WT/TPR/S/261/Rev.2 Trade Policy Review 
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  II. TRADE AND INVESTMENT REGIMES 
(1) TRADE POLICY OBJECTIVES , LAWS AND IMPLEMENTATION  
1. The institutional framework for formulating an d implementing trade policy in the Philippines 
remains largely the same as at the time of its previous Review.1  For the most part, trade-related 
policies are set out in laws enacted through the regul ar parliamentary process:  these laws often give 
either the President or the responsible Secretary (i.e. Minister) authority for specific trade-related 
matters, including the formulati on of implementing regulations. 
2. The National Economic and Development Aut hority (NEDA), the Philippines' economic 
development and planning agency, consists of the NEDA Board, wh ich sets major policy directions 
for the Philippines, and the NEDA Secretariat, the Board's research and technical support arm.  The 
NEDA Board is chaired by the President and mainly comprises selected Secretaries.2  The Department 
of Trade and Industry (DTI) remains the Government's  main regulatory body for trade, industry, and 
investment activities.  The DTI chairs the Cabi net Committee on Tariff and Related Matters (CTRM), 
as well as the Technical Committee on WTO Matters (TCWM).  Other agencies have trade-related 
responsibilities, in particular the Department of Fina nce and Department of Agriculture (Table II.1).   
Table II.1 
Main institutions involved in trade po licy formulation and implementation, 2011 
Department/organization Trade-related functions 
National Economic and Development 
Authority (NEDA) Responsible for formulation of social and ec onomic policies, plans, and programmes.  The 
NEDA Board is chaired by the President and largely comprises Cabinet members.  It is 
supported by 7 Cabinet-level inter-agency committees, including the Committee on Tariff 
and Related Matters (below) 
Committee on Tariff and Related Matters 
(CTRM)  Inter-agency body, chaired by the DTI, charged with advising the President and the NEDA 
Board on tariff-related matters and on the eff ects on the country of various international 
developments; coordinates agency positi ons and recommends national positions for 
international economic negotiations 
Technical Committee on WTO Matters 
(TCWM)  Government inter-agency body under the CTRM, ch aired by the DTI.  It recommends to 
the CTRM Philippine positions and strategies re levant to the country's implementation of 
its WTO commitments and continuing participa tion in the multilateral trading system.  It 
has 15 member agencies.  Four sub-committees on (a) agriculture, (b) industrial tariffs, 
(c) services, and (d) other rules and discip lines are responsible for WTO implementation 
issues 
Tariff commission Investigative and research functions related to  the effects of tariff legislation and tariff 
relations between the Philippines and third countries.  Recommends tariff revisions.  
Conducts formal anti-dumping, counterva iling and safeguard i nvestigations and 
recommends definitive measures.  Undertakes  investigations on petitions to change duty 
rates and duty classification.  I ssues tariff classification rulings 
Department of Trade and Industry  Trade and industrial policies 
Board of Investments Regulation and pr omotion of investments in the Philippi nes.  Responsible for preparing the 
annual Investment Priorities Plan.  Promulga tes rules and regulations to implement the 
provisions of the Omnibus Investments C ode.  Administers investment incentives 
Table II.1 (cont'd)
                                                      
1 The only changes are the creation of an Accred itation Office in 2006, and the termination of the 
Garments and Textile Export Board, in 2005, which used to administer export quotas. 
2 NEDA online information.  Viewed at:  http://www.neda.gov.ph. The Philippines WT/TPR/S/261/Rev.2 
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  Department/organization Trade-related functions 
Bureau of Export Trade Promotion Export promotion.  Also provides secretariat support to the Export Development Council, 
a Government and private-sector partners hip with responsibilities for export policies 
(under the Office of the President) 
Bureau of International Trade Relations Trade representation abroad, trade inform ation and export promotion;  conduct of 
Philippine trade and investment relations at  bilateral, regional, and multilateral level 
Bureau of Import Services Administration of import regula tions on selected items. Initiates and conducts preliminary 
investigations on dumping, countervailing and safeguard petitions to ascertain whether to 
impose provisional measures.  Responsible for receiving the Tariff Commission's report 
from its formal investigation;  takes d ecisions on imposition of definitive measures 
Bureau of Product Standards (BPS) Development and im plementation of standards and technical regulations 
Philippine Accreditation Office Responsib le for the accreditation functions of th e BPS Accreditation Scheme  and the 
BPS Laboratory Accreditation Scheme.  Gi ves formal recognition to conformity 
assessment bodies after assessing their competen ce to carry out certif ication, inspection, 
testing, and calibration services 
Bureau of Trade Regulation and Consumer 
Protection Consumer protection and regulation of internal trade  
Philippine International Trading Corporation Trade and trade-related services to the private sector.  Imports various commoditi es and 
products to stabilize supply and prices in the domestic market 
Intellectual Property Office Admi nistration and implementation of the Intellectual Property Code 
Office of Policy Research Assists the DTI in coordinati ng and formulating general tr ade and industry policies.  
Provides technical support in the areas of polic y research, preparation of official positions 
on policy issues, and legislative proposals.  Coordinates with other government agencies 
and the private sector to en sure consistency in policies 
Department of Finance Formulation and implementa tion of fiscal policies 
Bureau of Customs Collection of import/e xport duties, and VAT and excise taxes 
Department of Agriculture Agricultural policies 
Bureau of Plant Industry Plant protection, quarantine, and inspection services 
Bureau of Animal Industry  Administration of  animal quarantine and inspection services 
Bureau of Fisheries and Aquatic Resources Administ ration of fish quarantine and inspection services 
Bureau of Agricultural and Fisheries Product 
Standards Development of standards and technical regulations 
National Food Authority  Administration of rice pr ice stabilization programme and imports of rice 
Sugar Regulatory Administration Monitoring of suga r supply and administration of sugar export quotas 
Department of Tourism  Policy formulation and promotion of the tourism industry 
Central Bank of the Philippines Monetary and exchange rate policy 
 
