Trade and Industry Secretary Alfredo E. Pascual supports the call in Congress for Constitutional amendment to ease restrictive provisions on foreign ownership in local businesses.
“I support the proposed Constitutional amendment to lift the restrictions on foreign ownership of businesses in the Philippines,” said Pascual in reaction to the proposal led by House Speaker Martin Romualdez.
Such a move, Pascual said, will make “our country more competitive in attracting foreign investments – needed for creating high-quality jobs for our people.”
On Monday, Dec. 11, Romualdez said top congressional leaders of the country's political parties were meeting to discuss procedural issues that have hampered past efforts to amend the Philippines' 1987 constitution.
The private sector, including foreign business groups, have been urging Congress to lift current limits to foreign investment, including the so-called 60-40 rule, which caps foreign ownership of local firms at 40 percent.
There had been previous efforts to amend the economic provisions in the Constitution to make the country more attractive to foreign investors but these moves did not prosper.
Instead, some laws were passed during the previous administration which eased foreign ownership restrictions in some sectors of the economy. These include the Public Service Act (PSA), Foreign Investment Act (FIA), and Retail Trade Liberalization Act (RTLA).
The PSA allows up to 100 percent foreign ownership of public services in the country.
Republic Act No. 11647, which amends the 85-year-old PSA, excludes telecommunications, domestic shipping, railways and subways, airlines, expressways and tollways, and airports from the definition of a public utility.
These economic activities are no longer be subject to the 40 percent foreign ownership cap for public utilities under the Constitution.
But the law also bars foreign nationals from owning more than 50 percent of capital in public services engaged in the operation and management of critical infrastructure, unless their country accords reciprocity to Filipino nationals.
The Duterte administration also passed into law a measure amending the FIA to make the Philippines more accessible to foreign investors, such as RA No. 11647 which amends RA No. 7042 or the FIA of 1991.
In addition, the RTLA of 2000 was amended to further open up the retail trade sector to foreign investors.
RA No. 11595, which amends RA 8762, allows a foreign retailer to have at least P25 million in paid-up capital, lower than the $2.5 million which was stated in the old law.
The Department of Trade and Industry, the Securities and Exchange Commission, and the National Economic and Development Authority will review the required minimum paid-up capital every three years.