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Foreign Investment Act of 1991 - : 1. Concept of Negative List
Foreign Investment Act of 1991 - : 1. Concept of Negative List
Foreign Investment Act of 1991 - : 1. Concept of Negative List
- The basic law that governs foreign investments in the Philippines. It is considered a landmark
legislation because it liberalized the entry of foreign investments into the country 1
- Foreign investors are generally treated like their domestic counterparts and must register with
SEC of with the Bureau of Trade Regulation and Consumer Protection (BTRCP)
Terms to note:
Investment – equity participation in any enterprise organized or existing under the laws of
the Philippines
Foreign investment – a equity investment made by non-Philippine National in the form of
foreign exchange and/or other assets actually transferred to the Philippines and duly
registered with the Central bank
SCOPE
Non-Philippine National
Those not falling within the definition of “Philippine National” under Section 3a of the Act
Key Features
o Section 5, sentence 2 – the SEC or BTRCP, as the case may be, shall not impose any
limitations on the extent of foreign ownership in an enterprise additional to those
provided in this Act
o Section 6 –
Foreign investments in export enterprises whose products and services do
not fall within List A and B of the FINL is:
Allowed up to 100% ownership
If non-Philippine nationals:
o Register with BOI and submit the reports that may be
required to ensure continuing compliance of the export
enterprise that fails to meet the export ration requirement
o The SEC or BTRCP shall then order the noncomplying export
enterprise to reduce its sales to the domestic market to not
more than 40% of its total production
Failure to comply without justifiable reason shall
subject the enterprise to cancellation of registration
Section 9 –
o But this is mainly applicable to former Philippine citizens in:
Rural banks (under RA 7353)
Cooperatives (under RA 6938)
Thrift banks and Private Development Banks (under 7906)
Financing companies
o These rights shall not extend to activities reserved by the Constitution, including:
Exercise of profession
Defense-related activities
Activities under Retail trade Act, Security Agency Act, Small Scale Mining Act,
Rice and Corn Industry Act and Cockpits Operation and Management