Title
12th Foreign Investment Negative List EO
Law
Executive Order No. 175
Decision Date
Jun 27, 2022
Rodrigo Roa Duterte's Executive Order No. 175 establishes the Twelfth Regular Foreign Investment Negative List, delineating investment areas reserved for Filipino nationals and easing restrictions on foreign participation in select sectors to promote economic growth.
foreign investment
negative list
executive order

Legal basis and controlling framework

  • The Executive Order is anchored on Republic Act No. 7042, the Foreign Investments Act of 1991, as amended, which mandates a Regular Foreign Investment Negative List.
  • Republic Act No. 7042 provides for a Regular Foreign Investment Negative List that covers investment areas or activities that are:
    • open to foreign investors and/or
    • reserved to Filipino nationals.
  • The Executive Order updates the list pursuant to Section 8 of Republic Act No. 7042, as amended.
  • Amendments are governed by the revised Implementing Rules and Regulations of Republic Act No. 7042.

Policy purpose and intent

  • The Executive Order reflects the policy to ease restrictions on foreign participation in certain investment areas or activities.
  • The Executive Order replaces the Eleventh Regular Foreign Investment Negative List to reflect changes in List A and List B.

Twelfth Regular Foreign Investment Negative List

  • Only the investment areas and/or activities appearing in the Twelfth Regular Foreign Investment Negative List are reserved for Philippine Nationals.
  • Reservations under the Negative List are subject to the exceptions and conditions indicated in the list itself.
  • List A covers investment areas or activities where foreign ownership is limited by the mandate of the Constitution and specific laws.
  • List B covers investment areas or activities where foreign ownership is limited for reasons of security, defense, risk to health and morals, and protection of small and medium scale enterprises.

List A: Foreign equity limits

  • List A provides a baseline rule that no foreign equity is allowed for specified investment areas and activities.
  • No Foreign Equity in List A applies to the following:
    • Mass media, except recording (Section 11, Article XVI of the 1987 Constitution) and internet business (referenced by DOJ Opinion No. 40, s. 1998).
    • Practice of professions under Section 14, Article XII of the Constitution, except where allowed by law subject to the prescribed conditions, including cross-references to RA No. 5181, RA No. 8981 (Section 7[j]), and Title II of PD No. 442, plus the Annex on Professions.
    • Retail trade enterprises with paid-up capital of less than PhP25,000,000.00 (as referenced to Section 2 of RA No. 11595, amending RA No. 8762).
    • Cooperatives (as referenced to RA No. 6938, as amended by RA No. 9520), except investments of former natural born citizens of the Philippines under the referenced rule in RA No. 8179.
    • Private detective, watchmen or security guards agencies (as referenced to RA No. 5487, as amended by PD No. 11 and PD No. 100, s. 1973).
    • Small-scale mining (as referenced to RA No. 7076).
    • Utilization of marine resources in archipelagic waters, territorial sea and exclusive lakes, bays and lagoons (as referenced to Section 2, Article XII of the 1987 Constitution).
    • Ownership, operation and management of cockpits (as referenced to PD No. 449).
    • Manufacturable, repair, stockpiling and/or distribution of nuclear weapons (as referenced to Section 8, Article II of the Constitution).
    • Manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons and anti-personnel mines (as referenced to treaties/conventions supported by the Philippines).
    • Manufacture of firecrackers and other pyrotechnic devices (as referenced to Section 5 of RA No. 7183).
  • Up to twenty-five percent (25%) foreign equity applies in List A to:
    • Private recruitment, whether for local or overseas employment (Article 27 of PD No. 442).
  • Up to thirty percent (30%) foreign equity applies in List A to:
    • Contracts for the construction of defense-related structures (CA No. 541).
  • Up to forty percent (40%) foreign equity applies in List A to:
    • Advertising (Section 11, Article XVI of the Constitution).
    • Procurement of infrastructure projects pursuant to Section 23.4.2.1(b), (c) and (e) of the IRR of RA No. 9184.
  • Additional List A areas limit foreign participation with cross-referenced standards:
    • Exploration, development and utilization of natural resources (Section 2, Article XII of the Constitution).
    • Ownership of private lands (Section 7, Article II of the Constitution; Section 22 of CA No. 141; Section 4 of RA No. 9182), with an exception for a natural born citizen who has lost his Philippine citizenship and who has legal capacity to enter into a contract under Philippine laws (as referenced to Section 10 of RA No. 7042, as amended by Section 5 of RA No. 8179).
    • Operation of public utilities (Section 11, Article XII of the Constitution; Section 13 of CA No. 146, as amended by Section 4 of RA No. 11659; Section 2[a], 2[b] and 2[m] of RA No. 7718).
    • Educational institutions other than those established by religious groups and mission boards, for specified foreign persons and purposes under the cited constitutional rule (including short-term high-level skills development not forming part of the formal education system under Batas Pambansa Blg. 232).
    • Culture, production, milling, processing, trading except retailing, of rice and corn and acquiring rice and corn by-products, subject to period of divestment under NFA Council Resolution No. 193, s. 1998.
    • Contracts for the supply of materials, goods and commodities to GOCCs, companies, agencies, or municipal corporations (RA No. 5183 and RA No. 9184).
    • Operation of deep sea commercial fishing vessels (RA No. 8550, as amended by RA No. 10654).
    • Ownership of condominium units (Section 5 of RA No. 4726).
    • Private radio communications network (Section 11, Article XII of the Constitution; National Telecommunications Commission Memorandum Circular No. 10-8-91).

