German business group hears investor gains in new laws

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The AMENDMENTS to the economic reform laws, especially the liberalization measures, will benefit investors in the Philippines, and a trade official detailed them at a forum organized by the German-Philippine Chamber of Commerce and Industry (GPCCI) tuesday.

Atti. Ryan Romero Perez, Legal Compliance Department of Trade and Industry’s Board of Investments (DTI-BOI), noted key amendments to Republic Act 11595 or the Retail Business Liberalization Act (RTLA), RA 11647 or the Foreign Investment Act (FIA) and RA 11759 or the Civil Service Act.

Under the Retail Liberalization Act (RTLA) or RA 11595, Perez pointed out that “there are no longer any BOI pre-qualification requirements and the amendment has significantly reduced the minimum capital paid”.

According to Perez, several categorizations were previously confusing. “There was an A, B, C and D category, with different capital requirements ranging from $250,000 to $7.5 million. Now it’s only one standard 25 million pesos. So there is no more categorization.

The second key amendment, he said, is the minimum investment per store.

“So before, as you can see, it was between $250,000 and $830,000. But now it’s just a standard amount of $200,000 or 10.5 million pesos,” he said. -he adds.

Perez noted that parent company net worth has been removed and is no longer a requirement.

Meanwhile, regarding stocks, Perez said, “Also with the public equity offering in the PSE or the initial public offering, before it was 30% equity or IPO.”

BOI pre-qualification is no longer required either, he said: “you can go directly to the Securities and Exchange Commission and incorporate, register.”

However, Perez said the new law retains its promotion of products made in the Philippines.

“But the very good thing is that it’s more liberalized in the sense that investors are only encouraged to have a stock of shares,” he added.

Meanwhile, the Implementing Rules and Regulations (IRR) of the Foreign Investment Act (FIA) or RA 11647, are being drafted by the National Economic Development Authority (NEDA), the Department of Commerce and of Industry (DTI) and the Ministry of Finance. (DOF).

According to Perez, based on the timeline, the TRI will be enacted by May 2022.

The FIA ​​aims to attract more foreign investment through the creation of the Foreign Investment Promotion and Marketing Plan (FIPMP) and the relaxation of requirements for foreign investors to operate in the country.

An important amendment, according to Perez, is the creation of the 13-member Interagency Investment Promotion Coordinating Committee (IIPCC), with four representatives drawn from various chambers of industry or commerce.

Perez said the committee’s primary function is to promote or facilitate efforts to encourage foreign investment, with the DTI as the lead agency and the BOI as the secretariat.

The panel is responsible for establishing and developing a Foreign Investment Promotion and Marketing Plan (FIPMP), an online database “of local businesses that are interested in partnering with foreign investors,” Perez said.

He cited another important provision of the FIA: foreign investors or companies who can do business or invest 100% of their capital in national companies.

“So they have to first register with the [Securities and Exchange Commission] SEC as a corporation or with the DTI if it is a sole proprietorship,” Perez said.

For foreign exporting companies, “there is a requirement on their export sales, which is that at least 60% of their total production must be exported”.

The Public Service Amendment Act (PSA) or RA 11659 transfers regulatory powers from the Public Service Commission, which has been abolished, to several administrative agencies.

Another important amendment is “the removal of restrictions on foreign capital on most public services, with the exception of two cases for public services as defined by law and critical infrastructure”, Perez said.

“Thus, all other public services not defined as being of public utility are now subject to more than 40% participation,” he explained.

Perez explained the definition and enumeration of public services: “So it’s all concessionaires, joint ventures, entities providing public services that operate, manage, control public use.”

The six utilities are: Electricity Distribution, Electricity Transmission, Petroleum and Petroleum Products, Pipeline Transmission Systems, Pipeline Water Distribution Systems and Sewerage Pipeline Systems, seaports and public service vehicles.

Under the critical infrastructure reciprocity clause, Perez said: “Foreign nationals are permitted to own more than 50% of the capital of entities engaged in capital infrastructure, provided that the country of such financing grants reciprocal rights to Filipinos abroad.”

But “if there is no reciprocity, foreign nationals are only allowed up to 50% of the capital”.

He said the list of utilities can only be expanded by the inclusion of other utilities upon NEDA’s recommendation to the president and the president’s recommendation to Congress.

The GPCCI belongs to the international network of German Chambers of Commerce Abroad, or AHK, represented by 140 offices in 92 countries. GPCCI is the official representation of German companies in the Philippines, which is a bilateral organization with approximately 300 members, as well as a service provider for companies in their market entry and expansion.

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