Policy and guiding principles
- Section 2 establishes as State policy to attract, promote, and welcome productive investments from foreign individuals, partnerships, corporations, and governments (including political subdivisions).
- Section 2 limits encouragement of foreign investments to activities that significantly contribute to sustainable, inclusive, resilient, and innovative economic growth and to the extent foreign investment is allowed by the Constitution and relevant laws, consistent with protection of national security.
- Section 2 directs that foreign investments shall be encouraged in enterprises that significantly expand livelihood and employment opportunities for Filipinos, enhance economic value of agricultural products, promote the welfare of Filipino consumers, expand exports and access to foreign markets, and/or transfer relevant technologies in agriculture, industry, and support services.
- Section 2 provides that foreign investments may be welcomed as a supplement to Filipino capital and technology in enterprises serving mainly the domestic market.
- Section 2 mandates promotion of accountability and integrity in public office and the administration of efficient public service to entice foreign investments.
- Section 2 requires foreign investments to be conducted based on the principles of transparency, reciprocity, equity, and economic cooperation.
Key definitions established
- Section 3(b) defines “investment” as equity participation in an enterprise organized or existing under Philippine law and duly recorded in the enterprise’s stock and transfer book (or an equivalent registry of ownership).
- Section 3(c) defines “foreign investment” as an equity investment by a non-Philippine national in the form of foreign exchange and/or other assets actually transferred to the Philippines, and duly registered with the Bangko Sentral ng Pilipinas.
- Section 3(h) defines “practice of profession” as an activity rendered and performed by a registered and duly licensed professional or a holder of a special temporary permit within the scope of a professional regulatory law.
- Section 3(i) defines “pipeline transaction” as the sector that includes transport of goods or materials through a pipeline, such as crude, refined petroleum, natural gas, biofuels, and other chemically stable substances.
Foreign investment promotion coordination
- Section 4 creates the Inter-Agency Investment Promotion Coordination Committee (IIPCC) to integrate promotion and facilitation efforts to encourage foreign investments.
- Section 4 designates the Department of Trade and Industry (DTI) as the lead agency of the IIPCC.
- Section 4 provides the IIPCC composition as:
- (a) Secretary of the DTI as Chairperson;
- (b) Secretary/Undersecretary of the Department of Finance (DOF) as Vice-Chairperson;
- (c) One representative from DTI–Board of Investments (BOI);
- (d) One representative from DTI–Philippine Economic Zone Authority (PEZA);
- (e) One representative from Department of Foreign Affairs (DFA), Office of the Undersecretary for Multilateral Affairs and International Economic Relations (OUMAIER);
- (f) One representative from NEDA;
- (g) One representative from Department of Information and Communications Technology (DICT);
- (h) One representative from Commission on Higher Education (CHED);
- (i) One representative from Technical Education and Skills Development Authority (TESDA); and
- (j) Four industry/business chamber representatives from National Capital Region, Luzon, Visayas, and Mindanao, each chosen from nominees with known competence, probity, integrity, and expertise, and at least ten (10) years of outstanding management or leadership experience.
- Section 4 allows the Chairperson to request participation of additional government departments and agencies, LGUs, NGOs, and local business chambers and enterprises as foreign investment needs require.
- Section 4 directs the IIPCC to coordinate and, when necessary, partner with specific investment authorities (including BCDA, AFAB, CDC, SBMA, CEZA, JHMC, PPMC, ZCSEZA, PHIVIDEC Industrial Authority (PIA), APECO, and TIEZA, and similar authorities created by law) to promote foreign investments; it expressly excludes the administration, design, and grant of fiscal incentives.
- Section 4 designates the BOI as the IIPCC’s secretariat, responsible for implementing its policies and resolutions.
Powers and the FIPMP framework
- Section 4-A grants the IIPCC powers and functions to:
- (a) establish a medium-and-long-term Foreign Investment Promotion and Marketing Plan (FIPMP) integrating existing investment development plans and programs under BOI, PEZA, and various investment promotion agencies (IPAs), LGUs, and other agencies (as delineated in Section 4-B);
- (b) design a comprehensive marketing strategy and campaign promoting the country as a desirable investment area;
- (c) support inbound and outbound foreign direct and trade missions for new international markets;
- (d) encourage and support research and development in priority areas indicated by the FIPMP;
- (e) monitor performance against measurable, timebound FIPMP targets, including job generation;
- (f) submit annual evaluation and reports to the President and Congress on IIPCC activities;
- (g) establish and regularly update an online database with a directory of ready local partners from priority sectors under the FIPMP for investment promotion and business matching; and
- (h) support local government efforts to promote foreign direct investments, expedite compliance with national requirements, and address investors in their localities involved with foreign investments.
