11th FINL slated for Palace review

The 11th version of the Foreign Investment Negative List (FINL), touted as the most liberal thus far, has been transmitted to Malacañang for review, Socioeconomic Planning Secretary Ernesto Pernia said yesterday.

“The 11th FINL has been submitted to OP (Office of the President) yesterday (Tuesday) morning. Their legal staff would still review it,” he said.

The negative list determines investment areas where foreign participation is prohibited or limited. The FINL was last updated in 2015.

The list will be presented for approval during the next meeting of the National Economic and Development Authority (NEDA). Once cleared, an executive order promulgating the 2017 FINL is expected to be signed before the end of the year.

In its proposed version, NEDA said several economic areas where restrictions on foreign ownership and participation will be relaxed.

These include the removal of restrictions on foreign-owned investment houses and financial activities in line with the liberalization of the banking sector, practice of several professions, foreign infrastructure contractors, and lowering the paid-up capital requirement for foreign retailers from $2.5 million to $200,000.

For other areas such as public utilities (telecommunications and water), President Duterte has expressed interest in the imposition of a 70 percent foreign ownership cap, according to Pernia.

Raising the foreign ownership limit for public utilities, however, will require the amendment of the Public Service Act which prohibits majority ownership by foreign entities in public utilities.

A bill is already pending in the House of Representatives seeking to amend the statutory definitions of public utility to open industries including telecommunications, transport, power and water to increased foreign ownership.

In a related development, the Department of Finance (DOF) has assured Chinese investors the government is taking necessary steps to make the Philippines more attractive to foreign capitalists.

Finance Secretary Carlos Dominguez told Chinese businessmen in a forum the FINL review aims to increase the number of sectors which are 100 percent open to foreign participation.

Dominguez had said he favors the plan to lift foreign ownership restrictions for certain sectors of the economy to generate more foreign investments.