MAILBOX: Foreign ownership restriction in the 10th FINL (E.O. 184)

This refers to the article published in The Philippine Star on June 6, written by Louella D. Desiderio which is entitled “Gov’t relaxes foreign investment restrictions.” The said article, in part, states:

“The new FINL removes the foreign ownership restriction on lending firms, investment houses and financing companies, and trims the number of professions reserved only for Philippine nationals under List A.

The 9th FINL set a 49-percent limit to foreign equity in lending companies, while it provided a 60-percent cap on the foreign ownership of investment houses and financing companies regulated by the Securities and Exchange Commission. Xxx” (Emphasis ours)

It should be emphasized that E.O. 184, being an Executive Order, does not institute a new law but rather “reflects changes to List A, pursuant to existing laws.” (See 2nd Whereas Clause of E.O. 184).

Thus, we would like to point out that the changes introduced in the 10th FINL do not amend or repeal any existing law relative to investment areas/activities reserved to Filipino nationals as well as those open to foreign investors particularly in lending companies, financial companies and investment houses.

In fact, the 10th FINL still mandates a maximum of 49 percent foreign equity participation for lending companies, and 60 percent equity participation for financing companies and investment houses pursuant to existing laws. This is expressly provided in footnote No. 4 under List A which reads:

Lending companies regulated by SEC are allowed to have up to 49 percent foreign equity participation (Sec. 6 of RA 9474)

Financing companies and investment houses regulated by SEC are allowed to have up to 60 percent foreign equity participation (Sec. of RA 5980 as amended by RA 8556; PF 129 as amended by RA 8556).

With regard to the practice of profession, we likewise invite your attention to footnote No. 1 under List A which enumerated the professions that are still subject to reciprocity rules before foreign nationals may be allowed to practice in the Philippines, pursuant to Sec. 7(j) of Republic Act. No. 8981 otherwise know as the “PRC Modernization Act of 2000.”

Hence, kindly make the necessary clarifications in order not to mislead the public.

Thank you.

Very truly yours,

CAMILO S. CORREA, General Manager