Philippines updates foreign investment rules: What EO 113 means for market entry.
The Philippine government has approved Executive Order No. 113, introducing the 13th Regular Foreign Investment Negative List (RFINL), a key framework that defines which sectors are open or restricted to foreign investors. The update reflects a calibrated approach that balances liberalisation with the continued protection of strategic industries.
The revised list signals a more investor friendly stance in selected areas, while maintaining long standing constitutional and statutory limits in sectors considered sensitive to national interests.
What the negative list covers
The RFINL operates under the Foreign Investments Act of 1991 and is divided into two categories. List A covers sectors where foreign ownership limits are mandated by the constitution or existing legislation. List B addresses industries restricted for reasons of national security, public health or the protection of local enterprises.
Sectors that remain fully closed to foreign ownership include mass media, the corporate practice of architecture, cooperatives, private security agencies, small-scale mining and the utilisation of marine resources.
Partial access and equity thresholds
For sectors where foreign participation is permitted, ownership limits vary considerably. Foreign equity is capped at 25 percent in private recruitment firms and companies involved in defence-related construction. Advertising firms may accept up to 30 percent foreign equity.
A broader group of sectors carries a 40 percent ceiling, including retail trade enterprises with paid-up capital below PHP 25 million, natural resource exploration, public utilities, commercial fishing, consulting services and condominium ownership. Under List B, the same 40 percent cap applies to the manufacture of firearms and explosives, gambling and micro and small domestic market enterprises below specified capital thresholds.
Telecommunications open with conditions
One of the more significant changes in EO 113 is the treatment of telecommunications. Foreign investors may now own up to 100 percent of a Philippine telecommunications company, provided that reciprocity conditions are met, meaning Filipino investors must receive equivalent access in the investor’s home country. Where reciprocity is absent, the foreign equity ceiling reverts to 50 percent. This update signals a measured shift towards greater openness in a sector that has historically been tightly controlled.
What the means for investors
The introduction of the 13th Foreign Investment Negative List highlights the need for careful market entry planning in the Philippines. While the policy direction is more open, sector specific rules, equity caps and reciprocity requirements still require close attention.
Investors must consider not only whether a sector is open, but also the conditions attached. This is particularly relevant in partially liberalised industries where structuring may be more complex. Many structures will continue to require joint ventures or local partnerships, specifically in industries under the 40 percent ceiling. In telecommunications, the reciprocity requirement adds a layer of due diligence that investors will need to address early in the planning process. Existing businesses may also find opportunities to expand or restructure under the revised framework.
Overall, the changes reflect a measured shift towards greater openness while maintaining protections in strategic sectors. The Philippines is becoming a more competitive investment destination, although long term impact will depend on how effectively the framework is applied.