Source: WTO Secretariat, based on various Departments' online information. 
3. As indicated by the authorities, all agencies and inter-agency bodies have contact points for 
non-governmental stakeholder inputs into the trade-policy-making process.  Under the Tariff and Customs Code of the Philippines, the Tariff Commi ssion is mandated to c onduct public hearings on 
proposed tariff modifications and accession to trade agreements.
3  In addition, private-sector and/or 
NGO participation is institutionalized within the TCWM's subcommittees on agriculture, services,  
industrial tariffs, and other rules and disciplines.   
4. In May 2011 the DTI launched a One Count ry, One Voice advocacy and consultation 
mechanism to enable stakeholders to participate in  trade-policy formulation and trade negotiations.   
5. Procedures for the negotiation, ratification, and entry into force of international agreements 
are set out in the Department of Foreign Affairs (DFA) Office of Legal Affairs (OLA) 
                                                      
3 Tariff and Customs Code of the Philippines (as amended), sections 401 and 402.  Viewed at:  
http://www.chanrobles.com/ republicactno1937bo ok1.htm#BOOK%201, %20TITLE%202. WT/TPR/S/261/Rev.2 Trade Policy Review 
Page 14 
  
  Circular No. 01-07.  Presidential authorization mu st be obtained prior to any negotiations:  this 
authorization, inter alia , establishes negotiating position parame ters.  Generally negotiations are 
conducted by the DFA, which is responsible for c oordinating with other relevant agencies, obtaining 
the President's signature, and preparing for Senate ratification if needed.  Domestic ratification is 
required in all cases except for agreements that impl ement existing agreements as well as foreign loan 
agreements.  International agreements enter in to force fully only upon compliance with domestic 
ratification requirements.  The authorities indicated th at if treaties are found to be in conflict with one 
another, the Philippines would seek to reconcile th em by renegotiating or am ending the earlier treaty 
(it is presumed that the newer treaty contains current  Philippine policy).  If this is not possible, one of 
the treaties would be terminated or suspended in  accordance with the Vienna  Convention on the Law 
of Treaties (Articles 30 and 59).   
(2) TRADE AGREEMENTS AND ARRANGEMENTS  
(i) Participation in the WTO 
6. The Philippines, an original member of the WTO,  grants at least MFN treatment to all trading 
partners.  It is participant in the WTO Informa tion Technology Agreement (ITA) and signatory to the 
GATS protocols on telecommunicati ons (Fourth Protocol) and Financ ial Services (Fifth Protocol), 
which entered into force in 2006 and 2011, respectivel y.  It is not a signatory to the Plurilateral 
Agreement on Government Procurement (G PA) or on Trade in Civil Aircraft. 
7. Since 1995 the Philippines has been involved in  five dispute settlement cases as complainant 
and six as respondent.4  Over the review period, new dispute settlement cases in which the Philippines 
has been involved directly relate to ci garettes and distilled spirits (Table II.2). 
Table II.2 
Philippines' involvement in WTO dispute se ttlement:  new cases, 2005 to July 2011 
Dispute Raised 
by/against Request for 
consultation Panel established Appeal/ 
implementation Document 
series 
Complaints by the Philippines 
Customs and fiscal measures on cigarettes from the Philippines Thailand 
 7 February 2008 17 November 2008.  
Panel report 
circulated: 15 November 2010 Appellate Body 
Report circulated 
17 June 2011 DS371 
Complaints against the Philippines 
Taxes on distilled spirits United Sates 
 14 January 2010 20 April 2010  (was 
agreed that the panel 
established under 
DS396 would also examine the US 
complaint)  DS403 
Table II.2 (cont'd) 
                                                      
4 The five cases in which the Philippines was complainant involved:  Thailand, customs and fiscal 
measures on cigarettes (DS 371);  Au stralia, measures affecting the import ation of fresh pineapple (DS271);  
Australia, measures affecting the importation of fresh fruit and vegetables (DS 270);  United States, import 
prohibition of certain shrimp and shri mp products (DS61);  and Brazil, m easures affecting desiccated coconut 
(DS22).  The six cases in which it was respondent involve d:  United States, taxes on distilled spirits (DS403);  
European Union, taxes on distilled spirits (DS396);  Korea, anti-dumping measures regarding polypropylene 
resins (DS215);  United States, measur es affecting trade and investment in the motor vehicle s ector (DS195);  
United States, measures affecting pork and poultry (DS102 and DS74).   The Philippines WT/TPR/S/261/Rev.2 
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  Dispute Raised 
by/against Request for 
consultation Panel established Appeal/ 
implementation Document 
series 
Taxes on distilled spirits EU 29 July  2009 19 January 2010 Panel report 
circulated:  
15 August 2011 
Panel report is under appeal DS396 
Philippine participation as a third party 
Tariff treatment of certain 
information technology products Chinese Taipei / 
EU 
 12 June 2008 23 September 2008 
(joint request for 
establishment of 
panel) Panel reports 
circulated:  
16 August 2010 DS377 
 Japan / EU 28 May 2008   DS376 
 United Sates / 
EU 28 May 2008   DS375 
 
