President Rodrigo Duterte signed into law Republic Act (RA) No.
11647, “An Act Promoting Foreign Investments”, thereby amending Republic Act No. 7042, otherwise known as
the “Foreign Investment Act of 1991”.
RA No. 11647 is a consolidation of Senate Bill No. 1156 and
House Bill No. 300 that was passed by Congress in December 2021.
The amended
law seeks to help facilitate more foreign investments in the country by allowing more equity for foreign investors.
The law also establishes the Inter-Agency Investment Promotion Coordination Committee, led by the Department of
Trade and Industry (DTI), which will craft plans for the following: to promote the Philippines as a foreign
investment destination; maintain an online database of foreign investments and local enterprises that can be
partnered up; help local governments attract foreign investments; and address concerns of foreign
investors.
Foreign
investments are also encouraged in enterprises “that significantly expand livelihood and employment opportunities
for Filipinos; enhance economic value of agricultural products; promote the welfare of Filipino consumers; expand
the scope, quality and volume of exports and their access to foreign markets; and/or transfer relevant technologies
in agriculture, industry and support services.”
Here are the salient features of the
amended FIA:
- 100% capital in domestic enterprise
Non-Philippine nationals are allowed to do business or invest in a domestic enterprise with up to 100 percent of its
capital, except if their participation is prohibited or limited to a smaller percentage in the foreign investments
negative list (FINL).
It also liberalizes the practice of professions not governed by
existing special laws.
- Reduction of list of investment areas reserved for Filipinos
There is the reduction of the number of direct hires for foreign companies from 50 to 15 to help attract smaller
foreign investors.
This applies to 1) defense-related businesses like the
manufacture, repair, storage, and distribution of firearms, ammunition, and lethal weapons; and 2) small and micro
domestic market enterprises with paid-up equity capital of less than $200,000.
- Startup enablers
Foreigners are now allowed 100% ownership of startups or startup enablers, enterprises involving advanced
technology, enterprises where a majority of direct employees are Filipinos and there must be at least 15 such
employees.
- Development Program
Registered foreign enterprises employing foreign nationals and enjoying fiscal incentives should implement a skills
and understudy development program to ensure transfer of technology or skills to Filipinos.
- Less reduction cost
Export enterprises involving foreign investors that fail to meet export ratio requirements will be ordered to reduce
its domestic market sales to at most 40% of its total production, compared to at most 60% in the old
law.
The law
also mandates export businesses to register under the National Internal Revenue Code so that they can avail
themselves of any tax perks.
Thinking of
putting up a business in the Philippines? Let the Filepino experts guide you with the process. Call us today
at +63.917.8922337 (Philippines) or send your inquiries
here.
