Liberalization bills seen producing spate of SEC foreign ownership rulings

THE Securities and Exchange Commission (SEC) is expected to expedite rulings involving companies with foreign ownership cases, following the passage of three laws liberalizing foreign participation in various industries.

“With the signing of the amendments of the Foreign Investments Act (FIA), the Public Service Act (PSA), and the Retail Trade Liberalization Act (RTLA), the regulatory body may now quickly resolve pending cases, a move that will help the Philippines hasten its recovery from the pandemic,” former SEC Secretary Gerard M. Lukban said in a statement.

“Instituting these game-changing reforms is a step in the right direction. Now more than ever, it is imperative to further liberalize the Philippine economy and open its doors to foreign investment to spur economic growth amid the lingering impact of the COVID-19 pandemic,” he added.

President Rodrigo R. Duterte recently signed into law the three measures designed to further open up the economy to foreign investors.

Republic Act (RA) No. 11647, which amended the Foreign Investments Act of 1991, eases foreign ownership rules for most retail companies except for micro and small market enterprises with paid-in capital of up to $200,000.

RA No. 11595, which amended the Retail Trade Liberalization Act of 2000, lowers the minimum paid-up capital for foreign retailers to P25 million and the minimum investment requirement to P10 million per store.

In March, Mr. Duterte signed Republic Act (RA) No. 11659, which amended the Public Service Act to allow 100% foreign ownership in many industries, the main exceptions being entities engaged in the transmission and distribution of electricity, water pipeline and sewerage companies, seaports, petroleum pipelines, and public utility vehicles.

The Bangko Sentral ng Pilipinas (BSP) estimates that the Philippines took in a record foreign direct investment (FDI) of $10.3 billion in 2021.

With the amendment, Mr. Lukban said he expects FDI to surge, aiding the Philippines in its recovery from the pandemic.

He also said that the favorable resolution of pending cases complements the amended laws and will further bolster the Philippines’ image as a new investment destination.

“Foreign investors were previously cautious (about entering) the Philippines because of the old and antiquated laws, which made it hard for us to attract larger investments. Resolving pending cases swiftly will allow us to show investors that the Philippines is now a haven for foreign investments,” Mr. Lukban said.

“Allowing more players to jumpstart their business in our country, as evidenced by the record-high improvement in investor sentiment, can help drive our economic recovery. The implementation of easier restrictions on foreign entrants will lead to the creation of more jobs and unlock more opportunities, ultimately leading to higher income and spending power of households,” he added. — Luisa Maria Jacinta C. Jocson