Source : WTO Secretariat. 
8. The Philippines has maintained a strong record  on notifications to the WTO.  However, 
notifications are lagging with respect to agricult ure (special safeguard, domestic support, export 
subsidies and tariff quotas (see Chapter IV)), subsid ies and countervailing measures, and state-trading 
activities.  Since 2005, the Philippines has not notif ied any TBT-relevant b ilateral or plurilateral 
agreements or any preferential or non-preferential ru les of origin.  The authorities indicated that there 
have not been "any new, or any changes to exis ting laws, regulations or administrative guidelines, 
which significantly affect trade in services", which the Philippines is obliged to notify under 
Article III:3 of the GATS (Table AII.1). 
9. At the Hong Kong, China and Geneva Minist erial Conferences, the Philippines emphasized 
the development dimension of the Doha Development Agenda (DDA).  It has, inter alia , stressed the 
need for agricultural reform;  progress on implementa tion issues;  and the importance of special and 
differential treatment for developing countries.  It has indicated its support for the request-offer 
modality for services negotiations and the need for progress on the rule-making aspects of these 
negotiations.  It has also expressed its preference for a voluntary system for the notification and registration of GI protection, and does not support the extension of such protection to other products.
5 
10. With respect to the DDA negotiations, the Philippines has, over the review period, 
contributed comments and textual suggestions to th e trade facilitation Draft Consolidated Negotiating 
Text, focusing on transitional provisions for deve loping and least developed country Members as well 
as institutional arrangements.6  It has cosponsored proposals in the Negotiating Group on Market 
Access on procedures for the facilitation of solutions  to non-tariff barriers as well as on international 
standardization.7  It has made joint proposals with NAMA-11 countries setting out its position,  
inter  alia, on the formula for tariff liberalization, tariff bindings, and the need to ensure a balance in 
the outcomes of the NAMA and agricultural negotiations.8  Together with other developing countries 
it has also submitted a communication to the Counc il for Trade in Services on the categories of 
                                                      
5 Philippines' statements to the 2005 and 2009 WTO Ministerial Conferences, WTO documents 
WT/MIN(05)/ST/107, 16 December 2005;  and WT/MIN/(09)/ST/77, 2 December 2009. 
6 WTO document TN/TF/W/167, 6 January 2010.  
7 WTO documents TN/MA/W/88, 23 July 2007 and TN/MA/W/142, 13 April 2011. 
8 WTO documents TN/MA/W/87, 19 June 2007;  TN/MA/W/86, 8 June 2007;  and, TN/MA/W/79, 
6 July 2006;  TN/MA/W/68/Add.1, 8 May 2006;  and TN/MA/W/68, 30 March 2006.  The NAMA-11 Group 
consists of:  Argentina, the Bolivarian Republic of Venezuela, Brazil, Egypt, India, Indonesia, Namibia, 
Philippines, South Africa, and Tunisia. WT/TPR/S/261/Rev.2 Trade Policy Review 
Page 16 
  
  natural persons for commitments under GATS mode 4.9  The Philippines has been active in the 
Committee on Trade and Environment in Special Session (CTESS). 
(ii) Regional and bilateral free trade agreements 
11. The Philippines is a founding member of the Association of Southeast Asian Nations 
(ASEAN).  ASEAN's main focus is on establishing an ASEAN Community by 2015.  This comprises 
three pillars:  political-security, socio-cultural, a nd economic.  A blueprint agreed in 2006, sets out 
targets and timelines for advancing the economic  pillar (the ASEAN Economic Community (AEC)) 
by the 2015 deadline.  Four overarching goals were identified in this blueprint:  (i) to achieve an 
ASEAN single market and production base through th e free flow of goods, services, investment, and 
skilled labour as well as the freer flow of capital.  Twelve sectors were identified as priorities for 
integration10, and emphasis is placed on enhancing tr ade in, and the competitiveness of, ASEAN's 
food, agriculture, and forestry products;  ( ii) to enhance the ASEAN competitiveness through 
measures relating to competition policy, consumer pr otection, infrastructure development, taxation, 
and e-commerce;  (iii) to promote the equita ble economic development of ASEAN members by 
supporting small and medium-sized enterprises (SMEs) as well as technical and development 
cooperation;  and (iv) integration into the gl obal economy, to be achieved through a coherent 
approach towards external economic relations and en hanced participation in global supply networks.11   
12. Progress in achieving the free movement of goods aspect of the ASEAN Economic 
Community has been largely achieved.  Attenti on is now focused on  non-tariff barriers and trade 
facilitation measures. 
13. In 2008, the Agreement on the Common Effec tive Preferential Tariff Scheme for the ASEAN 
Free Trade Area (CEPT-AFTA) was reviewed and enhanced into a more comprehensive legal instrument, the ASEAN Trade in Goods Agreement (ATIGA), signed in  February 2009.  The ATIGA 
preserves, consolidates, and streamlines all the provisions in the CEPT-AFTA, formalizes several 
Ministerial decisions, and incorporates new disciplines (Table II.3).
12   
14. ASEAN Members have been active in concluding free-trade agreements within the 
Asia-Pacific region.  Over the re view period, new ASEAN FTAs entered into force with Australia and 
New Zealand, China (services), India, Japan, and, Ko rea;  and a bilateral agreement entered into force 
between the Philippines and Japan (Table II.3)13.  ASEAN FTA negotiations are on-going with the 
European Union.  
                                                      
