Find out if your business is allowed to operate in the Philippines.

Any foreign investor planning to enter the Philippines should get familiar with the Philippines’ Negative Investment List. This document tells you if your business area is open to foreign investors.

You can find our summary below, for your convenience.

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What is the Philippines Negative Investment List?

The Philippines Negative Investment List is an Executive Order that regulates where foreign entities are not allowed to invest. This regulation tells you the business fields that are fully and partially open to foreign investment.

President Rodrigo Duterte signed the 11th Negative Investment List – the most recent version – in October 2018. This version of the Negative List updates the previous one signed by then-president Benigno Aquino III in 2015.

The official document is available on the Official Gazette of the Republic of the Philippines.

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What fields are open for full foreign ownership?

The 11th Philippines Negative Investment List allows full foreign participation in five business areas that were previously either restricted or not explicitly discussed.

Most of these – such as internet businesses, teaching, and training centers – are exceptions to other categories where the Negative List doesn’t allow foreign ownership. The government made these exceptions to welcome foreign investment in these areas, as long as they’re not directly related to professions or formal education.

You can find the breakdown below.

Up to 100% foreign ownership

NO.	BUSINESS FIELD	MAXIMUM FOREIGN OWNERSHIP
		10th Negative List (2015)	11th Negative List (2018)
1	Internet businesses, meaning internet access providers that are just carriers for transmitting messages and do not create content.	0%	100%
2	Teaching at higher education levels for non-professional subjects, meaning subjects that aren't included in government board or bar examinations.	0%	100%
3	Training centers for short-term high-level skills outside of the formal education system.	40%	100%
4	Adjustment companies, lending companies, financing companies, and investment houses.	• 40% for adjustment companies • 49% for lending companies • 60% for financing companies and investment houses	100%
5	Wellness centers	40%	100%

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What fields are open for partial foreign ownership?

The Philippines Negative Investment List also allows partial foreign participation in many other business fields. In other words, foreign investors are allowed to be minority owners in these business fields, with a variety of ownership caps.

You can find the breakdown below.

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Up to 40% foreign ownership

There are a few major changes in this section compared to the 10th Negative Investment List from 2015.

For example, foreigners can now own up to 40 percent of contracts for construction and repair of locally-funded public works, subject to regulations. Previously, foreigners could only have up to 25 percent equity in these contracts.

Foreigners can also now own up to 40 percent of private radio communications networks, compared to only up to 20 percent in the 2015 Negative List.

NO.	BUSINESS FIELD	MAXIMUM FOREIGN OWNERSHIP	EXCEPTIONS
		11th Negative List (2018)
1	Contracts for the construction and repair of locally-funded public works	40%	• Infrastructure/ or development projects covered in Republic Act No. 7718 Foreign-funded or assisted projects which need to undergo international competitive bidding
2	Exploration, development and utilization of natural resources	40%	-
3	Ownership of private lands	40%	-
4	Operation of public utilities	40%	• Power generation • Supply of electricity to the contestable market • Similar businesses or services not covered by the definition of public utilities
5	Educational institutions	40%	• Institutions founded by religious groups and mission boards • Education for foreign diplomatic personnel, their dependents, and other foreign temporary residents • Short-term high-level skills development outside the formal education system as defined in Section 20 of Batas Pambansa No. 232 (1982)
6	• Culture, production, milling, processing and trading of rice and corn • Acquiring - by barter, purchase or otherwise - rice, corn, and their byproducts	40%	Retailing
7	Contracts for the supply of materials, goods and commodities to GOCC, companies, agencies or municipal corporations	40%	-
8	Operation of deep sea commercial fishing vessels	40%	-
9	Ownership of condominium units	40%	-
10	Private radio communications network	40%	-

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Up to 30% foreign ownership

NO.	BUSINESS FIELD	MAXIMUM FOREIGN OWNERSHIP	EXCEPTIONS
		11th Negative List (2018)
1	Advertising	30%	-

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Up to 25% foreign ownership

NO.	BUSINESS FIELD	MAXIMUM FOREIGN OWNERSHIP	EXCEPTIONS
		11th Negative List (2018)
1	Private recruitment both for local or overseas employment	25%	-
2	Contracts for the construction of defense-related structures	25%	-

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What fields are closed off to foreign ownership?