List B: Security, defense, health, morals, SME protection

  • List B provides a ceiling of up to forty percent (40%) foreign equity for the listed activities.
  • List B includes the following investment activities:
    • Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine National Police (PNP) clearance:
      • Firearms (handguns to shotguns), parts of firearms and ammunition, and instruments/implements intended to be used in manufacture of firearms.
      • Gunpowder; dynamite; blasting supplies; ingredients used in making explosives.
      • Specific enumerated chemical ingredients (including chlorates, nitrates, nitric acid, nitrocellulose, perchlorates, dinitrocellulose, glycerol, amorphousphorus, hydrogen peroxide, strontium nitrate powder, toluene) and devices including telescopic sights, sniper and other similar devices.
    • However, the manufacture or repair of these items may be authorized by the Chief of the PNP to non-Philippine nationals on conditions that:
      • a substantial percentage of output (as determined by the PNP) is exported, and
      • the extent of foreign equity ownership allowed is specified in the authority/clearance (as referenced to the IRR framework of RA No. 7042 and RA No. 8179).
    • Manufacture and distribution of dangerous drugs (RA No. 7042, as amended by RA No. 8179).
    • Sauna and steam bathhouses, massage clinics and other like activities regulated by law due to risks to public health and morals, except wellness centers (RA No. 7042, as amended by RA No. 8179).
    • All forms of gambling (RA No. 7042, as amended by RA No. 8179), except those covered by investment agreements with PAGCOR (PD No. 1869, as amended by RA No. 9487).
    • Micro and small domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000 (RA No. 7042, as amended by RA No. 11647).
    • Micro and small domestic marker enterprises that meet one or more of the following conditions:
      • involve advance technology as determined by the Department of Science and Technology (DOST), or
      • are endorsed as startup or startup enablers by the lead host agencies (Department of Trade and Industry, Department of Information and Communications Technology or DOST) pursuant to RA No. 11337 (the Innovative Startup Act), or
      • have a majority of their direct employees as Filipinos, with a further requirement that the number of Filipino employees is not less than fifteen (15),
      • and have paid-in equity capital of less than the equivalent of US$100,000 (RA No. 7042, as amended by RA No. 11647).

