Doing business in the Philippines: Foreign Investment Negative List

The Foreign Investment Negative List, or Negative List, is a list of economic sectors where foreign
ownership and participation in the Philippines are regulated. It contains two component lists: List A and
List B. List A contains areas of investment where foreign ownership is limited by mandate of the
Philippine Constitution or by specific laws. List B, on the other hand, contains areas of investment where
foreign ownership is limited for reasons of security, defense, risk to health and morals, and protection of
local small-and-medium enterprises (SMEs).

Except for activities where restrictions on foreign equity are imposed under the Philippine Constitution
or statutes, the President of the Philippines may amend the Negative List and such amendments should
not be made more than once every two years.

The regular Negative List is updated and issued every two years and the current version being
implemented is the 11th version, signed into law by President Rodrigo Duterte under Executive Order
(EO) No. 65 in October 2018.

Updates on the 11th Version of the Negative List

The 11th version added sectors where up to 100% foreign participation will be allowed:

Internet businesses (a new category previously included in the category of mass media, which remains
completely restricted to foreign participation and ownership);

Teaching at higher education levels (provided the subject being taught is not a professional subject or
included in a government board or bar examination);

Training centers engaged in short-term high-level skills development that do not form part of the formal
education system;

Insurance adjustment companies, lending companies, and investment houses; and

Wellness centers.

It also increased participation of up to 40% on two sectors:

Contracts for construction and repair of locally-funded public works (except those that are foreign-
funded or assisted and required to undergo international competitive auction), which used to have 25%
foreign equity cap; and

Private radio communication networks (previously only up to 20% equity).

However, the new Negative List removed the following sectors from the list (where up to 40% foreign
equity was previously allowed):

Facility operator of an infrastructure or a development facility requiring a public utility franchise; and

Adjustment companies.

The 11th Foreign Investment Negative List (under EO 65)

List A

No Foreign Equity

Mass media, except recording and internet business

Practice of professions, including radiologic and x-ray technology, law, criminology, and marine deck
officers and marine engine officers

Subject to the Annex on Professions indicating professions where foreigners are allowed to practice in
the Philippines subject to reciprocity and where corporate practice is allowed; and

Foreigners may teach at higher education levels if subject being taught is not a professional subject
(included in a government board or bar examination).

Retail trade enterprises with paid-up capital of less than US$2.5 million

Cooperatives

Organization and operation of private detective, watchmen or security guards agencies

Small-scale mining

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

Ownership, operation, and management of cockpits

Manufacture, repair, stockpiling, and/or distribution of nuclear weapons

Manufacture, repair, stockpiling, and/or distribution of biological, chemical, and radiological weapons
and anti-personnel mines

Manufacture of firecrackers and other pyrotechnic devices

Up to 25% Foreign Equity

Private recruitment, whether for local or overseas employment

Contracts for the construction of defense-related structures

Up to 30% Foreign Equity

Advertising

Up to 40% Foreign Equity

Contracts for the construction and repair of locally-funded public works, except:

Infrastructure/development projects covered in Republic Act (RA) No. 7718; and

Projects which are foreign-funded or assisted and required to undergo international competitive
bidding.

Exploration, development, and utilization of natural resources

Ownership of private lands

Operation of public utilities, except power generation and the supply of electricity to the contestable
market and similar businesses or services not covered by the definition of public utilities

Educational institutions other than those established by religious groups and mission boards, for foreign
diplomatic personnel and their dependents and other foreign temporary residents, or for short-term
high-level skills development that do not form part of the formal education system as defined in Section
20 of Batas Pambansa (BP) No. 232 (1982)

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

Contracts for the supply of materials, goods, and commodities to Government-Owned and Controlled
Corporation (GOCC), company, agency or municipal corporation

Operation of deep-sea commercial fishing vessels

Ownership of condominium units

Private radio communications network

List B

Up to 40% Foreign Equity

Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine
National Police (PNP) clearance:

Firearms (handguns to shotguns), parts of firearms and ammunition therefor, instruments or

implements used or intended to be used in the manufacture of firearms;

Gunpowder;

Dynamite;

Blasting supplies;

Ingredients used in making explosives:

Chlorates of potassium and sodium;

Nitrates of ammonium, potassium, sodium barium, copper (11), lead (11), calcium, and cuprite;

Nitric acid;

Nitrocellulose;

Perchlorates of ammonium, potassium, and sodium;

Dinitrocellulose;

Glycerol;

Amorphous phosphorus;

Hydrogen peroxide;

Strontium nitrate powder;

Toluene; and

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 No. 7042 as amended by RA No. 8179).

Manufacture, repair, storage, and/or distribution of products requiring Department of National Defense
(DND) clearance:

Guns and ammunition for warfare;

Military ordinance and parts thereof (e.g., torpedoes, depth charges, bombs, grenades, missiles);

Gunnery, bombing, and fire control systems and components;

Tactical aircraft (fixed and rotary-winged), parts, and components thereof;

Space vehicles and component systems;

Combat vessels (air, land, and naval) and auxiliaries;

Weapons repair and maintenance equipment;

Military communications equipment;

Night vision equipment;

Stimulated coherent radiation devices, components, and accessories;

Armament training devices; and

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 No. 7042 as amended by RA No. 8179).

Manufacture and distribution of dangerous drugs (RA No. 7042 as amended by RA No. 8179)

Sauna and steam bathhouses, massage clinics, and other like activities regulated by law because of risks
posed to public health and morals, except wellness centers

All forms of gambling, except those covered by investment agreements with Philippine Amusement and
Gaming Corporation (PAGCOR)

Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000
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

Source: Official Gazette of the Philippines

Updated: November 8, 2019

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