Legislative action to liberalize foreign ownership to start in 2018

Legislative action is needed to lift foreign ownership restrictions in certain industries and this is expected to commence next year, the Department of Finance (DOF) told Japanese investors recently.

During a recent forum held in Tokyo, Finance Secretary Carlos Dominguez III said one of the ways to open the economy to foreign investors is to introduce amendments to the Constitution, which will be undertaken starting 2018, or in about 12 months.

“The President has called for a revision of our Constitution, which we believe will start probably next year or in about 12 months,” Dominguez said, adding that the administration would need the support of Congress to push for legislative reforms.

Dominguez also told Japanese businessmen the administration is reviewing its Foreign Investment Negative List (FINL).

“A window opened for us to review that list. We are currently reviewing it with the idea of opening areas such as construction and other areas to foreign investments,” he said.

Amendments to the FINL are made once every two years, promulgated through executive orders from the President. The FINL was last updated in 2015.

It determines areas or sectors where foreign participation is prohibited or limited. Several prohibitions on foreign ownership need legislative action and cannot be lifted administratively.

Dominguez had earlier said he is in favor of lifting limitations on foreign ownership for certain sectors to generate more investments.

Citing the 2016 ASEAN Investment Report, the DOF said the Philippines continues to lag behind most of its fellow members in the Association of Southeast Asian Nations in terms of foreign direct investment inflows.

The DOF said the Philippines had a net FDI inflow of $5.724 billion in 2015, accounting for only 4.7 percent of the total net FDI inflows in the region.

Earlier, Socioeconomic Planning Secretary Ernesto Pernia also said the government is pushing for the “highest possible or approvable” easing of foreign control in industries, such as retail, trade, practice of professions, public utilities and contractors.

Pernia also said steps are being taken to ease restrictions on foreign contractors and allow them to fully participate in big-ticket infrastructure projects under the government’s Build Build Build program.

The economic planning chief is also intent on lifting restrictions on highly-skilled academic workers to improve the competitiveness of local universities.