A significant shift is underway in the Philippines’ economic landscape. President Marcos Jr. has unveiled a revised set of foreign investment rules, poised to unlock new opportunities and reshape key industries. Executive Order No. 113, the 13th Regular Foreign Investment Negative List, signals a deliberate move towards greater openness and collaboration.
For years, small-scale retail trade was exclusively reserved for Filipino citizens. Now, overseas investors can hold up to 40% ownership in retail enterprises with a paid-up capital of less than P25 million. This isn’t simply a change in numbers; it’s a fundamental recalibration, aligning with recent legislative reforms and designed to invigorate the sector.
The updated rules don’t relinquish control to foreign entities. Philippine nationals will still maintain the reins of these businesses, adhering to the principles of the Retail Trade Liberalization Act. This careful balance aims to foster growth while safeguarding national interests.
Beyond retail, the new order dramatically alters the landscape for infrastructure projects. Foreign ownership in government infrastructure is now permitted up to 75%, but with a crucial caveat: this applies only to projects demanding specialized skills or technologies currently unavailable within the Philippines. This targeted approach ensures local development isn’t hampered by a lack of expertise.
Government procurement is also experiencing liberalization. Foreign bidders can now participate in projects with up to 40% foreign equity, provided they meet specific criteria – reciprocal rights for Philippine suppliers, unavailability of local goods, or the need to prevent unfair market practices. Consulting services follow suit, allowing for up to 40% foreign ownership when local expertise falls short.
Amidst rising regional tensions, the Marcos administration is simultaneously strengthening national security. The 13th RFINL introduces a new category allowing up to 40% foreign equity in the domestic development and production of military materials and equipment. This initiative, guided by the Self-Reliant Defense Posture Revitalization Act, aims to cultivate a robust local defense industry.
The wave of change extends to vital sectors like telecommunications and renewable energy. Telecommunications management is now open to 100% foreign ownership, contingent on reciprocal treatment from the investor’s home country. This builds on previous legislation that broadened definitions of “public utility,” paving the way for greater foreign participation in shipping and railways.
The energy sector is also benefiting from increased liberalization. A 2022 Department of Energy circular already permitted full foreign participation in solar, wind, and hydro energy projects, further accelerating the transition to sustainable power sources.
Experts predict these changes will be transformative. The Philippines, with its consumption-driven economy and a population exceeding 114 million, presents a uniquely attractive market for foreign investors. Increased competition is expected to translate into more choices, lower prices, and improved products and services for Filipino consumers.
The 13th RFINL is structured around two lists: List A and List B. List A identifies industries constitutionally or legally restricted to Filipino ownership – including mass media, small-scale mining, and sensitive marine resource use. List B outlines areas where foreign ownership is capped at 40% due to national security, public health, or the need to protect small businesses, encompassing sectors like firearms manufacturing and gambling facilities.
These new regulations, taking effect 15 days after publication, represent more than just an adjustment to investment rules. They signify a bold step towards a more open, competitive, and resilient Philippine economy, poised for sustained growth and innovation.