- Section 4-B requires the IIPCC to develop a comprehensive FIPMP for a medium five-year and a long-term ten-year plan.
- Section 4-B requires the FIPMP to be based on competitive advantages, natural resources, skill and educational development, traditional linkages, and international market potential, and to be fully consistent with the strategic investment priorities plan under Title XIII of the National Internal Revenue Code (as amended).
- Section 4-B requires that an online portal containing the FIPMP be uploaded with further details such as the IIPCC’s procedure, contacts, and schedules.
- Section 4-B requires the database to include a directory of local enterprises capable and willing to partner with potential foreign investors.
- Section 4-B requires the IIPCC to consult local chambers of commerce, sectoral and business groups, and other individual partners when foreign applicants seek partners, subcontractors, suppliers, and other local business counterparts.
- Section 4-B requires education and skills agencies (DepEd, CHED, TESDA, DOLE, PRC, and other training agencies) to direct curriculum and training toward manpower requirements of the FIPMP.
- Section 4-B requires the IIPCC to coordinate with concerned government agencies to ensure alignment with the FIPMP, and directs that DTI shall promulgate rules and regulations needed to implement the provision.
Registration rules for foreign nationals
- Section 5 allows a non-Philippine national (as defined in Section 3(a)) who is not disqualified by law to do business as defined in Section 3(d) or invest in a domestic enterprise up to one hundred percent (100%) of its capital upon registration with the SEC (or DTI for single proprietorships), without need of prior approval.
- Section 5 bars SEC or DTI from imposing any limitation on foreign ownership beyond those provided in the Act.
- Section 5 requires enterprises seeking to avail of incentives under the Omnibus Investment Code of 1987 to apply for registration with the BOI, which must process the application under the criteria for evaluation prescribed in the Omnibus Investment Code of 1987.
- Section 5 requires a non-Philippine national intending to engage in the same line of business as an existing joint venture (in which the applicant or its majority shareholder is a substantial partner) to disclose in the SEC application the fact of the existing joint venture and the names and addresses of the partners in that existing joint venture.
- Section 5 establishes a transitory period under Section 15 hereof, during which SEC shall disallow registration of the applying non-Philippine national if the existing joint venture enterprise, particularly the Filipino partners, can reasonably prove the domestic market activities to be undertaken.
- Section 5 provides that SEC shall effect registration of any enterprise applying under the Act within fifteen (15) days upon submission of completed requirements.
Export enterprises and ownership limits
- Section 6 allows foreign investment in export enterprises (whose products and services do not fall within Lists A and B of the Foreign Investment Negative List under Section 8) up to one hundred percent (100%) ownership.
- Section 6 requires export enterprises with non-Philippine nationals to register with the BOI and submit reports required to ensure continuing compliance with export requirements.
- Section 6 requires BOI to advise the SEC or DTI, as the case may be, of any export enterprise that fails to meet the export ratio requirement.
- Section 6 authorizes the SEC or DTI to order non-complying export enterprises to reduce sales to the domestic market to not more than forty percent (40%) of total production.
- Section 6 requires cancellation of SEC or DTI registration and/or penalties under Section 14 if the enterprise fails to comply with the SEC or DTI order without justifiable reason.
- Section 6 requires export enterprises to register and comply with export requirements under Title XIII of the NIRC (as amended) for purposes of availing tax incentives or benefits.
Foreign Investment Negative List rules
- Section 8 maintains a Foreign Investment Negative List defining investment areas reserved to Philippine nationals.
- Section 8(a)(1) reserves defense-related activities requiring prior clearance and authorization from the Department of National Defense (DND) to engage in activities such as manufacture, repair, storage and/or distribution of firearms, ammunition, lethal weapons, military ordinance, explosives, pyrotechnics, and similar materials—unless manufacturing or repair activity is specifically authorized by the Secretary of National Defense.