9 WTO document TN/S/W/31, 18 February 2005. 
10 These priority sectors are:  electronics, e-ASEA N, healthcare, wood-based  products, automotives, 
rubber-based products, textiles and apparel, agri-based products, fisheries, air travel, tourism, and logistics 
services (logistics services was adde d as a priority sector in 2007).  
11 For greater detail on specific measures and timeframes, see ASEAN (2008).  
12 The authorities note that these new disciplines include:  negotiated MFN treatment;  the 
establishment of an ASEAN Trade Repository;  a dedicat ed chapter on trade facilitation, issuance of legal 
enactments in a timely manner, and streamlined and unified provisions on modification of concessions and trade 
remedies. 
13 Two of these agreements have been considered  by WTO Members:  the ASEAN FTA with China 
(factual abstract and a presentation on services) and the bilateral FTA between the Philippines and Japan 
(factual presentation).  The Philippines WT/TPR/S/261/Rev.2 
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  Table II.3 
Overview of participation in FTAs, 2011 
ASEAN Members 
Title ASEAN Trade in Goods Agreement (ATIGA) 
Parties Brunei Darussalam, Cambodi a,  Indonesia, Lao PDR, Malays ia, Myanmar, the Philippines, 
Singapore, Thailand, and Viet Nam  
Date of signature/entry into force  Janua ry 1992/January 1992 (CEPT-AFTA), May 2010 (ATIGA) 
Transition for full implementation 
(goods) Transition period ended in 2010;   99.5% tariff lines are duty free;  of the 44 lines still 
attracting tariffs, the highest rates are applied to rice 
Services covered Yes, under the ASEAN Framewor k Agreement on Services (AFAS) (Table IV.4) 
Philippines merchandise trade with 
ASEAN (2010) 28.1% of total imports;  22.4 of total exports 
Main trading partners:  
Singapore:  9.3 % of total imports;  14.2% of total exports 
Thailand:  7.0 % of total imports;  3.5% of total exports 
Selected additional measures relating to 
the free movement of goods under the 
AEC Blueprint Elimination of non-tariff barrier s (by 2012 for the Philippines);  rules of origin reform;  trade 
facilitation measures;  customs integration;  ASEAN Single Window;  and  harmonization of 
standards, technical regulations, and conformity assessment procedures  
WTO document series L/4581 
ASEAN Members, Australia and New Zealand 
Title Agreement Establishing the ASEAN- Australia-New Zealand Free Trade Area 
Parties ASEAN, Australia, New Zealand 
Date of signature/entry into force  February 2009/January 2010  
Transition for full implementation by 
Philippines(goods) From 2020 (95.9 %) of tariff lines  will be duty free;  of the  (337) of lines still attracting 
tariffs at the end of the transition period,  the highest rates will be applied to corn 
Services covered Yes (Table IV.4) 
Philippines merchandise trade with 
Australia and New Zealand (2010) Australia:  1.5% of total imports;  0.7 % of total exports 
New Zealand:  0.7 % of total imports;  0.1 % of total exports 
WTO document series WT/REG284 
ASEAN members countries and China 
Title Framework Agreement on Comprehensive Economic Cooperation between ASEAN and the 
People's Republic of China 
Parties ASEAN, China 
Date of signature/entry into force Goods :  November 2004 (amended 2010)/January 2005 
Services:  January 2007/July 2007 
Transition for full implementation by 
Philippines (goods) 2018 
Tariffs for lines in the Normal Track to be eliminated by 2012  
(7,693 lines or 86.96% of the Philippines tariff) Tariffs in the Sensitive Track (931 tariff lines) ar e to be reduced to between zero and 5% by 
January 2018; 
Tariffs listed as highly sensitive (250 tariff lines) are to be reduced to not more than 50% by 
January 2015. 
28 tariff lines are excluded from reduction commitments 
 
