Navigating Foreign Investments: Equity Limits and Business Structures in the Philippines
Anyone, regardless of nationality, can invest in the Philippines with up to 100% equity. A business with 60% Filipino equity is considered a Philippine company, while one with more than 40% foreign equity is considered a foreign-owned domestic company.
Foreign-owned companies may be formed as a corporation, branch, regional headquarters, or representative office. The type of formation defines the foreign owners’ liability.
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Restrictions to 100% foreign ownership
Any business may be 100% foreign-owned except for those covered in the FIA Foreign Investment Negative List A & B. These restrictions are determined by:
For additional information, feel free to visit: Businesses Foreigners May Be Restricted to Invest In: the Foreign Investment Negative List
FIA Negative List A
Negative List A includes economic activities where foreign equity is restricted in compliance with the Philippine Constitution and Special Laws provisions. The restrictions range from zero to only 60% foreign equity allowed.
Activities where zero foreign ownership is allowed include:
mass media
the practice of professions
the use of Philippine marine resources
small-scale mining
the manufacture, repair, stockpiling, and/or distribution of nuclear, biological, chemical, and radiological weapons
Retail
others as found in FIA Foreign Investment Negative List A
Negative List A also details economic activities where foreign ownership is restricted up to 20%, 25%, 30%, 40% and 60%.
FIA Negative List B
Negative List B includes activities where foreign ownership is restricted only up to 40% due to security, defense, health and moral reasons, as well as to protect small and medium-scale industries.
Minimum investments
Foreign ownership of businesses is also restricted by the amount of paid-up capital, depending on the nature of the business. Executive Order No. 98 has lowered the minimum paid-up capital needed for up to 100% foreign ownership, as follows:
Unless otherwise stated in the FIA Negative List A&B, domestic enterprises, or companies catering to the domestic market, may have up to 100% foreign ownership if the paid-up capital is at least US$200,000. For domestic enterprises employing at least 50 persons and/or using advanced technology, the required minimum paid-up capital is only US$100,000.
Retail trade companies may have 100% foreign ownership if the paid-up capital is at least US$2,500,000, with a minimum investment of US$830,000 for establishing a store.
Retail companies specializing in luxury or high-end products are allowed 100% foreign ownership with a minimum paid-up capital of US$250,000 per store.
A business qualifies as an export company if it exports at least 60% of its output. KPO, BPO, web development, and similar businesses serving foreign clients are considered export companies. Export companies may have 100% foreign ownership with a minimum paid-up capital of only P5,000, but have to submit an additional document that said companies are export entities to the Securities and Exchange Commission.
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FAQs
Approved Foreign Investments Reach PhP 148.43 Billion in the First Quarter of 2024. Total Foreign Investments (FI) approved in the first quarter of 2024 was recorded at PhP 148.43 billion, a decrease of 63.6 percent from the PhP 408.22 billion total FI in the same quarter of 2023.
Will you recommend the Philippines to foreign investors? ›
Being a developing nation, the Philippines has great potential to accelerate its economy through foreign and local investments. The government, in return, encourages these businesses to thrive and continue contributing to its emerging economy.
Does increasing of foreign direct investment good in the Philippines? ›
The findings of this study provides strong empirical evidence to confirm the generally held view that, under favourable economic environment, FDI does have the capacity to impact positively on economic growth in the Philippines.
Why is the Philippines not a top choice for foreign investment? ›
Poor infrastructure, high power costs, slow broadband connections, regulatory inconsistencies, a cumbersome bureaucracy, and corruption remain disincentives to investment.
Who is the top foreign investor in the Philippines? ›
Germany emerged as the leading foreign investor in the Philippines, with total investments amounting to approximately 394 billion Philippine pesos. The Netherlands came next with about 350 billion Philippine pesos in investments.
Is 100% foreign ownership allowed in the Philippines? ›
Foreign investments in the Philippines
Anyone, regardless of nationality, can invest in the Philippines with up to 100% equity. A business with 60% Filipino equity is considered a Philippine company, while one with more than 40% foreign equity is considered a foreign-owned domestic company.
Is it worth investing in the Philippines? ›
Notably, the World Bank has projected the Philippines to become the second fastest-growing economy among Asian countries in the East Asia and Pacific region in 2024, highlighting the resilience and potential of our economy.
Can a US citizen invest in the Philippines? ›
For a Special Investor's Resident Visa (SIRV), you need to invest a minimum of $75,000 in an eligible business or corporation in the Philippines. Additionally, you have to meet certain age, health, and character requirements, and maintain your investment for the duration of your residency.
Is real estate a good investment in the Philippines? ›
According to investors, real estate is one of the safest investments one can make because it's considered to be recession-proof. No matter the current condition of the country, people will always be looking to buy or lease a home.
What are the threats of foreign direct investment in the Philippines? ›
Lastly, factors such as corruption, instability, inadequate infrastructure, high power costs, lack of juridical security, tax regulations and foreign ownership restrictions discourage investment.
Poor infrastructure, high power costs, slow broadband connections, regulatory inconsistencies, and corruption are major disincentives to investment. The Philippines' complex, slow, and sometimes corrupt judicial system inhibits the timely and fair resolution of commercial disputes.
What is the foreign investment law in the Philippines? ›
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 ...
Will you recommend Philippines to foreign investors? ›
They Are Abundant In Natural Resources
One of the most notable reasons why foreign investors eye the Philippines to start their businesses and build their empires is because the country is rich in natural resources. It is one of their greatest competitive standpoints.
Why do foreign investors pull out of the Philippines? ›
Security Bank chief economist Robert Dan Roces attributed the reversal to elevated interest rates in developed economies and continued economic uncertainties. This “may have led investors to seek safer havens for their investments, pulling them out of emerging markets like the Philippines,” he said.
What is the Philippines foreign investment negative list? ›
175). The Foreign Investment Negative List enumerates businesses and professions where foreign ownership, investment or practice in the Philippines is prohibited or restricted by relevant laws.
What is the Philippine law on foreign investment? ›
What is the Philippines' Foreign Investment Act? Republic Act No. 7042, also known as 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.
What is the investment trend in the Philippines? ›
Philippines foreign direct investment for 2022 was $9.37B, a 21.84% decline from 2021. Philippines foreign direct investment for 2021 was $11.98B, a 75.65% increase from 2020. Philippines foreign direct investment for 2020 was $6.82B, a 21.33% decline from 2019.
Is 40% foreign ownership in the Philippines? ›
40% restriction on foreign ownership for corporations. 60-40" requirement. The . Non-Philippine nationals may own up to one hundred percent (100%) of domestic market enterprises unless foreign ownership therein is prohibited or limited by .
