JFC seeks more investment liberalization

Passage of 2 bills pressed

The Joint Foreign Chambers (JFC) has urged Congress for the passage of two bills within the remaining months of the 16th Congress to make the list of areas wherein foreign investors are not allowed or restricted less negative.

In a position paper, JFC identified these two bills as the Foreign Investment Act amendments (HB 2818 and SB 1424) and FINL (Foreign Investment Negative List) Liberalization Act (HB 5544 and SB 2517).

There are 11 sectors listed under the Ninth Regular Foreign Investment List where foreign investors are not allowed. These include mass media, practice of all professions, retail trade, cooperatives, private security agency, small-scale mining, utilization of marine resources, ownership, operation and management of cockpits, manufacture of firecrackers and pyrotechnics, and manufacture of nuclear, biological and chemical weapons.

Foreign investors can have as much as 25 percent stake in private radio communications network, private recruitments local or foreign, and construction. Foreigners are allowed 30 percent stake in advertising firms.

There are also 10 sectors under the current list where foreign investors are allowed 40 percent equity ownership. These include land ownership, public utilities, large scale mining, supply contracts, educational institutions, large scale deep sea commercial fishing, and ownership of condominium units. Ownership in lending companies are opened up to 40 percent.

Foreign firms are also allowed a majority 60 percent ownership in the areas of financing and investment houses.

Economic areas that involve security (firearms, chemicals) and moral (gambling) issues are opened up to 40 percent foreign equity participation only.

The JFC has also sent a letter to Senate President Drilon to recommend passage of both bills, considering the very limited time left in the 16th Congress. Letter has also been sent to House Trade Chair Rep. Mark Villar to request for hearing on the bills.

The foreign business group stressed that FINL Liberalization Act is included in President Aquino’s Priority Legislative Measures (as of July 2015). It is intended to remove restrictions on adjustment companies, lending companies, financing companies, and investment houses in the FINL under a single reform measure. The proposed law is consistent with banking and financial sector reforms undertaken in the 15th and 16th Congresses to relax or remove restrictions on foreign equity. It would facilitate entry of new investments through foreign equity and trade liberalization.

The Foreign Investment Act amendments, on the other hand, seeks to remove the practice of professions in the FINL and lower the minimum paid-in capital for foreign equity and reduces the foreign investment employment

requirement.

Aside from amendments to the restrictive provisions in the Constitution, there are amendments to individual laws which restrict foreign equity introduced in the current Congress.

These bills are under TWG deliberation by the Senate Economic Affairs Committee and remain pending in House Trade Committee.

JFC is a coalition of the American, Australian-New Zealand, Canadian, European, Japanese and Korean Chambers in the Philippines and the Philippine Association of Multinational Companies Headquarters, Inc.

The group represents over 3,000 member companies engaged in over $230 billion worth of trade and $30 billion worth of investments in the Philippines.

The JFC seeks and promotes the creation of an investor-friendly environment in the Philippines as a means to achieve inclusive growth.