Republic Act No. 11647 (RA 11647), amending the Foreign Investments Act of 1991 (FIA), was signed into law on March 2, 2022. The law eases the restrictions on foreign participation on investments in the Philippines.
Some of the salient features of RA 11647 are as follows:
- List of Areas Reserved to Philippine Nationals
Except as otherwise provided under the Retail Trade Liberalization Act of 2000 and other relevant laws, micro and small domestic market enterprises with paid-in equity capital less than the equivalent of US$ 200,000.00 are reserved to Philippine nationals. RA 11647, however, provides that in the following instances, a minimum paid-in capital of US$ 100,000.00 shall be allowed to non-Philippine nationals:
- They involve advanced technology as determined by the Department of Science and Technology (DOST);
- Those endorsed as startup or startup enablers by the lead host agency pursuant to RA 11337 or the Innovative Startup Act (such as the DOST, Department of Trade and Industry (DTI), Department of Information and Communications Technology, among others); or
- Majority of their direct employees are Filipinos, but in no case shall the number of the Filipino employees be less than fifteen (15).
Registered foreign enterprises employing foreign nationals and enjoying fiscal incentives shall implement an understudy or skills development program to ensure the transfer of technology or skills to Filipinos. The Department of Labor and Employment shall monitor compliance with this requirement.
- Creation of the Inter-Agency Investment Promotion Coordination Committee (IIPCC)
The IIPCC was created to integrate all promotion and facilitation efforts to encourage foreign investments in the Philippines. The DTI shall act as its lead agency.
The IIPCC is empowered, among others, to establish both a medium and long-term Foreign Investment Promotion and Marketing Plan, coordinating all existing investment development plans and programs under the Bureau of Investments, Philippine Economic Zone Authority, various investment promotion agencies, local government units, and other agencies. The IIPCC shall likewise promote the Philippines as a desirable investment area, and support inbound and outbound direct and trade missions for new international markets to explore the Philippines as a location to do business.
Moreover, the IIPCC, upon the order of the President and in coordination with the National Security Council and the National Economic and Development Authority, shall review foreign investments involving military-related industries, cyber infrastructure, pipeline transportation, or such other activities which may threaten territorial integrity and the safety, security and well-being of Filipinos, when:
- Made by a foreign government-controlled entity or state-owned enterprise, except independent pension funds, sovereign wealth funds, and multi-national banks; or
- Located in geographical areas critical to national security.
- Anti-Graft Practices in Foreign Investment Promotions
A new section was included to punish public officials and employees involved in foreign investment promotion who shall commit any of the punishable acts under Section 3 of RA 3019 or the Anti-Graft and Corrupt Practices Act. In addition to the penalties provided in the said law, they shall be punished by a fine of not less than Php 2 million but not more than Php 5 million.
- Non-applicability of the FIA
The FIA, as amended, shall not apply to the following:
- Banks and other financial institutions governed by RA 8791 or the General Banking Act of 2000, and other laws under the supervision of the Bangko Sentral ng Pilipinas; and
- Practice of professions that are covered by specific laws and fall under the jurisdiction of various Professional Regulatory Boards or any other equivalent regulating body, or those subject to reciprocity agreements with other countries. Employment or practice of profession not covered by any special law or reciprocity agreement shall be subject to the provisions of the FIA, as amended, to the extent applicable and subject to compliance with necessary licenses and permits.