Services covered Yes (Table IV.4) 
Philippines merchandise trade with 
China (2010) 8.5% of total imports;  11.1% of total exports 
WTO document series WTO/COMTD/N/20;  S/C/N/463;  WT/COMTD/51 
ASEAN member countries and India 
Title Agreement on Trade in Goods (falling unde r the Framework Agreement on Comprehensive 
Economic Cooperation between ASEAN and th e Republic of India, 2003, as amended 
in 2009) 
Table II.3 (cont'd)  WT/TPR/S/261/Rev.2 Trade Policy Review 
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  Parties ASEAN, India 
Date of signature/entry in to force August 2009/May 2011  
Transition for full implementation by 
Philippines (goods) From 2022 87.5% of tariff lines will be duty free;   of the 959 lines still attracting tariffs at 
the end of the transition period, the highest rate s will be applied to meat or preserved or 
prepared meat of swine, turk ey, and geese; onions;  sweet pot atoes;  cabbages;  and coffee 
Services covered No 
Philippines  merchandise trade with 
India (2010) 1.0% of total imports;  0.8% of total exports 
WTO document series WT/COMTD/N/35 
ASEAN member countries and Japan 
Title Agreement on Comprehensive Economic Partnership Among Japan and Member States of 
ASEAN 
Parties ASEAN, Japan 
Date of signature/entry into force March 2008/December 2008 
Transition for full implementation by 
the Philippines (goods) From 2018 97.1% of tariff lines will be duty free;   of the 337 lines still attracting tariffs at 
the end of the transition period, the highest rates will be applied to moto r vehicles other than 
passenger cars 
Services covered No 
Philippines merchandise trade with 
Japan (2010) 12.5% of total imports;  15.2% of total exports 
WTO document series WT/REG277 
ASEAN member countries and Korea 
Title Agreement on Trade in Goods (fa lling under the 2005 Framework Agreement on 
Comprehensive Economic Cooperation among the Governments of the Republic of Korea 
and ASEAN) 
Parties ASEAN, Korea 
Date of signature/entry into force Goods:  2006/2008 
Services:  2008/2009 
Transition for full implementation by 
Philippines (goods) 2016 
Tariffs for tariff lines in the Normal Track to be eliminated by 2012  (7564 lines or 90.8% of the Philippines tariff) 
Tariffs in the Sensitive Track (558 tariff lines) ar e to be reduced to between zero and 5% by 
January 2016; 
Tariffs listed as highly sensitive (95 tariff lines ) to be capped at 50%;  reduced by 50%, or 
reduced by 20% by 2016. 
152 tariff lines exempt from tariff reductions 
Services covered Yes (Table IV.4) 
Philippines  merchandise trade with 
Korea (2010) 6.9% of total imports;  4.4% of total exports 
WTO document series WT/REG287/N/1;  WT /COMTD/N/33;  S/C/N/559;  S/C/N/560 
Japan and the Philippines 
Title Agreement between Japan and the Republic of the Philippines for an Economic Partnership 
Parties Japan, Philippines 
Date of signature/entry into force September 2006/December 2008 
Transition for full implementation 
(goods) 2018 
From 2018 98.6% of tariff lines will be duty free;   of the 115 lines still attracting tariffs at 
the end of the transition period, the highest rates will be applied to vegetable products 
(47.2%) 
Table II.3 (cont'd) 
 The Philippines WT/TPR/S/261/Rev.2 
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  Services covered Yes (Table IV.4) 
Philippines merchandise trade with 
Japan (2010) 12.5% of total imports;  15.2% of total exports 
WTO document series WT/REG257 
 
Note: Figures on transition periods for full implementation have been provided by the au thorities.  All figures are at the HS 8 -digit 
 level, and exclude in-quota tariff lines.  
Source: WTO Secretariat. 
(iii) Other agreements 
15. The Philippines participates in  intergovernmental arrangement s for dialogue and cooperation 
with other Pacific Rim countries through the As ia Pacific Economic Cooperation (APEC) forum, and 
with Europe through the Asia-Europe Meeting (ASEM).14   
16. APEC trade- and investment-related initiatives over the review period have included:  the 
second Trade Facilitation Action Plan (TFAP II), whic h calls for the reduction of transaction costs by 
5% over the period 2007-10;  a Strategic Window  Plan (2007), which provides a series of 
recommendations to assist member economies to develop single-window systems for trade transactions, with a longer term view of achieving interoperability between these systems within the 
region;  and an Investment Facilitation Action Plan (2008).
15  In pursuance of the goals of these 
initiatives, the Philippines has taken steps to improv e the transparency of its trade and investment 
regimes, participated in APEC conformity assessmen t arrangements, and issued rules and guidelines 
to facilitate e-commerce. 
17. The Philippines is a beneficiary of the GSP schemes of:  Belarus, Canada, the European 
Union, Japan, Norway, the Russian Federation,  Switzerland, Turkey and, the United States.16  
The Philippines has ratified and acceded to the Global System of Trade Preferences.17 
(3) FOREIGN INVESTMENT REGIME AND BUSINESS FRAMEWORK  
18. In spite of the Government's concern about th e Philippines sub-optimal record of attracting 
investment, compared with other ASEAN countries, and its determina tion to change this situation, 
there remain extensive constitutional and st atutory limitations on foreign investment.18  This largely 
                                                      
14 APEC members are:  Australia;  Brunei Darussalam;  Canada;  Chile;  China;  Hong Kong, China;  
Indonesia;  Japan;  Republic of Korea;  Malaysia;  Mexico;  New Zealand;  Papua New Guinea;  the Philippines;  
Russia;  Singapore;  Chinese Taipei;  Thailand;  and the United States.   
ASEM Members are:  Australia;  Austria;  Belgium;  Brunei Darussalam;  Bulgaria;  Cambodia;  
China;  Cyprus;  Czech Republic;  Denmar k;  Estonia;  Finland;  France;  Germany;  Greece;  Hungary;  India;  
Indonesia;  Ireland;  Greece;  Hungary;  India;  Indo nesia;  Ireland;  Italy;  Japan;   Republic of Korea;  Laos;  
Latvia;  Lithuania;  Luxembourg;  Malaysia;  Malta;  Mo ngolia;  Myanmar;  the Netherlands;  New Zealand;  
Pakistan;  the Philippines;  Poland;  Portugal;  Romania;  Russia;  Singapore;  Slovakia;  Slovenia;  Spain;  
Sweden;  Thailand;  United Kingdom;  and Viet Nam.   
15 APEC online information.  Viewed at:  http://www.apec.org/en/A bout-Us/About-APEC/ 
Achievements-and-Benefits.aspx. 
16 UNCTAD online information.  Viewed at:  http://www.unctad.org/en/docs/itcdtsbmisc 
62rev4_en.pdf. 
17 UNCTAD online information.  Viewed at:  http://www.unctadxi.org/temp lates/Pages1879.aspx. 
18 The DTI has reported that the investment rate in the Philippines is among the lowest in ASEAN (see:  
http://www.dti.gov.ph/uploads/Downl oadableForms/ComPLAN%202010%2020 (portrait)_for%2 0WEB.pdf).  WT/TPR/S/261/Rev.2 Trade Policy Review 
Page 20 
  
