President Aquino recently issued the Tenth Regular Foreign Investment Negative List (FINL). This sets out the activities reserved to Philippine nationals. At first sight, it seems to expand the activities that foreigners can engage in.

The latest FINL excludes from the list of nationalised activities:

  • certain professions (such as engineering, accountancy, and medicine);
  • lending companies;
  • financing companies; and
  • investment houses.

In the previous FINLs, only Philippine citizens were permitted to practice the excluded professions. Lending companies could not have more than 49% foreign equity; financing companies and investment houses could not have more than 60% foreign equity.

Some saw the changes as a response to the call for a less restrictive foreign investment policy in the Philippines consistent with the move towards regional and global economic integration.

However, the changes seem to be purely cosmetic. The footnotes to the FINL explain that:

  • foreigners can practice the excluded professions if their country also allows Filipinos to practice these professions. This reciprocity rule, however, is already present in most of the laws that nationalise the excluded professions. Thus, as before, if the foreigner's country does not observe this rule, the foreigner will be barred from practicing the excluded professions;
  • lending companies are allowed up to 49% foreign equity, while financing companies and investment houses are allowed up to 60% foreign equity. Thus, as before, foreigners may not own these companies over the specified limit.

The new FINL does not introduce any other 'changes'. The other nationality restrictions (such as in landowning, public utility and mass media) remain.

To amend or remove a nationality restriction, either Congress must pass a law, or the Philippine Constitution must be amended, depending on whether the restriction was imposed by a statute or the Constitution. Presidential issuances will not be sufficient, since they can only implement the laws. While the Foreign Investments Act, which grants the President the power to issue the FINL, declares the policy of promoting foreign investments, this is only 'to the extent that foreign investment is allowed in such activity by the Constitution and relevant laws'.

Thus, unless the Constitution or the law that imposes a nationality restriction is amended, foreign investors will still need to deal with nationality restrictions in specified areas.