Business Classifications in the Philippines by foreign ownership
Table of contents
The Philippines offers multiple options for foreigners to set up their businesses in the country, with the primary categorization being on the basis of the percentage of ownership. According to an executive order by the government on the 15th of June 2022, the Twelfth Regular Foreign Investment Negative List is now in effect. This dictates business classifications in the Philippines by foreign ownership, and what percentage can be owned by foreigners.
This list includes business classifications where foreign ownership is limited due to certain articles of the constitution of the Philippines, or specific laws
No Foreign Ownership industries
- Mass media, except recording (Section 11, Article XVI of the 1987 Constitution; Presidential Memorandum dated 05 May 1994) and internet business (Department of Justice (DOJ] Opinion No. 40, S. 1998)
- The practice of professions (Section 14, Article XII of the Constitution), except in cases specifically allowed by law following the prescribed conditions stated therein (Section 1 of Republic Act (RA) No. 5181, Section 7 [i] of RA No. 8981, Title Il of Presidential Decree [PD] No. 442). The Annex on Professions below indicates:
- professions where foreigners are not allowed to practice in the Philippines, except if subject to reciprocity as provided in pertinent laws; and
- corporate practice of professions with foreign equity restrictions under pertinent laws
- Retail trade enterprises with paid-up capital of less than Php25.000.000.00 (Section 2 of RA No. 11595, amending RA No. 8762)
- Cooperatives (Chapter III, Article 26 of RA No. 6938, as amended by Chapter II, Article 10 of RA No. 9520), except investments of former natural-born citizens of the Philippines (Section 4 of RA No. 8179, amending RA No. 7042)
- Organization and operation of private detectives, watchmen, or security guards agencies (Section 4 of RA No. 5487, as amended by Section 4 of PD No. 11 and PD No. 100, s. 1973)
- Small-scale mining (Section 3 of RA No. 7076)
- Utilization of marine resources in archipelagic waters, territorial sea, and exclusive economic zone, as well as small-scale utilization of natural resources in rivers, lakes, bays, and lagoons (Section 2, Article XII of the Constitution)
- Ownership, operation, and management of cockpits (Section 5 of PD No. 449)
- Manufacture, repair, stockpiling, and/or distribution of nuclear weapons (Section 8, Article Il of the Constitution)
- Manufacture, repair, stockpiling, and/or distribution of biological, chemical, and radiological weapons and anti-personnel mines (various treaties to which the Philippines is a signatory and conventions supported by the Philippines)
- Manufacture of firecrackers and other pyrotechnic devices (Section 5 of RA No.7183)
Industries with up to 25% foreign ownership
- Private recruitment, whether for local or overseas employment (Article 27 of PD No. 442)
- Contracts for the construction of defense-related structures (Section 1 of Commonwealth Act (CA) No. 541)
Industries with up to 30% foreign ownership
- Advertising (Section 11, Article XVI of the Constitution)
Industries with up to 40% foreign ownership
- Procurement of infrastructure projects pursuant to Section 22.214.171.124(b), (c), and (e) of the Implementing Rules and Regulations (IRR) of RA NO. 9184
- Exploration, development, and utilization of natural resources (Section 2, Article XII of the Constitution)
- Ownership of private lands (Section 7, Article XII of the Constitution; Section 22 of CA No. 141, Section 4 of RA No. 9182), except for a natural-born citizen who has lost his Philippine citizenship and who has the legal capacity to enter into a contract under Philippine laws (Section 10 of RA No. 7042, as amended by Section 5 of RA No. 8179)
- Operation of public utilities (Section 11, Article XII of the Constitution;12 Section 13 of CA No. 146, as amended by Section 4 of RA No. 11659; Sections 2[a], 2[b] and 2[m] of RA No. 7718)
- Educational institutions other than those established by religious groups and mission boards, for foreign diplomatic personnel and their dependents, and other foreign temporary residents (Section 4, Article XIV of the Constitution), or for short-term high-level skills development that does not form part of the formal education system as defined in Section 20 of Batas Pambansa No. 232
- Culture, production, milling, processing, trading except retailing, of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof (Section 5 of PD No. 194), subject to a period of divestment (National Food Authority (NFA) Council Resolution No. 193, s. 1998)
- Contracts for the supply of materials, goods, and commodities to government-owned or -controlled corporations (GOCC), companies, agencies, or municipal corporations (Section 1 of RA No. 5183,17 and Section 4 of RA No. 9184)
- Operation of deep sea commercial fishing vessels (Section 27 of RA No. 8550, as amended by RA No. 10654)
- Ownership of condominium units (Section 5 of RA No. 4726)
- Private radio communications network (Section 11, Article XII of the Constitution, National Telecommunications Commission Memorandum Circular No. 10-8-91)
This list includes business classifications where foreign ownership is limited for reasons of security, defense, protection of SMEs, and risk to health and morals in the Philippines.
Industries with up to 40% foreign ownership
- Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine National Police (PNP) clearance:
- Firearms (handguns to shotguns), parts of firearms, and ammunition, therefore, instruments or implements used or intended to be used in the manufacture of firearms;
- Blasting supplies;
- Ingredients used in making explosives:
- Chlorates of potassium and sodium;
- Nitrates of ammonium, potassium, sodium barium, copper, lead, calcium, and cuprite;
- Nitric acid;
- Perchlorates of ammonium, potassium, and sodium;
- Hydrogen peroxide;
- Strontium nitrate powder;
- Toluene; and
- Telescopic sights, sniper scopes, and other similar devices.
However, the manufacture or repair of these items may be authorized by the Chief of the PNP to non-Philippine nationals; Provided that a substantial percentage of output, as determined by the said agency, is exported. Provided further that the extent of foreign equity ownership allowed shall be specified in the said authority clearance (IRR of RA No. 7042, as amended by IRR of RA No. 8179).
