The American Chamber of Commerce (AmCham) of the Philippines’ Legislative Committee, together with the Trade Investment Committee, had its joint meeting last March 30, 2022 where they invited the following speakers: Hon. Sharon Garin, Representative of the AAMBIS-OWA Party List and Chairperson of the Committee on Economic Affairs, House of Representatives; and Board of Investments Governors Angelica Mapua-Cayas and Marjorie Ramos-Samaniego. The speakers focused on the reform laws that were recently brought into the spotlight through signing into law by President Rodrigo Duterte.
The reform laws are:
- RA 11659 – Public Service Act (signed into law March 21, 2022)
- RA 11595 – Retail Trade Liberalization Act (IRR issued March 12, 2022)
- RA 11647 – Foreign Investments Act (signed into law March 2, 2022)
The Public Service Act allows up to 100% foreign ownership of public services in the country. Other amendments to the law include the simplified categorization of investments. “Public Utility” was given a clearer definition with the inclusion of: distribution and transmission of electricity, petroleum and petroleum products transmission, water distribution and wastewater systems, seaports, and public utility vehicles. The 1987 constitution restricts foreign equity ownership of public utilities up to 40%; all other public services not classified as public utility are now open to 40% foreign equity ownership. It also includes the lifting of procedural restrictions for entry and safeguards for national security.
The Retail Trade Liberalization Act is the policy to promote consumer welfare in attracting, promoting and welcoming productive investments that will bring down prices for the Filipino consumer, create more jobs, promote tourism, assist small manufacturers, stimulate economic growth, and enable Philippine goods and services to become globally competitive through the liberalization of the retail trade sector. The amendments simplified the categorization of investments, lifted procedural restrictions for entry, lowered capitalization requirements from PHP 125M (USD 2.5M) to PHP 25M for paid up capital, and relaxed requirements to maintain investments in the Philippines from PHP 41.5M (USD 830K) per store to PHP 10M.
The Foreign Investments Act of 1991 is a law regulating foreign investments in the Philippines. The act allows foreign investors to invest up to 100% equity in domestic market enterprises, but also sets restrictions. Its objective is to encourage foreign investors to provide employment opportunities, develop resources, increase the value of exports, and help fuel the overall economy. The amendments of the law includes simplified categorization of investments, lifting of procedural restrictions for entry, lower capitalization requirements, lowered local manpower requirement to 15 from 50, increased the penalty for graft and corruption, and safeguards for national security.
The expected impact of these laws is to attract more global investors and modernize several sectors of public service. These reforms aim to help stimulate the economy especially for local businesses, generate more jobs for Filipinos, improve basic services for Filipino consumers, and allow for the exchange of skills and technology with the country’s foreign partners. With the amendment of these laws, the Philippines could be more competitive with our ASEAN neighbors.
Considering the increase in the national debt due to the pandemic and the government’s effort to stimulate economic growth, a legislation easing the requirements and relaxing the limitations on foreign investors will help the Philippines recover and sustain economic development. We are one with the government in working towards attracting and welcoming productive foreign investment for economic growth to provide more opportunities to our fellow Filipinos.
