Foreign Investment policies and benefits

The Philippines’ Foreign Direct Investment (FDI) attractiveness, among others, accounts for:

• Its rich natural resources.
• Being the youngest and fastest-growing economy in Asia.
• A successful integration in the economy of business processing outsourcing (BPO);
• A large domestic market with a population of over 109 million people;
• High literacy rate with skilled English speaking workforce;
• Receptiveness to innovation; and,
• A gateway to other countries in the region facilitated by the country’s membership in the ASEAN.

Policies of the Philippines on Foreign Investment

Policies of the Philippine government encourage foreign investment, save in cases limited to Filipino citizens or corporations pursuant to the 1987 Philippine Constitution. The Foreign Investment Act of 1991, specifically Section 2 thereof, provides as follows:

"It is the policy of the State to attract, promote and welcome productive investments from foreign individuals, partnerships, corporations, and governments, including their political subdivisions, in activities which significantly contribute to national industrialization and socio-economic development to the extent that foreign investment is allowed in such activity by the Constitution and relevant laws. Foreign investments shall be encouraged in enterprises that significantly expand livelihood and employment opportunities for Filipinos; enhance economic value of farm products; promote the welfare of Filipino consumers; expand the scope, quality and volume of exports and their access to foreign markets; and/or transfer relevant technologies in agriculture, industry and support services. Foreign investments shall be welcome as a supplement to Filipino capital and technology in those enterprises serving mainly the domestic market.
As a general rule, there are no restrictions on the extent of foreign ownership of export enterprises. In domestic market enterprises, foreigners can invest as much as one hundred percent (100%) equity except in areas included in the negative list. Foreign-owned firms catering mainly to the domestic market shall be encouraged to undertake measures that will gradually increase Filipino participation in their businesses by taking in Filipino partners, electing Filipinos to the board of directors, implementing the transfer of technology to Filipinos, generating more employment for the economy and enhancing skills of Filipino workers."

• The negative list provided is embodied in an Executive Order issued by the present President of the Philippines, particularly, Executive Order No. 65 Series of 2018.

Anti-competition Policy in the Philippines

The Philippines has the Philippine Competition Act (Republic Act 10667) with facets comparable to the anti-competition laws in many countries. Many foreign investors may already be too familiar with their respective home countries. It adopts best practices in implementing the anti-competition rules to ensure that the market is fair and can build a level playing field. Suppose a foreign entrant intends to pour millions or billions of dollars into the local economy. In that case, it will want to know whether the company will receive the same treatment under the law as market incumbents.

The Philippines, through the regulation of the Philippine Competition Commission, offers a level playing field, one where companies are expected to increase their market shares or attain dominance through merit and innovation alone—not through shady deals or unscrupulous business practices. By ensuring that anti-competitive conduct is caught or deterred, the PCC is, in effect, upholding the principle of fairness (through the rule of law) for anyone who chooses to set up shop in the country, foreign investors included.