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.

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

The Philippines is a country with over 7,000 islands and some 150 languages spoken. This large market makes things slightly tricky for foreign investors or businesses planning to start their business there.

Although the Philippines ranked 95th out of 190 economies in the World Bank’s ease of doing business index 2020, it has significantly improved from 2018 when it was previously ranked 124th. This huge jump has encouraged foreign investors and entrepreneurs to set their eyes on this archipelagic market.

As such, any foreign investor planning to enter the Philippines in 2021 should get familiar with the Philippines’ 11th Foreign Investment Negative List. This document tells you if your business area is open to foreign investors.

But let us first answer a common question frequently asked: Can foreigners invest in the Philippines?

The answer is yes! It just depends on the extent to which business field.

Quick Navigation

• What is the Philippines Negative Investment List?
• What fields are open for full foreign ownership?
  • Up to 100% foreign ownership
• What fields are open for partial foreign ownership?
  • Up to 40% foreign ownership
  • Up to 30% foreign ownership
  • Up to 25% foreign ownership
• What fields are closed off to foreign ownership?
• What fields are restricted for security reasons?
  • Requires Philippines National Police (PNP) approval
  • Requires Department of Defense (DND) approval
• Are there any other restricted fields?
• How should I start?

What is the Philippines Foreign Investment Negative List?

The Philippines Foreign Investment Negative 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 in the Philippines.

In the past, mass media was not allowed to be 100 percent owned by foreigners, but only Filipinos. Thereafter, the  Philippines Foreign Investment Act of 1991 and the following 10th Negative Investment List also restricted foreign equity in mass media, except recording.

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 new 11th Negative Investment List is also broken down into 2 Lists - List A and List B. The following are what each list consists of and includes:

• List A includes areas of investment and extent of foreign ownership, where limitations are by the mandate of the Philippine Constitution or law
• List B includes areas of investment and extent of foreign ownership, where limitations are for reasons such as national security and defense, the risk to health and morals, and protection of local Small and Medium Enterprises (SMEs). The official document is available on the Official Gazette of the Republic of the Philippines.

---

What fields are open for full, 100% 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 Philippines 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%

In one of our webinars launched last year, our COO Viktor Kyosev discussed with Rocky Chan and RJ Ledesma from EnterPH how foreign businesses have adapted their market entry strategies since the beginning of COVID-19 and debated possible scenarios for the near future.

In his opening presentation on the Philippines, Rocky Chan cleared a huge misconception that foreigners can only own 40 percent of their business in the Philippines. However, most of the time, any foreigner can own 100 percent of their business.

---

Read more about Doing Business in the Philippines: Attractiveness & Opportunities Post COVID-19

---

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.

---

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 the 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	Exception
		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%	-

---

Up to 30% foreign ownership

No	Business Field	Maximum Foreign Ownership	Exception
		11th Negative List (2018)
1	Advertising	30%	-

---

Up to 25% foreign ownership

No	Business Field	Maximum Foreign Ownership	Exception
		11th Negative List (2018)
1	Private recruitment both for local or overseas employment	25%	-
2	Contracts for the construction of defense-related structures	25%	-

---

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	Exception
		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%	-

---

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. This is also known as List B.

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.

---

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 including:  Chlorates of potassium and sodium Nitrate of ammonium, potassium, sodium barium, copper (11), lead (11), calcium, and cuprite  Nitric acid Nitrocellulose Perchlorates of ammonium, potassium, and sodum  Dinitrocellulose Hydrogen peroxide Strontium nitrate powder Toluene	40%
6	Telescopic sights, sniper scope and other similar devices	40%

---

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%

---

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	Exception
		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%	-

---

Summary

In short, investors need to pay attention to the Philippines’ 11th Foreign Investment Negative List, List A and List B, when planning to invest or start a business in the Philippines.

The Negative Investment List allows investors to understand which businesses are fully open and can be 100 percent owned by foreigners and which are completely closed off.

If you are still unsure, we recommend reaching out to us here and we will be happy to connect you with our service providers on the ground to answer any questions you may have.

How should I start

Negative Investment Lists are challenging to navigate. It is quite difficult for governments to prepare specific categories, as a result, businesses struggle to navigate the gray areas.

If you have not been through this experience before, we would advise you to connect with experienced consultants on the ground who can help figure out the most suitable options for your company.

---

Greenhouse empowers you to book business incorporation services and connect with market entry consultants in the Philippines.

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

---