DTI issues guidelines on foreign equity participation

The Department of Trade and Industry (DTI) has issued a memorandum circular stating that 100-percent foreign ownership is allowed except in industries included in the foreign investments negative list.

"Foreign ownership limitation is the exception rather than the rule in so far as foreign investment is concerned," Trade Secretary Cesar V. Purisima, who is also chairman of the Board of Investments (BOI), said.

Purisima said this is based on Republic Act (RA) 7042 or the Foreign Investments Act of 1991 which states that "there are no restrictions on extent of foreign ownership of export enterprises . . . domestic market enterprises."

This means foreign firms can own up to 100 percent of the capital stock in export enterprises, including those classified as manufacturers, processors or service firms that export 60 percent or more of their output, or traders that purchase products domestically and export more than half of these products.

Purisima said areas for direct foreign investments include petrochemical, medical tourism, packaging, food exportation, and domestic market enterprises producing goods for sale, or render services to the domestic market.

Limitations apply only when the industry in question is included in the foreign investments negative list or it is covered by laws on national patrimony, health (drugs), public interest (media and utilities), morals (gambling), and national security.