Philippines: Foreign Investment Negative List
The Foreign Investment Negative List (FINL) acts as a shield to limit areas and activities in which foreign investors could participate in the Philippines. This list may be perceived as a negative thing due to the reduction of business possibilities it results to.
The FINL is divided into two different parts as written on the Department of Trade and Industry's website:
List A consists of areas of activities reserved to Philippine nationals where foreign equity participation in any domestic or export enterprise engaged in any activity listed therein shall be limited to a maximum of 40% as prescribed by the Constitution and other specific laws.
List B consists of areas of activities where foreign ownership is limited pursuant to law such as defense or law enforcement-related activities, which have negative implications on public health and morals, and small and medium-scale enterprises.
Therefore, a foreign investor will be allowed to own only a certain percentage of the corporation. This percentage varies depending on the activity he wishes to be involved in. When seen in this manner, it may appear terrifying and would lead you to think that some investors who planned to establish a corporation in the Philippines may have dropped the idea once they learn about these laws.
Well, this is not quite the case as foreign investments keep pouring into the country and the FINL list is actually just a form of protection for Filipino nationals. If you plan to invest or create a business in the Philippines that might fall under this list, you should most certainly ask for advice before dropping any idea at all.
Triple I Consulting
18th Floor Salcedo Tower. 169 HV Dela Costa, Salcedo Village 1227 Makati City, Philippines
T: +63 2 551 9012, +63 2 551 9013, +63 905 3130064; F: +63 2 551 8052
published: December 2013