Investors FAQs

Part 1: Foreign Investment Act (FIA)

Providing clarity on Republic Act No. 7042 and the 2022 amendments under RA 11647.

The Foreign Investments Act (FIA)

Q1 What is the Foreign Investments Act (FIA) of 1991 (RA 7042)?
Republic Act No. 7042 is the primary law regulating foreign investments in the Philippines. It generally allows foreign investors to invest up to 100% equity in domestic market enterprises, subject to certain restrictions.
Q2 What is the main purpose of the FIA?
The law aims to encourage foreign investors to provide employment opportunities, develop local resources, increase the value of exports, and help fuel the overall Philippine economy.
Q3 What forms can foreign investments take?
Foreign investments can be made in various forms, including:
  • Capital goods
  • Patents
  • Formulae
  • Other technological rights or processes

Restrictions on Foreign Ownership

Note: Always refer to the latest Foreign Investments Negative List (FINL) for specific industry caps.
Q4 What is the Foreign Investments Negative List (FINL)?
The FINL is a list of areas or activities that impose limits on foreign ownership, divided into List A and List B.
Q5 What is covered in List A?
List A consists of investment areas reserved for Philippine nationals due to Constitutional restrictions. Ownership in some areas is restricted to a maximum of 40%.
Q6 What areas are prohibited from foreign ownership (0%)?
Ownership is completely prohibited in: Mass media (except recording), licensed professions, retail trade, cooperatives, and private security agencies.
Q8 What is covered in List B?
List B limits ownership for security, defense, public health, and small-scale enterprise protection. Examples include firearms manufacture, military equipment, and most forms of gambling.

Rights and Guarantees

Q11 What are the basic guarantees for foreign investors?
  • Repatriation of Investments: Right to move capital back in the original currency.
  • Remittance of Earnings: Freedom to remit profits and interest.
  • Freedom from Expropriation: Protection against government seizure without just compensation.
  • Non-Requisition: Protection against property requisition except in national emergencies.

Amendments under RA 11647 (March 2022)

Q13 What are the key objectives of the amendments?
To promote and attract foreign investments by allowing international investors to fully own domestic enterprises, including micro and small enterprises, to fuel competition and growth.
Q14 How did ownership rules change for MSMEs?
Foreigners can now own an MSME with a minimum paid-in capital of US$100,000.00 (down from US$200,000.00) if:
  • They utilize advanced technology.
  • They are endorsed as a startup/startup enabler.
  • They hire at least 15 Filipino employees (previously 50).

National Security & Governance

Q15 What is the IIPCC?
The Inter-Agency Investment Promotion Coordination Committee (IIPCC) coordinates all promotion and facilitation efforts across government agencies under the DTI.
Q16 What powers does the President have?
The President can order the review, suspension, or limitation of foreign investments that threaten national safety or security (e.g., cyber infrastructure, military industries).