The updated Regular Foreign Investment Negative List (FINL) incorporates the provisions of the Retail Trade Liberalization Act (RTLA), according to the National Economic and Development Authority (Neda).
Neda Trade, Services and Industry (TSIS) staff told BusinessMirror that a draft FINL has been submitted to the president’s office for approval.
The draft already includes the changes to the RTLA, but not the changes contained in the Public Service Act (PSA) and the Foreign Investment Act (FIA), which were only recently passed.
“In the current IRR (implementing rules and regulations) of the FIA, however, it has been stated that changes to List A may be made by Neda at any time to reflect changes in law regarding the ‘extent of foreign equity participation in a specific area of economic activity,’ the FIA IRR said.
Neda said it might be possible to publish the changes in the FINL before the two-year negative list comes into effect if the FIA TRI provision is retained.
Based on the changes made under the RTLA, the government will reduce the paid-up capital required for foreign retail businesses and for other purposes.
Section 5 of the RTLA or Republic Act 11595 signed in July 2021 allows foreign retailers to operate in the country after registering with the Securities and Exchange Commission (SEC) or the Department of Trade and Investment (DTI).
These enterprises must: have a minimum paid-up capital of 25 million pesos; have a minimum investment of at least 10 million pesos per store; maintain a paid-up capital of 25 million pesos at all times, unless they have notified the SEC or the DTI that they are ceasing operations. Finally, their countries of origin do not prohibit the entry of Filipino retailers.
“Failure to maintain in the Philippines the paid-up capital required in the preceding paragraph prior to notification of the SEC or DTI, as applicable, will subject the foreign retailer to sanctions or restrictions on any future business activity/enterprise in the Philippines.” , said the RTLA.
The Neda is responsible for reviewing and revising the country’s RFINL, which contains restrictions on foreign investment and the exercise of professions based on the Constitution and laws of the Philippines.
The RFINL contains areas/investment activities where foreign equity participation is limited by the mandate of the Constitution and specific laws. It also includes areas/investment activities where foreign equity participation is restricted for reasons of defence, security, risk to public health and morals, and protection of small and medium-sized enterprises in the internal market.
Amendment of the list is directed by the Neda Secretariat, as provided for in Section 8 of RA 7042 or the Foreign Investment Act 1991, which states that amendments may be made on the recommendation of the Secretary to the national defense or the secretary of health, or the secretary of education, approved by the Neda, approved by the president, and promulgated by presidential proclamation.