On 02 March 2022, President Rodrigo Roa Duterte signed Republic Act (“RA”) No. 11647 or “An act promoting foreign investments, thereby amending Republic Act No. 7042, otherwise known as the ‘Foreign Investments Act of 1991’”.
RA No. 11647 aims to attract, promote and welcome productive foreign investments in activities that significantly contribute to sustainable, inclusive, resilient, and innovative economic growth, productivity, global competitiveness, employment creation, technological advancement, and countrywide development.
An Inter-Agency Investment Promotion Coordination Committee (“IIPC”) with the purpose of integrating all promotion and facilitation efforts to encourage foreign investments in the country was created under RA No. 11647. The IIPC is tasked to create a comprehensive and strategic Foreign Investment Promotion and Marketing Plan (“FIPMP”). It shall be led by the Department of Trade and Industry (“DTI”), which will be presided by the DTI Secretary as Chairperson.
A non-Philippine national, not otherwise disqualified by law may, without the need of prior approval, do business or invest in a domestic enterprise up to 100% of its capital, unless participation of non-Philippine nationals is otherwise limited by the Foreign Investments Act, as amended. Further, the law allows 100% foreign ownership in export enterprises whose products and services do not fall within List A and B of the Foreign Investment Negative List. For the latest Regular Foreign Investment Negative List, refer to
https://www.officialgazette.gov.ph/downloads/2018/10oct/20181029-EO-65-RRD.pdf
Small and medium-sized domestic market enterprises with paid-in equity capital less than the equivalent of USD200,000 are reserved to Philippine nationals. However, if the said enterprises are: (1) involved in advanced technology; or (2) endorsed as startup or startup enablers pursuant to RA No. 11337 or the “Innovative Startup Act”; or (3) a majority of their direct employees are Filipinos, but in no case shall the number of Filipino employees be less than fifteen (15) then a minimum paid-in capital of USD100,000 shall be allowed to non-Philippine nationals.
Further, RA No. 11647 states that, upon the order of the President, IIPC “shall review foreign investments involving military-related industries, cyber infrastructure, pipeline transportation, or such other activities which may threaten the territorial integrity and the safety, security and well-being of Filipino Citizens, when: (a) [m]ade by a foreign government-controlled entity or state-owned enterprises except independent pension funds, sovereign wealth funds and multinational banks, or (b) [l]ocated in geographical areas critical to the national security.”
In addition to the foregoing, RA No. 11647 provides for a stiffer punishment for public officials and employees involved in foreign investment promotions who violate anti-graft and corruption laws. Pursuant to section 10 of RA No. 11647, a new Section 17 is inserted into the Foreign Investments Act which provides that any public official or employee involved in foreign investment promotions who shall commit any of the acts under section 3 of RA No. 3019, as amended, otherwise known as the “Anti-Graft and Corrupt Practices Act”, shall, in addition to the penalties provided under Section 9(a) of the said Act, be punished by a fine of not less than PhP2,000,000 but not more than PhP5,000,000.
RA No. 11647 also clarified that the Foreign Investment Act of 1991 and the corresponding amendments do not apply to banking and other financial institutions, which are under the supervision of the Bangko Sentral ng Pilipinas, and to the practice of professions that fall under the jurisdiction of various professional regulatory boards.
RA No. 11647 was published in the Official Gazette on 02 March 2022 and took effect after fifteen (15) days following its date of publication or on 17 March 2022.