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Foreign Investment Negative List Philippines: Where Can Foreigners Invest?

foreign investment

Staying in the Positive: A Guide on Where to Invest in the Philippines as a Foreigner under the Foreign Investment Negative List

The Philippines is growing into a hotspot for foreign investors in Southeast Asia. As such, for any foreigners interested in investing in the country should have a proper understanding of the Philippine Foreign Investment Negative List (FINL), the legislation that defines the industries and the areas where foreign ownership is restricted or limited.

Philippine Foreign Investment Negative List (FINL) Overview

The list is constantly updated every few years, with the current list being its 12th regular reiteration that came from Executive Order Number 175[1] by then President Rodrigo Roa Duterte. It is vital for balancing the protection of foreign capital domestic industries and national interests and encouraging foreign capital.

The list is divided into two categories:

  • List A: Includes industries where foreign ownership is restricted for reasons of national security, public safety, and public health.
  • List B: Includes industries where foreign participation is limited for reasons of protecting small businesses and preserving job opportunities for locals.

Despite its name, the Foreign Investment Negative List also shows the industries that are open for foreign investment for those who are interested in investing in the Philippines. The following are some of the aforementioned industries that are open or relatively open for foreign investors:

  • Real estate and infrastructure (condominium units)

In recent times, the Real Estate industry in the Philippines is experiencing a boom. For foreigners, condominium units are available for investors who are interested in leasing or developmental interests. However, it should be noted that foreign ownership in a building cannot exceed 40% as provided by laws.

As for land ownership, the Country restricts land ownership to foreigners. However, there are laws that allows long-term leasing of private lands.

  • Energy and Renewable Resources

In 2022, the FINL was revised to open the renewable energy sector to full foreign ownership. This allows foreign citizens or foreign-owned corporations to engage in the exploration and development of renewable energy resources not limited to solar, wind, and biomass energy.[2]

This are different as to natural resources. According to the FINL, the exploration, development, and utilization of natural resources, is limited to 40% foreign equity.

  • Tourism and Hospitality

With its world-class beaches, rich culture, and welcoming people, the Philippines remains to be a haven for tourists. Just in 2023, the Philippines announced that it surpassed its targets for tourism with over 5.45 million international visitors with a receipt surge at PHP 482.54 billion[3]. As such, foreigners interested in tapping into the rich tourism industry of the Philippines can look into investing in hotels, resorts, and other travel-related services. The industry is generally unrestricted, except for land acquisitions.

  • Advertising

Despite having a restriction that only allows for up to 30% foreign equity, advertising is one of the key industries that foreign investors should also take notice of. The country has a growing demographic of tech-minded consumers with a noticeable online time consumption, enhancing the industry’s potential.[4] The industry is experiencing a continuous rise with ad spending forecasted to reach over 3 million USD in 2025.[5]

As such, advertising, should be one of the industries to look out for when it comes to foreign investors who are into tech and marketing.

  • BPO and IT industry

The Philippines is known as the Business Process Outsourcing (“BPO”) capital of the world. The country is steadily growing digitally and has an English-speaking workforce, making it an attractive sector for foreign investors.

The FINL does not have any significant restrictions on foreign ownership in the BPO and the IT sectors.  As such, foreign investors are free to establish wholly owned subsidiaries in these industries.

Conclusion

The Philippines offers numerous investment opportunities for foreign investors in various sectors. However, there are laws and regulations that investors should be wary of before diving in.

It is advisable for foreign investors to seek expert legal and business advice to ensure that they are fully compliant with the laws. Here at Abo Law, we have lawyers that specialize in corporate and other commercial concerns. Whether it’s setting up a corporation or drafting documents, Abo Law can help investors through every step of the way.

Written by: John Ezra Villar

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