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Lessening the negative: Balancing the nationalist foreign investment policy towards
The Philippine Star
07 Jul 2015
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TOPOFMIND

ByELAINEP.DEGUZMAN

Lesseningthenegative:
Balancingthenationalist
foreigninvestmentpolicy
towardsintegration
PursuanttotheForeignInvestmentAct
(R.A.7042,asamendedbyR.A.8179),the
PresidentofthePhilippinespromulgated

the10thRegularForeignInvestmentNeg

ativeList(FINL)lastMay29.TheFINL
coverstheareasoractivitiesreserved100

percenttoFilipinonationalsasmandated

bythePhilippineConstitutionandother
laws,aswellasthoseareaswhichare

partlynationalizedwhereinforeigninves
torsareallowedtoparticipatetoacertain
extent.

The10thFINLhassubstantiallyad

optedtheprovisionsofthe9thFINL.
However,themostnotabledifferenceisthatunderthe10th

FINL,thelistofprofessionsinwhichnoforeignparticipation
isallowedhasbeensignificantlyreducedfrom26(withsubcat
egories)downtofive.Underthe10thFINL,onlypharmacy,ra

diologicandXraytechnology,criminology,forestryandlaware

reservedforFilipinocitizens.Asidefromthis,othereconomic

provisionsaresubstantiallyunchanged.

ThechangeinthelOtnFINLcomescloseattheheelsofa
recentstudybytheEconomicResearchInstituteforAseariand
EastAsia(ERlA)entitledFDIRestrictivenessIndexforAsean:

ImplementationofAECBlueprintMeasures.Thisstudyana
lyzedtherestrictivenessofforeigndirectinvestment(FDI)ac
tivitiesinAseancountries.ItevaluatedtheFDIrestrictiveness

insixareas:foreignownershipormarketaccess,nationaltreat*
ment,screeningandapprovalprocedures,boardofdirectors
andmanagementcomposition,movementofinvestors,and
performancerequirements.Oneofitsconclusionsisthatde
velopingeconomiesinAsean,suchasCambodiaandVietnam,
tendtohaveamoreopenpolicytowardsforeigninvestments
comparedtoeconomieswithmoredevelopedandmature
industries.ItfurthermentionedthatVietnamandCambodia

Headline
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Lessening the negative: Balancing the nationalist foreign investment policy towards
The Philippine Star
07 Jul 2015
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Circulation
305,090
B4
Readership
305,090
English
ArticleSize
435 cm

haveadoptedkeyFDIpoliciesto"maintaintheirmomentumof
economicliberalizationandintegrationintheregion."Onthe
otherhand,moredevelopedeconomieswhichincludesthePhil
ippines,Malaysia,ThailandandIndonesia"havenotprogressed
furtherfromtheirrelativelyhigherinvestmentbase."Thestudy,
suggeststhemoredevelopedcountriesneedtoliberalizetheirser
vicessectorasitisanimportantpartoftheirgrowth."
Hence,the10thFINLmaybeconsideredas.aresponseto
thecallforalessrestrictiveforeigndirectinvestmentpolicy.
Foryears,someforeigninvestorshavebeenadvocatingfora,
moreopeninvestmentpolicyinthePhilippines.Followingthe
promulgationofthe9tnFINLin2012,theJointForeignCham
bers(JFC),acoalitionofforeignChambersofCommerce,has
openlyencouragedthePhilippinegovernmenttomakethe
10thFINL"lessnegative."ItcitedaWorldBankreportwhere
inthePhilippineeconomyin2012wasdescribedasremaining
moreclosedtoforeigninvestmentcomparedtoitslargeneigh
boringAseaneconomies.OneofthesuggestionsortheJFC
istheentireremovalfromtheFINLofpracticeofprofessions
sinceitdoesnotconcerninvestment.

