Executive Order No. 98 Entitled "Promulgating the Ninth Regular Foreign Investment Negative List"

November 27, 2012 BLGF MEMORANDUM CIRCULAR NO. 087-12 TO : All Heads of Offices, Heads of Bureaus, Regional Directors and Other Offices Concerned SUBJECT : Executive Order No. 98 Entitled "Promulgating the Ninth Regular Foreign Investment Negative List" For the information and guidance of all concerned, attached is a copy of Memorandum from the Department of Finance dated November 13, 2012 regarding the above-captioned subject. The Central and Regional Directors of this Bureau are hereby instructed to take note of the above and disseminate the contents to all Bureau Staff. Please be guided accordingly. ScCEIA (SGD.) ATTY. SALVADOR M. DEL CASTILLO OIC-Executive Director ATTACHMENT November 13, 2012 Memo for : Heads of Offices This Department Heads of Bureaus/Attached Agencies Department of Finance From : Director Lourdes Z. Santiago Subject : Executive Order No. 98 entitled "Promulgating the Ninth Regular Foreign Investment Negative List." Attached for information and guidance is a copy of Executive Order No. 98 dated 29 October 2012 of the Office of the President on the above-captioned subject. Signed by representative LOURDES Z. SANTIAGO Director IV Central Administration Office Office of the President of the Philippines Malacaang MALACAANG RECORDS OFFICE Manila, October 31, 2012 HON. CESAR V. PURISIMA Secretary Department of Finance Manila Sir: I have the honor to transmit for your information, and guidance, certified copy of Executive Order No. 98 dated October 29, 2012 entitled "PROMULGATING THE NINTH REGULAR FOREIGN INVESTMENT NEGATIVE LIST." HcTSDa Thank you. Very truly yours, (SGD.) MARIANITO M. DIMAANDAL Director IV October 29, 2012 EXECUTIVE ORDER NO. 98 PROMULGATING THE NINTH REGULAR FOREIGN INVESTMENT NEGATIVE LIST WHEREAS, Republic Act (RA) No. 7042, also known as the "Foreign Investments Act of 1991," as amended by RA 8179, provides for the formulation of a Regular Foreign Investment Negative List, covering investment areas/activities which may be opened to foreign investors and/or reserved to Filipino nationals; and aEDCSI WHEREAS, there is a need to formulate the Ninth Regular Foreign Investment Negative List, replacing the Eight Regular Foreign Investment Negative List, to reflect changes to List A pursuant to existing laws and upon recommendation of concerned agencies. NOW, THEREFORE, I, BENIGNO S. AQUINO III, President of the Philippines, by virtue of the powers vested in me by law, do hereby order: SECTION 1. Ninth Regular Foreign Investment Negative List. Only the investment areas and/or activities listed in the Annex hereof shall be reserved to Philippine nationals, and hereafter shall be referred to as the Ninth Regular Foreign Investment Negative List. The extent of foreign equity participation in these areas shall be limited to the percentages indicated in the List. SECTION 2. Amendments. Amendments to List A may be made at any time to reflect changes instituted in specific laws while amendments to List B shall not be made more often than once every two years, pursuant to Section 8 of RA 7042, as amended, and its revised implementing rules and regulations. SECTION 3. Repeal. All issuances, orders, rules and regulations, or parts thereof, which are inconsistent with this Executive Order are hereby repealed, amended or modified accordingly. SECTION 4. Separability. If any provision of this Executive Order is declared invalid or unconstitutional, the other provisions not affected thereby shall remain valid and subsisting. SECTION 5. Effectivity. This Executive Order shall take effect fifteen (15) days after its publication in a newspaper of general circulation. DONE in the City of Manila, this 29th day of October, in the year of Our Lord, Two Thousand and Twelve. EaHDcS ANNEX NINTH REGULAR FOREIGN INVESTMENT NEGATIVE LIST LIST A: FOREIGN OWNERSHIP IS LIMITED BY MANDATE OF THE CONSTITUTION AND SPECIFIC LAWS No Foreign Equity 1. Mass media except recording (Art. XVI, Sec. 11 of the Constitution; Presidential Memorandum dated 04 May 1994) AIaSTE 2. Practice of all professions 1 (Art. XII, Sec. 14 of the Constitution, Sec. 1 of RA 5181) a. Engineering i. Aeronautical engineering (PD 1570) ii. Agricultural engineering (RA 8559) iii. Chemical engineering (RA 9297) iv. Civil engineering (RA 1582) v. Electrical engineering (RA 7920) vi. Electronics and communication engineering (RA 9292) vii. Geodetic engineering (RA 8560) viii. Mechanical engineering (RA 