NEGATIVE LIST

Specifically, participation of non- Philippine nationals — as outlined in the Foreign Investment Negative List — are either prohibited or limited to a smaller percentage in the following areas:

• those reserved for Philippine nationals by mandate of the Constitution and specific laws;

• those deemed to be defenserelated, among them the manufacture, repair, storage, and distribution of firearms, ammunition, lethal weapons, military ordnance, explosives, pyrotechnics and similar materials, in which case prior clearance and authorization from the Department of National Defense is required;

• those deemed to have implications on public health and morals, among them the manufacture and distribution of dangerous drugs; and

are determined by the National Economic and Development Authority ( NEDA) adequately serving “the needs of the economy and the consumer and do not require further foreign investments.”

Significantly, a 36-month transitory period — in which a drastically trimmed negative list will govern the entry of foreign capital — will be enforced after the NEDA, in consultation with the SEC, the Board of Investments, and other agencies, issues rules and regulations implementing the measure.

Corollary to this, the NEDA Board will, within the next 18 months, formulate and publish a list of industries “strategic to the development of the economy.”

As a matter of policy and not a legal requirement, the list will specify the desired equity participation by Government and Filipino nationals in each strategic industry, to be characterized as: crucial to the “accelerated industrialization of the economy”: requiring massive capital investments to “achieve economies of scale for efficient operations”; needing highly specialized or advanced technology; having strong backward and forward linkages with most industries; and generating substantial foreign exchange savings through import substitution and collateral foreign exchange earnings through the export of part of the output arising from the establishment, expansion, and development of the industry.