate from the appropriate DOLE Regional Office requiring a notarized undertaking that the majority of their direct employees are Filipinos and that the number of Filipino direct employees is not less than fifteen (15).
The DOLE validates and monitors compliance with the undertaking within six (6) months from the start of commercial operation.
If the undertaking is not satisfied, the DOLE submits a report to the SEC, which causes the investor to satisfy the appropriate higher investment requirement and imposes the appropriate penalty if necessary.
Issuances relating to additional requirements are acted upon in accordance with Republic Act No. 11032 (Ease of Doing Business and Efficient Government Services Delivery Act of 2018).
For strategic industries defined under the Act (including Section 16 of the Act and Rule XXII), those provisions govern.
The online single-portal system makes the applicable platform link available for the registration process once operable.

Approval timelines and effect of inaction

The SEC or DTI decides on applications within seven (7) working days from official acceptance for domestic corporations, partnerships, and sole proprietors.
For foreign corporations, the SEC decides within twenty (20) working days from official acceptance.
If the application is not acted upon within the applicable period for reasons not attributable to the applicant, the application is considered automatically approved.

Compliance monitoring, SEC/DTI/IPAs registration, and BSP registration

The SEC or DTI, as applicable, monitors compliance with the Act’s foreign equity participation requirements.
The SEC or DTI, as applicable, monitors compliance with minimum paid-up equity capital through either: a BSP-issued certificate of inward remittance of FX in the BSP-prescribed format showing compliance, or other proof such as a bank certification that capital investment is deposited and maintained in a bank in the Philippines.
Registration with the SEC for corporations, partnerships, and joint ventures follows Republic Act No. 11232 (Revised Corporation Code), the Securities Regulation Code (SRC), the Civil Code of the Philippines, and other SEC-implemented laws; the SEC online registration platform link is made available on the online single-portal system once operable.
Registration with DTI for sole proprietors follows existing DTI guidelines, including conditions for basic and additional requirements; DTI’s online registration platform link is made available on the online single-portal system once operable.
Registration with IPAs follows existing procedures of relevant IPAs, with the relevant platform link made available on the online single-portal system once operable.
Enterprises seeking to source FX from the banking system for remittance of profits abroad and for capital repatriation connected with the foreign investment must register with the BSP, observing BSP rules on foreign investment registration; the BSP registration platform link is made available on the online single-portal system once operable.

Export enterprise foreign investment rules

Foreign investments in export enterprises are allowed up to one hundred percent (100%) provided the products/services do not fall within Lists A and B of the FINL.
As a general rule, export enterprises that are non-Philippine nationals register with the BOI.
Export enterprises registered under the Act that seek to avail of incentives must apply for registration with the appropriate IPAs, applying the rules under Title XIII of the NIRC, as amended and its implementing regulations.
Within seven (7) working days from issuance of a certificate of registration, the SEC or DTI transmits copies of the certificate of registration and the prescribed application form duly accomplished to BOI.
All duly registered foreign export enterprises must submit a duly accomplished report form to BOI within six (6) months after the end of each taxable year.
The IIPCC issues guidelines establishing a uniform template for the reports for recordkeeping and monitoring approved and realized foreign investments.
Failure to submit reports within the prescribed period or submission of fraudulent reports constitutes grounds for appropriate sanctions under Section 62, Rule XXI.
After receiving the reports, the BOI determines compliance with the export requirement.
If the export enterprise fails to comply with the export requirement, the BOI informs concerned IPAs, which advise the SEC for corporations and partnerships or the DTI for sole proprietors.
If the export enterprise fails to comply, the SEC or DTI requires immediate reduction of domestic sales to not more than forty percent (40%) of total production.
If the enterprise fails to comply with the order without justifiable reason, it is penalized in accordance with Section 62, Rule XXI.

