The implementing guidelines of the Amended Foreign Investments Act took effect on Thursday, paving the way to the government’s aspiration of seeing $10 billion in annual foreign direct investments to be drawn into the country by economic liberalization.
According to documents of the National Economic and Development Authority, implementation of Republic Act (RA) No. 11647, which was signed by former President Rodrigo Duterte in March, was now in full swing.
The new law amended the Foreign Investments Act of 1991. The state planning agency shepherded the crafting of the implementing rules and regulations (IRR).
To recall, the Duterte administration had pushed for three economic liberalization laws in lieu of amending the foreign restrictions enshrined in the 1987 Constitution, as charter change would be controversial and will take time.
Alongside the amendments to the Public Service Act and the Retail Trade Liberalization Act also enacted into laws by Mr. Duterte, the Amended Foreign Investments Act provided “less stringent requirements for potential foreign investors to enter the Philippine market despite the COVID-19 pandemic,” the Department of Trade and Industry (DTI) said back in March.
Under RA 11647’s IRR, the DTI Secretary chairs the Inter-Agency Investment Promotion Coordination Committee (IIPCC), which will “integrate all promotion and facilitation efforts to encourage foreign investments in the country.”
Consolidated plan
This will be done through the first-of-its-kind medium- (five-year) and long-term (10-year) Foreign Investment Promotion and Marketing Plan (FIPMP)—“a single investment promotion framework and strategy for the Philippines.”
Together with the Strategic Investment Priorities Plan, the FIPMP will promote the Philippines as a premier investment destination in order to create high skilled jobs, increase the sophistication of products and services produced or sourced locally, expand domestic supply sources, attract significant foreign capital and investments, as well as promote export diversification to accelerate countryside development.
Besides eight other government officials, including the Finance Secretary or an undersecretary as vice chair, the 12-person IIPCC also includes four private sector representatives, one each coming from Luzon, Visayas, Mindanao and Metro Manila.
The private sector representatives will be endorsed to the President by the IIPCC for an initial three-year term.
Private sector experts
“The representatives from the private sector shall be of known competence, probity, integrity and expertise in any of the fields of investments, advertising, banking, finance management and law, with at least 10 years of outstanding management or leadership experience, and shall be recommended by nationally recognized leading industry or business chambers or the largest private sector organization based on its geography, sector and membership,” the IRR read.
The Foreign Investments Act amendment also mandated a review of the foreign investment negative list (FINL) every two years.
Under the rules, “any non-Philippine national may do business or invest in a domestic enterprise up to 100 percent of its capital, provided it is investing in a domestic market enterprise in areas outside the FINL; or it is investing in an export enterprise whose products and services do not fall within lists A [covered by the 40-percent rule under the Constitution] and B [restrictions under other laws] of the FINL, except for defense-related activities.”