THE PROPOSED 11^th Regular Foreign Investment Negative List, which will be more “aggressive” in opening up more economic sectors to foreign ownership or participation, is undergoing careful review to make sure it is legally sound, an economic planning official said in a recent interview.

The new list was supposed to have replaced last year the existing roster that took effect in 2015.

Asked on progress of the new list, Rosemarie G. Edillon, undersecretary for Policy and Planning at the National Economic and Development Authority (NEDA), said the document has yet to reach President Rodrigo R. Duterte’s (PRRD) desk. “The 11^th RFINL is with OES (Office of the Executive Secretary) for legal review before it is endorsed for PRRD’s signature,” Ms. Edillon said in a mobile phone message last Thursday.

Ms. Edillon said that the government is making sure that the proposed liberalization of more sectors does not violate the constitution nor any other law, as the directive of the NEDA Board, led by Mr. Duterte, was to be as “aggressive as possible.”

Malacañang zeroed in on eight sectors and activities in its bid to further ease limits to foreign participation and ownership under Memorandum Order No. 16, signed by Executive Secretary Salvador C. Medialdea on Nov. 21 last year. “To raise the Philippines’ level of competitiveness… the NEDA Board and its member agencies are hereby directed to take immediate steps to lift or ease existing restrictions on foreign participation in the following investment areas or activities,” the order read, enumerating private recruitment; practice of professions where allowing foreign participation will redound to public benefit; contracts for construction and repair of locally funded public works; public services “except activities and systems that are recognized as public utilities such as transmission and distribution of electricity, water pipeline distribution system and sewerage pipeline system”; culture, production, milling, processing and trading — except retailing — of rice and corn and acquiring these grains “and by-products”; teaching at higher education levels; as well as retail trade and domestic trade enterprises.

“There has to be some legal scrubbing; they need to very very sure,” Ms. Edillon said.

“If you ask me then we’re way past. But then, I understand that it’s better to be sure. Be aggressive, but we still want to be within the bounds of the law.”

According to the NEDA official, “drastic” additions in the new list include opening up of training centers to foreign participation, as well as the practice of professions that do not require a license. “I think the most drastic changes that we’re slightly iffy with, is with respect to opening up of training centers for higher level skills development. It doesn’t form part of our hierarchical education structure, meaning short-term courses like data analytics, programming,” she explained in a phone call interview on Monday. “Also… teaching in higher education, especially those that do not require licensure; for instance: mathematics, economics, English.”

The 10^th two-year RFINL issued in 2015 had retained virtually unchanged the preceding roster of domestic activities and sectors restricted to foreign participation: licensed professions; retail; cooperatives; private security agencies; small-scale mining; utilization of marine resources; ownership, operation and management of cockpits; and manufacture, repair, stockpiling and/or distribution of nuclear weapons.

Foreigners can have limited stakes of up to 25% in private recruitment for local or overseas employment and construction and repair of locally-funded works like infrastructure and foreign-assisted projects.

Areas where foreigners can own up to 30% are: advertising; exploration, development and utilization of natural resources; private lands; public utilities; education; rice and corn administration; financing and investment companies; supplies to state-owned corporations and agencies; defense-related structures; public utility franchises; and private domestic and overseas construction contracts.

The list of industries allowing up to 40% foreign ownership include security; defense; those industries that pose a risk to health and morals, such as gambling, bath houses and massage clinics; and small-scale and medium-scale enterprises of a certain size.

‘BETTER LATE THAN NEVER’
Sought for comment, the American Chamber of Commerce of the Philippines, Inc. (AmCham) Senior Advisor John D. Forbes said in an e-mail yesterday that the group has “encouraged liberalization of the FINL for two decades.”

“Based on President’s Duterte’s MO 16, we anticipate the forthcoming FINL will represent the most serious effort yet of any administration to level the playing field for foreign investors. We look forward to its release,” Mr. Forbes said.

For European Chamber of Commerce of the Philippines President Guenter Taus, release of the new negative list would be “better late than never.” At the same time, Mr. Taus welcomed the scheduled enactment on Monday evening of the Ease of Doing Business Act that will streamline regulatory processes as well as of other “existing laws in order to facilitate the entry of foreign players into the local market.”

NEDA’s Ms. Edillon said that the government will pursue amendments to other laws like the Public Service Act that will open up telecommunications and other utilities to greater foreign participation, and the Retail Trade Liberalization Act that will do the same to this sector.

This article was originally published in the Business World Online on May 29, 2018»