  reflects the situation prevalent at the time of the last Review of the Philippines.  The authorities 
confirmed that there have been no concrete initiatives to relax or remove any of these restrictions.   
19. The main laws regulating foreign investment  in the Philippines remain the 1991 Foreign 
Investments Act (FIA), as amended by Republic Act 8179, the Omnibus Investment Code (OIC) and 
their respective implementing regulations.19  There have been no changes to these acts or regulations 
over the review period. 
20. The FIA provides for the formulation of a Fore ign Investment Negative List (FINL), which 
enumerates economic activities in which foreign equity is either prohibited or limited to a certain 
percentage.  The FINL has a List A and a List B.   List A sets out the areas of activity reserved to 
Philippine nationals under the Constitution and specific laws.  List B contains areas of activity and 
enterprises where foreign ownership is regulated fo r reasons of national security, defence, risk to 
health and morals, and protection of small and medium-sized enterprises (SMEs).  List A includes:  
mass media;  practice of professions;  retail trade enterprises with paid up capital of less than US$2.5 million;  cooperatives;  small-scale mining;  private radio communications networks;  recruitment;  contracts for locally funded public work s;  advertising;  exploration and utilization of 
natural resources;  land ow nership;  public utilities
20;  educational institutions;  the rice industry;  
government procurement;  deep sea fishing;  financing companies, and investment houses (Table AII.2). 
21. Since the last Review of the Philippines, the FI NL has been amended so that the practice of 
"guidance counselling" is now limited to Filipin o citizens.  Investments in gambling are now 
permitted but only if they are covered by investment  agreements with the Philippine Amusement and 
Gaming Corporation (PAGCOR) operating within special economic zones administered by the 
Philippine Economic Zone Authority.
21  In addition, use of marine resources has been extended to 
include small-scale use of natural resour ces in rivers, lakes, bays, and lagoons. 
22. Under the Lending Company Regulation Act of 2007, foreign-owned voting stock in lending 
companies is limited to 49%.  The percentage of  voting stock must reflect the citizenship of 
stockholders, whether individual or corporate invest ors.  In the case of corporate investors, the 
                                                                                                                                                                     
The President, in his 2010 State of the Nation Address, pledged to boost investment.  Viewed at:   
http://www.gov.ph/2010/07/26/state-of-the-n ation-address-2010-en /comment-page-2/. 
19 The OIC sets out the responsibilities of the Board of Investments (BOI); investment incentives;  the 
rights of investors relating to repatriation of investme nts;  remittances;  and investor rights relating to 
expropriation and requisition of investments.  The FIA sets out registration requirements; contains a list of investment areas reserved to Philippine nationals (FINL) ;  and sets out how this may be amended.  The FIA's 
provisions do not apply to financial services.   
20 FDI restrictions on public utilities are set out in Article XII Section 11 of the 1987 Philippine 
Constitution.  These are elaborated on in the Commonwealth Act No. 146 (as amended), Section 13(b) 
(otherwise known as the Public Servi ce Act).  This states that the term "public service" includes every person 
that now or hereafter may own, operate, manage or control in the Philippines…any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, e ither for freight or passenger, or both with or without 
fixed route and whatever may be its classification, frei ght or carrier service of an y class, express service, 
steamboat, or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shiphyard, marine railway, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, 
canal, irrigation system, wire or wireless communication system, wire or wireless broadcasting stations and 
other similar public services. 
21 The change with respect to gambling was based on the recommendation of PAGCOR, which was of 
the view that it would help attract more foreign investment in gaming activities under its supervision and 
contribute to increased government revenue.   The Philippines WT/TPR/S/261/Rev.2 
 Page 21 
 
 
  percentage of voting stock must reflect the c itizenship of the individual stockholders in the 
corporation.  Foreign nationals are only allowed to own voting stoc k if their country of nationality 
accords reciprocal rights to Filipinos with respect to  lending companies within their jurisdictions.  The 
authorities noted that this provision has yet to be added to the FINL.   
23. For activities not included in the FINL, full fore ign ownership is permitted, including foreign 
investment in export enterprises (those which export 60% or more of their output).  Companies must be registered, but prior authorization is not requi red.  Small and medium-sized domestic market 
enterprises with paid-in equity capita l of less than the peso equivalent of US$200,000 are reserved to 
Philippine nationals.  However a minimum pa id-in capital of US$100,000 is allowed to 
non-Philippine nationals if companies involve adva nced technology as determined by the Department 
of Science and Technology;  or, if they employ at least 50 direct Filipino employees. 
24. During its previous Review, the Philippines w as urged by some Members to relax these 
foreign investment barriers.  In particular it was suggested that the Philippines might consider 
reducing the paid-up capital requirement for 1 00% foreign-owned retail trade enterprises from 
US$2.5 million to US$200,000;  and, removing the 40% foreign equity limitation for private land 
ownership.
22   
25. The Philippines offers an array of investment incentives, administered by the respective IPAs 
for listed activities within the annua l Investment Priority Plan (IPP) (Chapter III(3)(i)).  Foreign 
industry associations have urged the Government to rationalize these incentives and the Government 
is also cognizant of the need to re-evaluate them.23  The authorities reported that a Bill has been 
passed by the House of Representativ es to integrate and consolidate the country's various investment 
and incentive measures under one law and th ereby to provide consistent policies.24  As at November 
2011, this Bill was under consideration in the Senate.  
26. There are investment provisions in several of  the Philippines' FTAs or economic cooperation 
agreements.  Negotiations to elaborate investment rules are in train between ASEAN and India, and 
ASEAN and Japan.25  The ASEAN-India Investment Agreement negotiations are expected to be 
concluded by end 2011, while those with Japan are still in their early stages.  The Philippines has 
concluded three new bilateral investment treaties over the review period, with Japan, Syria, and 
Turkey (Table II.4).   
                                                      