Domestic market enterprise rules and change of status

Foreign equity participation in domestic market enterprises is allowed up to one hundred percent (100%), unless prohibited or limited by the Constitution, existing laws, or the FINL.
A domestic market enterprise may change status to an export enterprise at any time by notifying the SEC or DTI through the applicable online registration platform link.
The SEC or DTI decides on the request within seven (7) working days from official receipt for domestic corporations, partnerships, and sole proprietors; for foreign corporations, the SEC decides within twenty (20) working days.
For foreign export enterprises, any change from domestic to export enterprise follows the export enterprise application rule and must be supported by relevant reports evidencing exportation of sixty percent (60%) or more of output.
Upon notification, the SEC requires amendment of the articles of incorporation to include exporting activity in the primary purposes.
New export enterprises that are non-Philippine nationals are subject to reportorial requirements and are monitored for compliance with the export requirement under the export enterprise rules.

FINL structure, formulation, publication, and effectivity

The Regular FINL consists of two (2) component lists, List A and List B, both reserving areas of economic activity to Philippine nationals.
The NEDA formulates the Regular FINL, following the process and criteria under Section 8 of the Act and the FINL rules.
The NEDA submits proposed Regular FINL to the President for approval and promulgation.
The NEDA submits the first Regular FINL and subsequent proposed Regular FINLs to the President at least forty-five (45) calendar days before the scheduled publication date.
The NEDA publishes the first Regular Negative List not later than sixty (60) days before the end of the transitory period.
Subsequent negative lists are published not later than fifteen (15) calendar days before the end of the effectivity of the current negative list.
The first Regular FINL becomes immediately effective at the end of the transitory period.
Subsequent Regular FINLs become effective fifteen (15) calendar days after publication in a newspaper of general circulation in the Philippines or in the official gazette.
Except for List A, each Regular FINL remains in force for two (2) years from the date of effectivity.
Each Regular FINL applies only to new foreign investments, and it does not affect existing foreign investments at the time of publication.

List A guidelines and amendments

List A contains areas of activity reserved to Philippine nationals where foreign investments are limited to a maximum of forty percent (40%) under the Constitution and other specific laws.
The NEDA enumerates the activities reserved to Philippine nationals by the Constitution and other specific laws.
Amendments to List A may be made by the NEDA any time to reflect changes made by law on foreign equity extent in a specific economic activity.

List B guidelines, reserved activities, and process

List B includes defense or law enforcement-related activities requiring prior clearance and authorization from DND or PNP, covering the manufacture, repair, storage, or distribution of firearms, ammunition, armored vests and other bulletproof attires, lethal weapons, military ordnance, explosives, pyrotechnics, and similar materials.
The Secretary of National Defense or Chief of the PNP may specifically authorize the manufacture and repair of the specified items by non-Philippine nationals, provided the relevant clearance/approval has been secured.
List B includes activities with negative implications on public health and morals, including manufacture and distribution of dangerous drugs and all forms of gambling; and venues including nightclubs, bars, beerhouses, dance halls; sauna and steam bathhouses; and massage clinics.
List B reserves micro and small domestic market enterprises with paid-in equity capital of less than US$200,000 (or its equivalent) to Philippine nationals, except that non-Philippine nationals are allowed a minimum paid-in capital of US$100,000 (or its equivalent) subject to: advanced technology determined by DOST, endorsement as startup or startup enablers by lead host agencies (DTI, DICT, or DOST) under Republic Act No. 11337 (Innovative Startup Act), or a notarized undertaking that the majority of direct employees are Filipinos with a minimum of fifteen (15) Filipino direct employees.
Foreign enterprises registered under the fiscal incentives framework that employ foreign nationals and enjoy fiscal incentives must develop and implement an understudy training program or skills development program to ensure transfer of technology skills to Filipino employees within the same enterprise.

Determination process for List B and amendments

For List B activities under defense-related items and public health/morals items, determination is based on NEDA recommendations (motu proprio or endorsed by NEDA) based on recommendations from DND or DOH as applicable, approved by the President, and promulgated through issuance of the Regular FINL by Executive Order; List B is submitted for Presidential action together with List A.
The NEDA informs the concerned agencies of deadlines for submission of recommendations consistent with the Regular FINL publication timeline.