- Section 8 reserves micro and small domestic market enterprises with paid-in equity capital less than the equivalent of Two hundred thousand US dollar (US$200,000.00) to Philippine nationals, with exceptions allowing non-Philippine nationals if:
- (1) they involve advanced technology as determined by Department of Science and Technology, or
- (2) they are endorsed as startup or startup enablers by the lead host agencies pursuant to Republic Act No. 11337 (Innovative Startup Act), or
- (3) a majority of direct employees are Filipinos, but in no case may the number of Filipino employees be less than fifteen (15), and a minimum paid-in capital of One hundred thousand US dollars (US$100,000.00) is met.
- Section 8 requires that registered foreign enterprises employing foreign nationals and enjoying fiscal incentives implement an understudy or skills development program to ensure transfer of technology or skills to Filipinos, with compliance regularly monitored by DOLE.
- Section 8 provides that nothing in the Act operates as a cause for termination of employees hired prior to effectivity; in all cases, Republic Act No. 442 (Labor Code of the Philippines) and other applicable laws, rules, and regulations issued by DOLE prevail.
- Section 8 provides that amendments to List B may be made on recommendation of the Secretary of National Defense, or the Secretary of Health endorsed by NEDA, or upon NEDA recommendation motu propio, approved by the President, and promulgated through issuance of the Foreign Investment Negative List by Executive Order.
- Section 8 limits amendments to the Foreign Investment Negative List to not more often than once every two (2) years.
- Section 8 requires NEDA, in consultation and cooperation with BOI, DTI, SEC, DICT, IPAs, and other pertinent government agencies, to:
- every two (2) years, (i) review the Foreign Investment Negative List; and
- every two (2) years, submit to Congress an analysis of foreign investment performance in the industries under the Negative List and reasons for recommended amendments, if any.
- Section 8 requires NEDA to recommend to Congress investment-related matters requiring necessary legislation.
Strategic industry review by Presidential order
- Section 16 requires that, upon an order of the President, the IIPCC, in coordination with the National Security Council (NSC) and NEDA, review foreign investments involving military-related industries, cyber infrastructure, pipeline transportation, or other activities that may threaten territorial integrity and the safety, security, and well-being of Filipino citizens.
- Section 16(a) triggers review when the investment is made by a foreign government-controlled entity or state-owned enterprise, except independent pension funds, sovereign wealth funds, and multinational banks.
- Section 16(b) triggers review when the investment is located in geographical areas critical to national security.
- Section 16 requires that any recommendation to suspend, prohibit, or otherwise limit a reviewed foreign investment be transmitted to the Office of the President for appropriate action.
Anti-graft penalties for promotions
- Section 17 requires public officials and employees involved in foreign investment promotions to uphold the highest standards of public service, accountability, and integrity.
- Section 17 imposes an additional sanction: any public official or employee involved in foreign investment promotions who commits any acts under Section 3 of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) is punished in addition to the penalties provided under Section 9(a) of Republic Act No. 3019.
- Section 17 sets the additional fine at not less than Two million pesos (P2,000,000.00) but not more than Five million pesos (P5,000,000.00).
Non-applicability to regulated sectors
- Section 18 provides that the Act does not apply to banking and other financial institutions governed and regulated by Republic Act No. 8791 (General Banking Law of 2000) and other laws under the supervision of the Bangko Sentral ng Pilipinas.
- Section 18 provides that the Act does not apply to the practice of professions covered by specific laws and under the jurisdiction of Professional Regulatory Boards (PRBs) or other equivalent regulating bodies.
- Section 18 provides that the Act does not apply to professions covered by reciprocity agreements with other countries.
- Section 18 requires that, where applicable and when necessary licenses, work permits, and visas are properly secured from relevant government agencies, an occupation, employment, or practice of profession not covered by special law or reciprocity agreement is subject to the Act.
Appropriations and implementation rules
- Section 13 appropriates Fifty million pesos (P50,000,000.00) from the Contingent Fund of the General Appropriations Act for the current fiscal year for release to the IIPCC.
- Section 13 directs that thereafter, amounts necessary to carry out the Act shall be included in the General Appropriations Act (GAA).
- Section 14 directs the NEA, in consultation with DTI and DOF, to amend existing rules and regulations necessary for efficient implementation of the Act.
Repeals, separability, and effect
- Section 15 amends Republic Act No. 7042 as amended and repeals or modifies all laws, decrees, orders, rules, regulations, and other issuances or parts inconsistent with the Act.
- Section 16 provides separability: if any portion or provision is declared unconstitutional, the remainder of the Act remains in force and effect.
- Section 17 provides effectivity after fifteen (15) days from publication in the Official Gazette or a newspaper of general circulation in the Philippines.