The 11th Philippines Negative Investment List also provides a list of business fields where foreign entities can’t invest at all.

Most of these are still the same as the 10th Negative List from 2015. However, the Philippines government included new exceptions to make these business areas more flexible to foreign investment.

You can find the breakdown below.

NO.	BUSINESS FIELD	MAXIMUM FOREIGN OWNERSHIP	EXCEPTIONS
		11th Negative List (2018)
1	Mass media	0%	• Recording • Internet businesses
2	The practice of professions, including radiologic and x-ray technology, law, criminology, and marine deck officers and marine engine officers	0%	• Professions that Filipinos can also hold in the origin country of the foreigner in question • Teaching of non-professional subjects not included in a government board or bar examination
3	Retail trade enterprises with paid-up capital of less than USD 2.5 million	0%	-
4	Cooperatives	0%	-
5	Organization and operation of private detective, watchmen or security guards agencies	0%	-
6	Small-scale mining	0%	-
7	• Utilization of marine resources in archipelagic waters, territorial sea, and exclusive economic zone • Small-scale utilization of natural resources in rivers, lakes, bays, and lagoons	0%	-
8	Ownership, operation, and management of cockpits	0%	-
9	Manufacture, repair, stockpiling and/or distribution of nuclear weapons	0%	-
10	Manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons and anti-personnel mines	0%	-
11	Manufacture of firecrackers and other pyrotechnic devices	0%

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What fields are restricted for security reasons?

In addition to the lists above, the Negative Investment List also limits other business areas based on reasons of security or defense.

Besides having restrictions for foreigners, investing in these fields also need approval from the Philippines National Police (PNP) or Department of Defense (DND).

You can find the breakdown below.

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Requires Philippines National Police (PNP) approval

NO.	BUSINESS FIELD	MAXIMUM FOREIGN OWNERSHIP
		11th Negative List (2018)
1	• Firearms (handguns to shotguns) • Parts of firearms and ammunition • Instruments to be used in the manufacture of firearms	40%
2	Gunpowder	40%
3	Dynamite	40%
4	Blasting supplies	40%
5	Ingredients used in making explosives	40%
6	Telescopic sights, sniper scope and other similar devices	40%

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Requires Department of Defense (DND) approval

NO.	BUSINESS FIELD	MAXIMUM FOREIGN OWNERSHIP
		11th Negative List (2018)
1	Guns and ammunition for warfare	40%
2	Military ordnance and parts such torpedoes, depth charges, bombs, grenades, and missiles.	40%
3	Gunnery, bombing, and fire control systems and components	40%
4	Guided missiles/missile systems and components	40%
5	Tactical aircraft, parts, and components	40%
6	Space vehicles and component systems	40%
7	Combat vessels (air, land, and naval) and auxiliaries	40%
8	Weapons repair and maintenance equipment	40%
9	Military communications equipment	40%
10	Night vision equipment	40%
11	Stimulated coherent radiation devices, components, and accessories	40%
12	Armament training devices	40%
13	Others as may be determined by the DND	40%

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Are there any other restricted fields?

The Philippines also restricts some other business fields based on risk to health and morals or protection of small and medium enterprises (SMEs).

You can find the breakdown below.

NO.	BUSINESS FIELD	MAXIMUM FOREIGN OWNERSHIP	EXCEPTIONS
		11th Negative List (2018)
1	Manufacture and distribution of dangerous drugs	40%	-
2	Sauna and steam bathhouses, massage clinics and other like activities	40%	Wellness centers
3	All forms of gambling	40%	Ventures covered by investment agreements with PAGCOR
4	Domestic market enterprises with paid-in equity capital of less than USD 200.000	40%	-
5	Domestic market enterprises which involve advanced technology or employ at least fifty direct employees with paid-in equity capital of less than USD 100.000	40%	-

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How should I start?

Negative Investment Lists are often challenging to navigate. Because the categories and often very broad, businesses often have to navigate gray areas about which categories their operations fall under.

So, it would be better to connect with experienced consultants on the ground who can help figure out the best options for your company.

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Greenhouse offers an online platform for you to book business incorporation services and connect with market entry consultants in your target markets.

We’ll connect you with experienced consultants on the ground who can help answer your questions about doing business in the Philippines.

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