22 WTO document WT/TPR/M/149/Add.1, 17 August 2005.  In this document it is noted by the 
Philippines that despite the 40% foreign equity limitation for private land ownership, Republic Act 7652 (The 
Investor's Lease Act) allows foreigners to lease lands for an initial period of 50 years with the possibility of 
extension for an additional 25 years, subject to conditions.  For tourism projects, private land may only be leased to foreigners for investments of a minimum of US$5 million. 
23 See Statement by the Foreign Chambers of Commerce of the Philippines on the Proposed 
Rationalization of Fiscal Incentives Legislation submitted to the House Ways and Means Committee on November 20, 2007.  Viewed at:  http://www.jccipi.com. ph/0710-2.pdf;  and the President's State of the Union 
address 2010. 
24 House Bill 4935, The Investments and Incentives Code of the Philippines. 
25 ASEAN-India Framework Agreement on Comprehensive Economic Cooperation (2003) (Article 5).  
Viewed at:  http://www.asean.org/15278.htm;  Agreement on Comprehensive Economic Partnership among 
Japan and Member States of ASEAN (Article 51).  Viewed at:  http://www.mofa.go.jp/policy/economy/ 
fta/asean/agreement.pdf;  Framework Agreement on Comprehensive Economic Cooperation among the 
Governments of the Republic of Korea and ASEAN (Ar ticle 2.3).  Viewed at:  http://www.fta.go.kr/pds/ 
fta_korea/asean/20 100413_asean.pdf. WT/TPR/S/261/Rev.2 Trade Policy Review 
Page 22 
  
  27. The aforementioned investment agreements c ontain provisions on investor-state dispute 
settlement.  The investor has the option to submit the dispute through the Philippines national court 
system or to an international arbitration body.   
28. The Board of Investments (BOI) and 12 investment promotion agencies (IPAs) are charged 
with developing investment promotion strategies.  Collectively the IPAs have produced a Philippines 
Investment Promotion Plan (PIPP) (2010-14).26  Under the Plan, promotion activities are to be 
focused on sectors that have already been shown to be viable (business process outsourcing (BPO);  
electronics/semi-conductors;  and energy/electricity ) as well as sectors identified as offering future 
potential (agri-industry, logistics, mining, shipbuilding, and tourism) (Chapter IV). 
Table II.4 
Philippines' participation in investme nt-related agreemen ts, November 2011  
Free-trade agreements containing investment provisions and in vestment agreements falling within the context of economic 
cooperation agreements  
Framework Agreement on the ASEAN Investment Area (AIA);  AS EAN-Australia-New Zealand FTA (Chapter 11);  Agreement on 
Investment of the Framework Agreement on Comprehensive Ec onomic Cooperation between ASEAN and the People's Republic of 
China;  ASEAN-Korea Investment Agreement;  and Agreement be tween Japan and the Republic of the Philippines for an Economic 
Partnership (Chapter 8) 
 
Bilateral investment treaties  
In force (date of entry into force):   Argentina (2002);  Australia (1995);  Austria (2003);  Bahrain (2002);  Bangladesh (1998);  Belgium 
and Luxembourg (2003);  Cambodia (2001);  Canada (1996);  Chile (1997);  China (1995);  Czech  Republic (1996);  Denmark (1998);   
Finland (1999);  France (1996);  Germany (2000);  India (2001);  Indonesia (2002);  Italy (1994);  Iran (2002);  Japan (2008);  Republic 
of Korea (1996);  Kuwait (2000);  Mongolia (2001);  Myanmar (1998);  Netherlands (1987);  Pakistan (2000);  Portugal (2003);  R omania 
(1998);  Russian Federation (1998);  Kingdom of Saudi Arabia ( 1996);  Spain (1994);  Switzerland (1999);  Syria (2010);  Chines e Taipei 
(1992);  Thailand (1996);  Turkey (2009);  United Kingdo m (1981);  Venezuela (2000);  and Viet Nam (1993) 
Concluded or signed but not yet in force:  Equatorial Guinea;  Lao People's Democratic Republic;  and Sweden.   
Under negotiation:   Bulgaria;  Belarus;  Greece;  Hungary;  Israel;  Latvia;  Lithuania;  Lebanon;  Malaysia;  Morocco;  Norway;  Oman;  
Panama;  Poland;  Slovak Republic;  Slovenia;  and United States 
Membership of international arbitral conventions/bodies 
Contracting State to the International Centre for the Settlement of  Investment Disputes (ICSID);  and signatory to the United N ations 
Convention on the Recognition and Enforcement of Fo reign Arbitral Awards (N ew York Convention) 
Other 
Member of the Multilateral Invest ment Guarantee Agency (MIGA)  
Double taxation treaties 
Austria;  Bahrain;  Bangladesh;  Belgium;  Canada;  China;  Czech  Republic;  Denmark;  Finland;  France;  Germany;  India;  Ind onesia;  
Italy;  Japan;  Republic of Korea;  Nether lands;  Pakistan;  Romania;  Russia;  Spain;  Sweden;  Switzerland;  Thailand;  Unite d 
Kingdom;  and Viet Nam  
 
