SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
) 
) 
) 
SENATE BILL NO, ----1124 
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INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO 
EXPLANATORY NOTE 
In 1991, Republic Act No. 7042 was passed, otherwise known as 
the Foreign Investments Act of 1991 (FIA). The law was intended to 
attract investments from foreign sources, and m so doing expand 
livelihood and employment opportunities for Filipinos. 
However, in the practical application of the law, there are two areas 
that appear inconsistent with the objectives of the FIA and merit a 
second look. 
First, while the FIA is meant to encourage foreign equity 
investments, the "practice of all professions" is, oddly enough, an 
included item in the Foreign Investment Negative List (FINL) under the 
heading "No Foreign Equity'~. Considering that certain laws governing 
each profession allow foreign nationals to practice in the Philippines 
under reciprocity arrangements, it is misleading to include such item in 
the FINL as a nationalized activity. This effectively discourages foreign 
professionals who would otherwise be allowed to practice here by virtue 
of reciprocity from coming in and sharing their ideas and technical know-
how, contrary to the inclusive policy of the FlA. 
Second, the FIA allows non-Philippine nationals to invest in small 
and medium-sized domestic market enterprises (DME) with a minimum 
paid-in capital of US$100,000 if they employ at least 50 direct 
employees. However, operationally speaking, a US$100,000 enterprise -
only a little over PhP 4.3 million -
cannot immediately sustain a labor 
force of 50 persons. So as not to render pointless this provision of the 
law, and to align it with the spirit of the FIA, there is a need to retain the 


employment requirement but lower the threshold to a more reasonable 
number. 
Therefore, this bill seeks to amend the Foreign Investments Act by 
excluding the practice of professions from the FINL by providing that the 
same shall not be covered by the scope of the FIA, and by lowering the 
employment threshold requirement to 15 direct employees for a 
US$100,OOO foreign investments in small and medium-sized DMEs. 
In view of the foregoing, immediate passage of this bill is earnestly 
sought. 
.. 
JOSEPH VICTOR G. EJERCITO 


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SIXTEENTH C(r)NGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
) 
) 
) 
SENATE BILL NO. 112,1 
'13 
AUG 29 P 4 :38 
INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO 
AN ACT 
AMENDING REPUBLIC ACT NO. 7042, AS AMENDED BY REPUBLIC 
ACT NOI. 8179, OTHERWISE KNOWN AS THE FOREIGN 
INVESTMENTS ACT OF 1991, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress assembled: 
SECTION 1. Section 4 of Republic Act No. 7042, as amended by 
Republic Act No. 8179, otherwise known as the Foreign Investments Act 
I 
of 1991, is hereby amended to read as follows: 
"Sec. 4. Scope. - This Act shall not apply to THE PRACTICE OF 
PROFESSIONS, 
OR 
TO 
banking 
and 
other 
financial 
institutions which are governed and regulated by the General 
Banking Act and other laws under the supervision 0 f the 
Central Bank." 
Sec. 2. 
Section 8 of Republic Act No. 7042 is hereby amended to 
read as follows: 
"Sec. 8. List of Investment Areas Reserved to Philippine 
Nationals (Foreign Investment Negative List). - The Foreign 
Investment Negative List shall have two (2) component lists: 
A, and B. 
a) List A shall enumerate the areas of activities reserved 
to Philippine nationals by mandate of the Constitution and 
specific laws. 
b) List B shall contain the areas of activities and 
enterprises regulated pursuant to law: 


1) Which are defense-related activities, requmng prior 
clearance and authorization from Department of National 
Defense (DND) to engage in such activity, such as the 
manufacture, repair, storage and/or distribution of 
firearms, 
ammunition, 
lethal 
weapons, 
military 
ordinance, 
explosives, 
pyrotechnics 
and 
similar 
materials; unless such manufacturing or repair activity is 
specifically 
authorized, 
with 
a 
substantial 
export 
component, to a non-Philippine national by the Secretary 
of National Defense; or 
2) Which have implications on public health and morals, 
such as the manufacture 
and distribution 
of 
dangerous drugs; all 
forms 0 f gambling; nightclubs, 
bars, beerhouses, dance halls; sauna and steam 
bathhouses and massage clinics. 
Small and medium-sized domestic market enterprises, with 
paid-in equity capital less than the equivalent two hundred 
thousand US dollars (US$200,000) are reserved to Philippine 
nationals, Provided that if: (1) they involve advanced technology as 
determined by the Department of Science and Technology or (2) they 
employ at least [fifty (50)] FIFTEEN (15) direct employees, then a 
minimum paid-in capital of one hundred thousand US dollars (US$1 
00,000.00) shall be allowed to non-Philippine nationals. 
Amendments to List B may be made upon recommendation of 
the Secretary of National Defense, or the Secretary of Health, or the 
Secretary of Education, Culture and Sports, endorsed by the NEDA, 
approved by the President, and promulgated by a Presidential 
Proclamation. 
The Transitory Foreign Investment Negative List established in , 
Sec. 15 hereof shall be replaced at the end of the transitory period 
by the first 
Regular Negative 
List to be formulated and 
recommended by NEDA, following the process and criteria provided 
in Sections 8 0 f this Act. 
The first Regular Negative List shall be published not later than 
sixty (60) days before the end of the transitory period provided in 
said section, and shall become immediately effective at the end of 
the transitory period. Subsequent Foreign Investment Negative Lists 


shall become effective fifteen (15) days after publication in a 
newspaper of general circulation in the Philippines: Provided, 
however, That each Foreign Investment Negative List shall be 
prospective in operation and shall in no way affect foreign 
investment existing on the date of its publication. 
Amendments to List B after promulgation and publication of 
the first Regular Foreign Investment Negative List at the end of the 
transitory period shall not be made more often than once every two 
(2) years". 
Sec. 3. Repealing Clause. -
Sections 4 and 8 of Republic Act No. 
7042, as amended by Republic Act No. 8179, and all laws, decrees, 
orders, rules and regulations or other issuances or parts thereof 
inconsistent with the provisions of this Act are hereby repealed or 
modified accordingly. 
Sec. 4. Separability Clause. - If any portion or provision of this Act is 
declared unconstitutional, the remainder 0 f this Act or any provisions 
not affected thereby shall remain in force and effect. 
Sec. 5. Effectivity. - This Act shall take effect fifteen (15) after 
publication in two (2) newspapers of general circulation in the 
Philippines. 
Approved,