What an Investor Should Know about the Philippines

Article excerpt

The Foreign Investment Act provides the rules and regulations for foreign investments without incentives. It removes restrictions on the extent of foreign ownership of domestic enterprises except in areas included in the Negative List, where foreign ownership is limited to 40%. Enterprises registered with the Board of Investment (BOI) may be 100% foreign-owned if they will engage in a pioneer project or export at least 70% of their total production. In addition, companies locating in the export processing zones and the Subic Bay Freeport Zone are not subject to foreign equity restrictions. Investments by multilateral financial institutions are also not subject to the nationality requirements.

Enterprises availing themselves of incentives remain subject to the rules applicable under the law of registration.

The Omnibus Investment Code of 1987 grants preferential tax and other benefits to enterprises for areas specified in the Investment Priorities Plan (IPP). Additional incentives are available for projects locating in less developed areas, to enterprises registered with the Export Processing Zone Authority (EPZA), and to multinational companies establishing headquarters in the Philippines.

REGISTRATION REQUIREMENTS

Non-Philippine nationals investing in enterprises under the Foreign Investment Act of 1991 need only register with the Securities and Exchange Commission (SEC) in cases of partnerships and corporations, and with the Bureau of Trade Regulation and Consumer Protection (BTRCP) under the department of Trade and Industry for sole proprietorships.

Non-Philippine nationals investing in export enterprises also need to register with the Board of Investments and submit periodic export reports.

An Investment One-Stop Shop Action Center, housed at the BOI office in Makati, was created as a part of the Council for Investments. Agencies involved are the Securities and Exchange Commission, Export Processing Zone Authority, the Bangko Sentral ng Pilipinas, Department of Labor and Employment, Bureau of Customs, Commission on Immigration and Deportation, Department of Tourism, Bonded Export Marketing Board, and Garments and Textile Export Board. Each agency has representatives to attend to the investors' needs and concerns regarding doing business in the Philippines.

INCENTIVES

To be able to register for incentives, an applicant should meet the following conditions: 1. In the case of a corporation, it must be organized under Philippine law. At least 60% of its capital stock outstanding and entitled to vote must be owned and controlled by Philippine nationals, and at least 60% of the members of its board of directors must be citizens of the Philippines. If an enterprise does not have the required degree of ownership by Philippine nationals, the following conditions are applicable:

a. It proposes to engage in a pioneer project that involves capital requirements, processes, technical skills, and relative business risk that, in the opinion of the BOI, cannot be adequately met by Philippine nationals; or the applicant exports at least 70% of its total production;

b. …