Theprohibitiononforeignerstopracticesomeprofessions
inthePhilippinescanbetracedbacktotheConstitution.Sec
tion14ofArticleXIIprovidesforthepromotionandsustained
developmentofnationaltalents,includingthatofFilipino
scientists,entrepreneurs,professionals,managers,highlevel
technicalmanpowerandskilledworkersandcraftsmenin
allfields.ThisistoensureFilipinoworkersandprofessionals

wouldbegiventhesupporttheyneedandgivenpriorityinthe

practiceoftheirprofession.However,althoughthepracticeof

allprofessionsislimitedtoFilipinocitizens,theConstitution

alsoprovidesthiscanbeprescribedbylaw.Thismeanslaws
maybepassedprescribingtherulesonthepracticeofprofes
sionsinthePhilippinesbyforeigners.Whilethe10thFINLdid
notentirelyremovethePracticeofprofessionsfromthelist,the
samehasbeenlimitedtofiveprofessions.Foreignersareal
lowedtopracticethoseprofessionsnotspecificallyprohibited

intheFINLprovidedtheircountryallowsforreciprocity.
WhiletheobjectiveofthelawtogiveprioritytoFilipinosis
noble,itmaybearguedthatwiththecurrentmovetowardsin
tegrationandrapidchangesintechnology,strictprohibitionon

foreignprofessionalsisnolongerpractice.Infact,Filipinopro
fessionalsarenolongerconfinedtopracticeinthePhilippines,

andtheirworkoverseasisnolongerlimitedtodomesticwork
andmanuallabor.ThereisalreadyamarketabroadforFilipino
nurses,doctors,engineersandaccountants.Whatneedstobead
dressedistheenhancementoftheskillsofFilipinoprofessionals
tomakethemgloballycompetitive,whethertheychoosetowork

inthePhilippinesorabroad.Anotherargumentagainstthere

strictivepolicyagainstforeignprofessionalsisthatitwouldalso
impedethedevelopmentofthedifferentprofessions.Thisrestric
tivepolicydiscourageshighlyspecializedprofessionalstrained
andlicensedinothercountriesfromworkingorteachinginthe
Philippines.ThishampersthechanceofotherFilipinoswhohave
noaccesstoforeigntrainingandeducationfromlearningmore
advancedtechnicalorscientificskills.

Headline
MediaTitle
Date
Section
Page No
Language

Lessening the negative: Balancing the nationalist foreign investment policy towards
The Philippine Star
07 Jul 2015
Color
Black/white
Business
Circulation
305,090
B4
Readership
305,090
English
ArticleSize
435 cm

Asidefromthepracticeofprofessions,theJFCalsoex
pressedsupportforHouseBillNo.5544whichseekstoremove
theforeignequityrestrictibnsinadjustment,lendingandfi

nancingcompanies.HB5544,filedbyRep.GiorgidiB.Agga
baoispendingintheHouseCommitteeonTradeandIndustry.
Thebfllisaimedtoattract,promote,liberalizeandwelcome
foreigninvestmentstocomplywiththecommitmentstothe

AseanEconomicCommunity(AEC).Thisisamovetowards
makingtheFINL"lessnegative".
AstheAseangearstowardstheAEC,theforeigninvestment

policyofthePhilippineswouldbecrucialinensuringthe
PhilippineswillnotbeleftoutbyitsAseanneighborsdur

ingtheregionaleconomicintegration.Oneofthepillarsof

AECistoestablishAseanasasinglemarketandproduction
basethroughthefreeflowofgoods,services,investment,
capitalandskilledlabor.
Morethanever,withthisintegrationandrapidchangesin

technology,itisimportantforourlegislaturetoenactlawsthat

wouldbalancethenationalistgoalsandtheneedtomakethe
Philippinesgloballycompetitive.Whiletheeconomicandso
cialbenefitstothePhilippinesofthisintegrationmaystillbe
debatable,thePhilippinescannotaffordtobeleftbehfirtdbyits
neighbors.Itmayneedtocatchupincertainareas,butithas
tomoveforward.

ElaineP.deGuzmanisasupervisorfromthetaxgroup,ofR.G.

Mcmabat&Co,(RGM&Co.),thePhilippinememberfirmofRPMG
International.

Thisarticleisforgeneralinformationpurposesonlyandshouldnotbe
consideredasprofessionaladvicetoaspecificissueorentity.
Theviewsanaopinionsexpressedhereinarethoseoftheauthoranddo

notnecessarilyrepresenttheviewsandopinionsofKPMGInternation

alorRGM&Co.Forcommentsorinquiries,pleaseemailphinquiry@
kpmg.comorrgmarmbat@kpmg.com.
FormoreinformationonKPMGinthePhilippines,youmayvisit
www.kpmg.com.ph.