Source: Board of Investments (BOI). 
29. Foreign companies may do business in the Ph ilippines through the establishment of a 
subsidiary (i.e. domestic corporation), bran ch, representative office, or regional operating 
headquarters.  The Corporation Code of the Philippines governs the establishment of domestic corporations and branches.  Under the Code, bran ches must deposit securities with the Securities and 
Exchange Commission (SEC) consisting, for example,  in Philippine Government bonds or shares of 
stock in domestic corporations.
27  Foreign investors may also be organized as general and limited 
partnerships in accordance with the provisions of  Title IX of the Civil Code of the Philippines.28  
                                                      
26 PIPP viewed at:  http://www.boi.g ov.ph/pdf//publicatio n/pipp/PIPPFR.pdf. 
27 Corporation Code of the Philippines, Title XV (Foreign Corporations).  Viewed at:  
http://www.chanrobles.com/le gal5title15.htm#TITLE%20XV. 
28 The Civil Code of the Philippines (R.A. No. 386, 1949).  Viewed at:  h ttp://www.chanrobles.com/ 
civilcodeofthephilippinesfulltext.html. The Philippines WT/TPR/S/261/Rev.2 
 Page 23 
 
 
  Depending on the entity's type of business, specific laws may also apply.  The Securities Regulation 
Code governs the establishment of representativ e offices and regional operating headquarters.29   
30. Initiatives over the review period to improve th e climate for business and investment in the 
Philippines include a programme of public-priva te partnerships (PPP)  launched by the new 
Government in 2010 to encourage private investments, inter alia, in major infrastructure initiatives.  
In 2011, live PPP schemes included two road proj ects and the Puerto Princessa Airport Development 
Project.30   
31. In 2007, the BOI launched a Strategic Investor Aftercare Program (SIAP).  This is a focal 
point for existing investors to voice any concerns, including with respect to their interactions with 
other government agencies.  According to the BOI, 72% of the 131 issues brought to the SIAP by 
investors in 2009 were resolved.31  The National Economic Research and Business Assistance Centre 
(NERBAC), which falls under the DTI, continues to help start-up companies transact with 
government agencies.  It has created a network and scheme with all agency representatives involved 
in the licensing and registration of a business.  NERBAC has 24 offices operational nationwide.32   
32. The DTI, together with other government  agencies, has made significant progress in 
streamlining the registration of business names.  The average processing time  has been reduced from 
4-8 hours to 15 minutes and the online application form is now one page long, rather than eight, due to a reduction in the information fields required (fro m 36 to 9).  Business name registration has also 
been localized, and e-payment options for business name registration are being considered.  The 
Government of the Philippines is developing th e Philippine Business Registry (PBR), and online 
system which aims to connect all agencies re lated to business registration and licensing. 
33. In 2007, the Government enacted an Anti-Re d-Tape Act (Republic Act No. 9485).  This 
requires each national and local government agency  to develop a citizens charter containing the 
procedures for obtaining government services and the performance level that the public should expect.  
The authorities reported that by mid 2011, 94% of local government units had launched their 
respective citizens charters and public assistance desks.
33  However, the World Bank has noted that 
implementation varies between cities, and a na tional enforcement mechanism has yet to be 
established.34   
34. National Competitiveness Council (NCC) was est ablished in 2006.  The mission of this 
public-private sector task-force is to build up the long-term competitiveness of the Philippines through 
policy reforms, project implementation, instituti on-building, performance monitoring, and goal 
setting.35  The authorities noted that the NCC has been  working to improve procedures for the entry 
                                                      
29 Securities Regulation Code (R.A. No. 8799).  Viewed:  http://www.chanrobles.com/ 
republicactno8799.htm. 
30 Status updates on the live PPP projects can be viewed at:  http://ppp.gov .ph/ppp-projects/live-ppp-
projects-2, and the list of projects at preparatory and development stages can be viewed at:  http://ppp.gov.ph/ ppp-projects/prospective-projects/. 
31 Board of Investments (2009). 
32 NERBAC online information.  Viewed at:  http://www.nerbac.biz. 
33 DILG (2011). 
34 World Bank's (2010b). 
35 The NCC has seven areas of focus:  developing  competitive human resources;  instituting efficient 
public and private sector management;  creating effec tive access to financing; impr oving transaction costs and 
flows;  providing a seamless infrastructure network;  developing energy cost competitiveness and 
self-sufficiency;  and addressing special concerns in  the legislature, ombudsman, and the judiciary. WT/TPR/S/261/Rev.2 Trade Policy Review 
Page 24 
  
  and exit of business persons;  trade facilitation;  consistency of business rule s and simplification of 
business procedures;  and harmonization of incentives.  
35. Fighting corruption is a key priority for the new administration.  This was highlighted by the 
President, in his State of the Nation address in July 2010.  The Government's Philippine Development 
Plan for the period 2011-16 identifies various stra tegies to improve the efficiency of the public 
service, inter alia , through the streamlining and automation of bureaucratic procedures.36 
                                                      
36 NEDA (2011).