Annex on professions

  • The Annex on Professions applies to List A entries on professional practice and provides the categories of professions where foreigners are not allowed to practice in the Philippines, except if subject to reciprocity under pertinent laws.
  • Annex A enumerates professions where foreigners are not allowed to practice in the Philippines (except reciprocity), including:
    • Accountancy (Section 34 of RA No. 9298).
    • Aeronautical engineering (Section 14 of PD No. 1570).
    • Agricultural and biosystems engineering (Sections 15 and 31 of RA No. 10915, repealing RA No. 8559).
    • Agriculture (Section 27 of PRC Resolution No. 2000-63).
    • Architecture (Sections 13 and 27 of RA No. 9266).
    • Chemical engineering (Section 30 of RA No. 9297).
    • Chemistry (Sections 16, 18 and 34 of RA No. 10657).
    • Civil engineering (Section 25 of RA No. 544, as amended by RA No. 1582).
    • Criminology (Section 14(a) and 27(b) of RA No. 11131).
    • Customs brokers (Section 25 of RA No. 9280).
    • Dentistry (Sections 14 and 31 of RA No. 9484).
    • Electrical engineering (Section 38 of RA No. 7920).
    • Electronics engineering (Sections 13 and 33 of RA No. 9292).
    • Electronics technician (Sections 13 and 33 of RA No. 9292).
    • Environmental planning (Sections 8 and 28 of RA No. 10587).
    • Fisheries profession (Section 28 of RA No. 11398).
    • Food technology (Section 14(a) of RA No. 11052).
    • Dorestry (Section 14 and 27 of RA No. 10690).
    • Geodetic engineering (Section 26 of RA No. 8560).
    • Geology (Sections 17 and 33 of RA No. 10166).
    • Guidance and counseling (Sections 13 and 29 of RA No. 9258).
    • Interior design (Sections 15 and 29 of RA No. 10350).
    • Landscape architecture (Sections 13 and 29 of RA No. 9053).
    • Librarianship (Sections 15 and 28 of RA No. 9246).
    • Marine deck and engineering (Section 28 of RA No. 8544, as amended by RA No. 10635).
    • Master plumbing (Section 21 of RA No. 1378).
    • Mechanical engineering (Section 39 of RA No. 8495).
    • Medical technology (Section 27 of RA No. 5527, as amended by RA No. 6138, PD No. 498 and PD No. 1534).
    • Medicine (Section 27 of RA No. 5527, as amended by RA No. 6138, PD No. 498 and PD No. 1534).
    • Metallurgical engineering (Sections 17 and 34 of RA No. 10688).
    • Midwifery (Section 22 of RA No. 7392).
    • Mining engineering (Sections 15, 16 and 28 of RA No. 4274).
    • Naval architecture (Sections 13 and 31 of RA No. 10698).
    • Nursing (Sections 13 and 20 of RA No. 9173).
    • Nutrition nd dietetics (Sections 15 and 31 of RA No. 10862).
    • Optometry (Section 34 of RA No. 8050).
    • Pharmacy (Sections 14 and 21 of RA No. 10918).
    • Physical therapy (Sections 15 and 21 of RA No. 5680) and occupational therapy (Sections 13(a) and 25 of RA No. 11241).
    • Professional teaching (Sections 15(a) and 24 of RA No. 7836, as amended by RA No. 9293; Section 7(j) of RA No. 8981; PRC Resolution No. 2012-668; RA No. 11448).
    • Psychology (Sections 12, 13 and 24 of RA No. 10029).
    • Radiologic and x-ray technology (Section 17(b) of RA No. 7431).
    • Real estate service (real estate consultant, real estate appraiser, real estate assessor, real estate broker and real estate salesperson) (Section 24 of RA No. 9646).
    • Respiratory therapy (Sections 13 and 34 of RA No. 10024).
    • Sanitary engineering (Section 32 of RA No. 1364).
    • Social work (Section 18 of RA No. 4373, as amended).
    • Speech Language Pathology (Sections 13(a) and 25 of RA No. 11249).
    • Veterinary medicine (Sections 15 and 31 of RA No. 9268).
    • Other professions as may be provided by law or by treaty where the Philippines is a party.
  • Annex B provides for corporate practice of professions with foreign equity restrictions under pertinent laws by listing:
    • Architecture (Section 37 of RA No. 9266).

Amendments, repeal, and separability

  • Section 2 provides that amendments to List A may be made at any time to reflect changes instituted in specific laws.
  • Section 2 provides that amendments to List B shall not be made more than once every two (2) years.
  • Section 3 repeals, amends, or modifies all orders, rules and regulations, issuances, or parts thereof that are inconsistent with the Executive Order.
  • Section 4 provides separability: invalidity or unconstitutionality of any provision does not affect the validity and continued subsistence of other provisions.

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