8495) ix. Metallurgical engineering (PD 1536) x. Mining engineering (RA 4274) xi. Naval architecture and marine engineering (RA 4565) xii. Sanitary engineering (RA 1364) b. Medicine and allied professions i. Medicine (RA 2382 as amended by RA 4224) ii. Medical technology (RA 5527 as amended by RA 6138, PD 498 and PD 1534) iii. Dentistry (RA 9484) iv. Midwifery (RA 7392) v. Nursing (RA 9173) vi. Nutrition and dietetics (PD 1286) DaAETS vii. Optometry (RA 8050) viii. Pharmacy (RA 5921) ix. Physical and occupational therapy (RA 5680) x. Radiologic and x-ray technology (RA 7431) xi. Veterinary medicine (RA 9268) c. Accountancy (RA 9298) d. Architecture (RA 9266) e. Criminology (RA 6506) f. Chemistry (RA 754) g. Customs brokerage (RA 9280) h. Environmental planning (PD 1308) i. Forestry (RA 6239) j. Geology (RA 4209) k. Interior design (RA 8534) l. Landscape architecture (RA 9053) m. Law (Art. VIII, Section 5 of the Constitution; Rule 138, Sec. 2 of the Rules of Court of the Philippines) n. Librarianship (RA 9246) o. Marine deck officers (RA 8544) p. Marine engine officers (RA 8544) q. Master plumbing (RA 1378) r. Sugar technology (RA 5197) THAICD s. Social work (RA 4373) t. Teaching (RA 7836) u. Agriculture (RA 8435) v. Fisheries (RA 8550) w. Guidance counseling (RA 9258) x. Real estate service (RA 9646) y. Respiratory therapy (RA 10024) z. Psychology (RA 10029) 3. Retail trade enterprises with paid-up capital of less than US$2,500,000 (Sec. 5 of RA 8762) 2 4. Cooperatives (Ch. III, Art. 26 of RA 6938) 5. Private security agencies (Sec. 4 of RA 5487) 6. Small-scale mining (Sec. 3 of RA 7076) 7. Utilization of marine resources in archipelagic waters, territorial sea, and exclusive economic zone as well as small-scale utilization of natural resources in rivers, lakes, bays, and lagoons (Art. XII, Sec. 2 of the Constitution) 8. Ownership, operation and management of cockpits (Sec. 5 of PD 449) 9. Manufacture, repair, stockpiling and/or distribution of nuclear weapons (Art. II, Sec. 8 of the Constitution) 3 10. Manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons and anti-personnel mines (various treaties to which the Philippines is a signatory and conventions supported by the Philippines) 3 11. Manufacture of firecrackers and other pyrotechnic devices (Sec. 5 of RA 7183) DCcIaE Up to Twenty Percent (20%) Foreign Equity 12. Private radio communications network (RA 3846) Up to Twenty-Five Percent (25%) Foreign Equity 13. Private recruitment, whether for local or overseas employment (Art. 27 of PD 442) 14. Contracts for the construction and repair of locally-funded public works (Sec. 1 of Commonwealth Act No. 541, Letter of Instruction No. 630) except: a. Infrastructure/development projects covered in RA 7718; and b. Projects which are foreign funded or assisted and required to undergo international competitive bidding (Sec. 2 (a) of RA 7718). 15. Contracts for the construction of defense-related structures (Sec. 1 of CA 541) Up to Thirty Percent (30%) Foreign Equity 16. Advertising (Art. XVI, Sec. 11 of the Constitution) Up to Forty Percent (40%) Foreign Equity 17. Exploration, development and utilization of natural resources (Art. XII, Sec. 2 of the Constitution) 4 18. Ownership of private lands (Art. XII, Sec. 7 of the Constitution; Ch. 5, Sec. 22 of CA 141; Sec. 4 of RA 9182) 19. Operation and management of public utilities (Art. XII, Sec. 11 of the Constitution; Sec. 16 of CA 146) 20. Ownership/establishment and administration of educational institutions (Art. XIV, Sec. 4 of the Constitution) 21. Culture, production, milling, processing, trading except retailing, of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof (Sec. 5 of PD 194) 5 ICAcTa 22. Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or municipal corporation (Sec. 1 of RA 5183) 23. Project proponent and facility operator of a BOT Project requiring a public utilities franchise (Art. XII, Sec. 11 of the Constitution; Sec. 2 (a) of RA 7718) 24. Operation of deep sea commercial fishing vessels (Sec. 27 of RA 8550) 25. Adjustment companies (Sec. 323 of PD 612 as amended by PD 1814) 26. Ownership of condominium units where the common areas in the condominium project are co-owned by the owners of the separate units or owned by a corporation (Sec. 5 of RA 4726) Up to Forty-Nine Percent (49%) Foreign Equity 27. Lending companies (Sec. 6 of RA 9474) 6 Up to Sixty Percent (60%) Foreign Equity 28. Financing companies regulated by the SEC (Sec. 6 of RA 5980 as amended by RA 8556) 6 29. Investment houses regulated by the SEC (Sec. 5 of PD 129 as amended by RA 8366) 6 LIST B: FOREIGN OWNERSHIP IS LIMITED FOR REASONS OF SECURITY, DEFENSE, RISK TO HEALTH AND MORALS AND PROTECTION OF SMALL- AND MEDIUM-SCALE ENTERPRISES Up to Forty Percent (40%) Foreign Equity 1. Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine National Police (PNP) clearance: a. Firearms (handguns to shotguns), parts of firearms and ammunition therefore, instruments or implements used or intended to be used in the manufacture of firearms EDISaA b. Gunpowder c. Dynamite d. Blasting supplies e. Ingredients used in making explosives: i. Chlorates of potassium and sodium ii. Nitrates of ammonium, potassium, sodium barium, copper (11), lead (11), calcium and cuprite iii. Nitric acid iv. Nitrocellulose v. Perchlorates of ammonium, potassium and sodium vi. Dinitrocellulose vii. Glycerol viii. Amorphous phosphorus ix. Hydrogen peroxide x. Strontium nitrate powder xi. Toluene f. Telescopic sights, sniper scope and other similar devices However, the manufacture or repair of these items may be authorized by the Chief of the PNP to non-Philippine nationals; Provided that a substantial percentage of output, as determined by the said agency, is exported. Provided further that the extent of foreign equity ownership allowed shall be specified in the said authority/clearance (RA 7042 as amended by RA 8179) 2. Manufacture, repair, storage and/or distribution of products requiring Department of National Defense (DND) clearance: a. Guns and ammunition for warfare EaCSHI b. Military ordnance and parts thereof ( e.g. , torpedoes, depth charges, bombs, grenades, missiles) c. Gunnery, bombing and fire control systems and components d. Guided missiles/missile systems and components e. Tactical aircraft (fixed and rotary-winged), parts and components thereof f. Space vehicles and component systems g. Combat vessels (air, land and naval) and auxiliaries h. Weapons repair and maintenance equipment i. Military communications equipment j. Night vision equipment k. Stimulated coherent radiation devices, components and accessories l. Armament training devices m. Others as may be determined by the Secretary of the DND However, the manufacture or repair of these items may be authorized by the Secretary of National Defense to non-Philippine nationals; Provided that a substantial percentage of output, as determined by the said agency, is exported. Provided further that the extent of foreign equity ownership allowed shall be specified in the said authority/clearance (RA 7042 as amended by RA 8179). 3. Manufacture and distribution of dangerous drugs (RA 7042 as amended by RA 8179) 4. Sauna and steam bathhouses, massage clinics and other like activities regulated by law because of risks posed to public health and morals (RA 7042 as amended by RA 8179) EaCSHI 5. All forms of gambling, except those covered by investment agreements with PAGCOR pursuant to RA 9487, or the PAGCOR Charter (RA 7042 as amended by RA 8179) 6. Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000 (RA 7042 as amended by RA 8179) 7. Domestic market enterprises which involve advanced technology or employ at least fifty (50) direct employees with paid-in equity capital of less than the equivalent of US$100,000 (RA 7042 as amended by RA 8179) Footnotes 1. This is limited to Filipino citizens save in cases prescribed by law. 2. Full foreign participation is allowed for retail trade enterprises: (a) with paid-up capital of US$2,500,000 or more provided that investments for establishing a store is not less than US$830,000; or (b) specializing in high end or luxury products, provided that the paid-up capital per store is not less than US$250,000 (Sec. 5 of RA 8762). 3. Domestic investments are also prohibited (Art. II, Sec. 8 of the Constitution; Conventions/Treaties to which the Philippines is a signatory). 4. Full foreign participation is allowed through financial or technical assistance agreement with the President (Art. XII, Sec. 2 of the Constitution). 5. Full foreign participation is allowed provided that within the 30-year period from start of operation, the foreign investor shall divest a minimum of 60 percent of their equity to Filipino citizens (Sec. 5 of PD 194; NFA Council Resolution No. 193 s. 1998). 6. No foreign national may be allowed to own stock in lending companies, financing companies or investment houses unless the country of which he is a national accords the same reciprocal rights to Filipinos (Sec. 6 of RA 9474; Sec. 6 of RA 5980 as amended by RA 8556; PD 129 as amended by RA 8366).