- Manufacture and distribution of dangerous drugs (RA No. 7042, as amended by RA No. 8179)
- Sauna and steam bathhouses, massage clinics, and other like activities are regulated by law because of risks posed to public health and morals, except wellness centers (RA No. 7042, as amended by RA No. 8179)
- All forms of gambling (RA No. 7042, as amended by RA No. 8179) except those covered by investment agreements with PAGCOR (PD No. 1869, as amended by RA No. 9487)
- Micro and small domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000 (RA No. 7042, as amended by RA No. 11647).
- Micro and small domestic market enterprises (i)that involve advanced technology as determined by the Department of Science and Technology (DOST); or (ii) are endorsed as startup or startup enablers by the lead host agencies, namely the Department of Trade and Industry, Department of Information and Communications Technology or DOST, pursuant to RA No. 11337, otherwise known as the “Innovative Startup Act;” or (iii) with a majority of their direct employees as Filipinos, but in no case shall the number of Filipino employees be less than fifteen (15), with paid-in equity capital of less than the equivalent of US$100,000 (RA No. 7042, as amended by RA No. 1164)
This list shows professions that foreigners are not allowed to practice in the Philippines. However, a foreigner may practice these professions in the Philippines if their host country allows Filipinos to do the same in their countries.
- Accountancy (Section 34 of RA No. 9298)
- Aeronautical engineering (Section 14 of PD No. 1570)
- Agricultural and biosystems engineering (Sections 15 and 31 of RA No. 10915, repealing RA No. 8559)
- Agriculture (Section 27 of Professional Regulation Commission (PRC) Resolution No. 2000-663)
- Architecture (Sections 13 and 27 of RA No. 9266)
- Chemical engineering (Section 30 of RA No. 9297)
- Chemistry (Sections 16, 18, and 34 of RA No. 10657)
- Civil engineering (Section 25 of RA No. 544, as amended by RA No. 1582)
- Criminology (Sections 14(a) and 27(b) of RA No. 11131)
- Customs brokers (Section 25 of RA No. 9280)
- Dentistry (Section 14 and 31 of RA No. 9484)
- Electrical engineering (Section 38 of RA No. 7920)
- Electronics engineering (Sections 13 and 33 of RA No. 9292)
- Electronics technician (Sections 13 and 33 of RA No. 9292)
- Environmental planning (Sections 18 and 28 of RA No. 10587)
- Fisheries profession (Section 28 of RA No. 11398)
- Food technology (Section 14(a) of RA No. 11052)
- Forestry (Sections 14 and 27 of RA No. 10690)
- Geodetic engineering (Section 26 of RA No. 8560)
- Geology (Sections 17 and 33 of RA No. 10166)
- Guidance and counseling (Sections 13 and 29 of RA No. 9258)
- Interior design (Sections 15 and 29 of RA No. 10350)
- Landscape architecture (Sections 13 and 29 of RA No. 9053)
- Librarianship (Sections 15 and 28 of RA No. 9246)
- Marine deck and engineering (Section 28 of RA No. 8544, as amended by RA No. 10635)19
- Master plumbing (Section 21 of RA No. 1378)
- Mechanical engineering (Section 39 of RA No. 8495)
- Medical technology (Section 27 of RA No. 5527, as amended by RA No. 6138, PD No. 498, and PD No. 1534)
- Medicine (Section 9 of RA No. 2382, as amended by RA No. 4224 and RA No.5946)
- Metallurgical engineering (Sections 17 and 34 of RA No. 10688)
- Midwifery (Section 22 of RA No. 7392)
- Mining engineering (Sections 15, 16, and 28 of RA No. 4274)
- Naval architecture (Sections 13 and 31 of RA No. 10698)
- Nursing (Sections 13 and 20 of RA No. 9173)
- Nutrition and dietetics (Sections 15 and 31 of RA **No.**10862)
- Optometry (Section 34 of RA No. 8050)
Any industry not specifically mentioned in the list above can have 100% foreign ownership. Some of the popular business classifications that offer complete foreign ownership in the Philippines include:
- Information and Technology
- Wholesale and Retail
- Gas Station (Construction and service)
- Steel-scale pellet-making plant
- Mining company (not valid if small-scale mining)
- Remittance Agent License & E-Money Issuer License.
- Freight forwarding company
- Auto leasing services
- Providing services to oil and gas companies like training and certification of oil and gas personnel, or inspection and testing for oil and Gas plant equipment.
- Money/Exchange and transfer company
- Charcoal factory
- Company for rice trading in the Philippines
- Railway engineering, construction, and maintenance.
- Small digital printing shop
- Financial Institution (Factoring Licenses)
- Medical clinic set up in the Philippines
- Chiropractic Clinic in the Philippines
- Marine Engineering
- Collection company
- Manufacturing Syrup from coconut plants
- Sourcing out and purchasing gold material and other minerals, and exporting out of the Philippines to other locations
- Testing and Analysis of Minerals and metals
- load port survey report (lpsr) requirements
- MLM marketing company.
- Contractor & Sub-Contractor
- Audiology Services
- Beauty Clinic
- Freight Forwarding Sea
- Freight Forwarding Air
- Crane Services and putting up Turbines
- Selling of sim cards and lines
- Piggery Business
- Visa Processing Company
The most efficient way to gauge the level of foreign ownership allowed in any industry is to have a specialist from the Philippines who could help you identify the right business classification for your company.
Emerhub assists you in registering your business in the Philippines by choosing the right company type for your business, and its foreign ownership as per the foreign investment negative list.
Ready to register your foreign business in the Philippines? Get in touch with Emerhub by filling out the form below.
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