Philippine laws encourage and welcome foreign investment from individuals, partnerships, corporations, and governments that wish to do business in the country.Republic Act No. 7042, also known as the Foreign Investment Act of 1991, allows 100% foreign equity in a business, unless said company falls within the industries listed under the Foreign Investment Negative List (FINL).
The FINL is a list of industries wherein foreign equity is either prohibited or regulated. It also requires the investors to have a corporate presence in the Philippines.
The FINL is separated into two parts. List A includes industries that limit foreign equity in accordance with specific laws and the Constitution.List B contains enterprises whose activities are regulated by law, such as defense-related activities (ex. firearms, pyrotechnics, etc.) which require clearance from the Department of National Defense (DND).
Also under List B are businesses that affect public health and morals (ex. gambling, nightclubs, massage clinics) and small businesses with less than US$500,000 in capital unless they involve advanced technology as determined by the Department of Science and Technology (DOST).
LIST A
No Foreign Equity
Mass media except recording
Practice of Professions
Pharmacy
Radiologic and x-ray technology
Criminology
Forestry
Law
Retail trade enterprises with paid-up capital of less than US$ 2,500,000
Cooperatives
Private Security Agencies
Small-scale Mining
Utilization of Marine Resources in archipelagic waters, territorial sea, and exclusive economic zone as well as small-scale utilization of natural resources in rivers, lakes, bays, and lagoons
Ownership, operation, and management of cockpits
Manufacture, repair, stockpiling, and/or distribution of nuclear, biological, chemical and radiological weapons, and anti-personal mines.
Manufacture of firecrackers and other pyrotechnic devices
Up to Twenty Percent (20%) Foreign Equity
Private radio communication networks
Up to Twenty-Five Percent (25%) Foreign Equity
Private recruitment, whether for local or overseas employment
Contracts for the construction and repair of locally-funded public works, except:
Infrastructure/development projects covered by R.A. 7718; and
Projects which are foreign-funded or assisted and required to undergo international competitive bidding of contracts for construction of defense-related structure
Up to Thirty Percent (30%) Foreign Equity
Advertising
Up to Forty Percent (40%) Foreign Equity
Exploration, development, and utilization of natural resources
Ownership of Private Lands
Operation and management of public utilities
Educational institutions other than those established by religious groups and mission boards
Culture, production, milling, processing, trading except retailing, of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof
Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or municipal corporation
Facility operator of an infrastructure or a development facility requiring a public utility franchise
Operation of deep sea commercial fishing vessels
Adjustment companies
Ownership of condominium units
LIST B
Up to Forty Percent (40%) Foreign Equity
Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine National Police (PNP) clearance:
Firearms (handguns to shotguns), parts of firearms and ammunition therefore, instruments or implements used or intended to be used in the manufacture of firearms
Gunpowder
Dynamite
Blasting supplies
Ingredients used in making explosives
Chlorates of potassium and sodium
Nitrates of ammonium, potassium, sodium barium, copper, lead, calcium and cuprite
Nitric acid
Nitrocellulose
Perchlorates of ammonium, potassium and sodium
Dinitrocellulose
Glycerol
Amorphous phosphorus
Hydrogen peroxide
Strontium nitrate powder
Toluene
Telescopic sights, sniper scope and other similar devices; however, the manufacture or repair of these items may be authorized by the Chief of the PNP to foreign nationals; provided that a substantial percentage of output is exported and the extent of foreign equity ownership allowed shall be specified in the said authority/clearance.
Manufacture, repair, storage, and/or distribution of products requiring Department of National Defense (DND) clearance:
Guns and ammunition for warfare
Military ordnance and parts thereof (ex., torpedoes, depth charges, bombs, grenades, missiles)
Gunnery, bombing, and fire control systems and components
Guided missiles/missile systems and components
Tactical aircraft (fixed and rotary-winged), parts and components thereof
Space vehicles and component systems
Combat vessels (air, land, and naval) and auxiliaries
Weapons repair and maintenance equipment
Military communications equipment
Night vision equipment
Stimulated coherent radiation devices, components, and accessories
Armament training devices
Others as may be determined by the Secretary of the DND; however, the manufacture or repair of these items may be authorized by the Secretary of National Defense to foreign nationals, provided that a substantial percentage of output, as determined by the said agency, is exported and the extent of foreign equity ownership allowed shall be specified in the said authority/clearance.
Manufacture and distribution of dangerous drugs
Sauna and steam bathhouses, massage clinics and other like activities regulated by law because of risks posed to public health and morals
All forms of gambling, except those covered by investment agreements with PAGCOR
Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000
Domestic market enterprises which involve advanced technology or employ at least fifty direct employees with paid-in equity capital of less than the equivalent of US$100,000
