EIGHTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES )
First Regular Session )
HOUSE OF REPRESENTATIVE
HB.No, 4457

Introduced by Representative TEODORICO T. HARESCO, JR.

EXPLANATORY NOTE

Participation of foreign entities in economic and commercial activities in the
Philippines is regulated under Republic Act No. 7042, as amended, otherwise known as the
Foreign Investments Act of 1991 (FIA).1 It was passed in order to attract, promote and
welcome foreign investment in activities which contribute to the national industrialization

and socioeconomic development.

As compared to our neighbors in Southeast Asia, the Philippines’ Foreign Direct
Investment is way behind. According to the recent World Investment Report of the United
Nations Conference on Trade and Development (UNCTAD) for 2019, FDI in the Philippines
in 2018 totalled $6.45 billion. It was down from the 2017 figure of $8.7 billion? In contrast,
our neighbor to the south, Indonesia, had $22 billion in foreign investments in 2018, more
than three times that of the Philippines. Thailand had $10 billion. The Philippines’ $6.45-
billion FDI in 2018 constituted only 4 percent of the total received by all Southeast Asian
nations — $148.69 billion. Our FDI went down by 26 percent from last year, ata time when

the total FDI for Southeast Asia went up by 3 percent
Foreign Direct Investment are important part of international resources. This bill

seeks to amend the current Foreign Investments Act in order to improve investment climate

in the Philippines. In view of the foregoing, the earnest passage of this bill is sought.

TEODORICO as JR.

2 htps://news.mb.com.ph/2019/06/18/why-are-we-behind-in-foreign-investments/
3 Ibid.


EIGHTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES i
First Regular Session )

HOUSE OF REPRESENTATIVES
H.B.No._4457

Introduced by Representative TEODORICO T. HARESCO, JR.

AN ACT
AMENDING REPUBLIC ACT NO. 7042, OTHERWISE KNOWN AS THE FOREIGN
INVESTMENTS ACT OF 1991, AS AMENDED BY REPUBLIC ACT NO. 8179, AND FOR
OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Section 2 of Republic Act No. 7042, as amended by Republic Act No. 8179,

otherwise known as the Foreign Investment Act of 1991, is hereby amended to read as follows:

Section 2. Declaration of Policy. - RECOGNIZING THAT GLOBAL AND REGIONAL
ECONOMIES AFFECT THE PHILIPPINE ECONOMY, [iJt is the policy of the State to
attract, promote and welcome productive investments from foreign individuals,
partnerships, corporations and governments, including their political subdivisions, in
activities which significantly contribute to [national—industrialization—and
secioeconomice—_develepment] SUSTAINABLE INCLUSIVE ECONOMIC GROWTH,
PRODUCTIVITY, GLOBAL COMPETITIVENESS, EMPLOYMENT CREATION,
TECHNOLOGICAL ADVANCEMENT, AND COUNTRYWIDE DEVELOPMENT to the
extent that foreign investment is allowed in such activity by the Constitution and
relevant laws. Foreign investments shall be encouraged in enterprises that
significantly expand livelihood and employment opportunities for Filipinos, enhance
economic value of [farm] AGRICULTURAL products; promote the welfare of Filipino
consumers; expand the scope, quality and volume of exports and their access to
foreign markets; and / or transfer relevant technologies in agriculture, industry and
support services. Foreign investments shall be welcome as a supplement to Filipino

capital and technology in those enterprises serving mainly the domestic market. XXX”

SEC. 2. Section 3 of R.A. 7042 is hereby amended to read as follows:

“Section 3. Definitions. - As used in this Act:


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XXX

b) The term “investment” shall mean equity participation in any enterprise organized or
existing under the laws of the Philippines AND DULY RECORDED IN THE ENTERPRISE’
STOCK AND TRANSFER BOOK, OR ITS EQUIVALENT:”

SEC. 3. Section 4 of R.A. 7042 is hereby amended to read as follows:

“Section 4. Scope. - This Act shall not apply to banking and other financial institutions
which are governed and regulated by the General Banking Act and other laws under the
supervision of the [GentralBank] BANGKO SENTRAL NG PILIPINAS, AND THE
PRACTICE OF PROFESSIONS.”

SEC. 4. The National Economic and Development Authority (NEDA), in cooperation and
consultation with the Board of Investments (BOI), the Department of Trade and Industry (DTI),
the Securities and Exchange Commission (SEC), the Department of Information and
Communications Technology (DICT), investment promotion agencies (IPAs), and other
pertinent government agencies, shall conduct an annual review of the Foreign Investment
Negative List.

SEC. 5. In order to effectively guide investors on potential areas of investment in the
Philippines, the BOI, in coordination and cooperation with the other government agencies and
IPAs, shall make available for public access a joint web portal that shall contain the following:

A) All information pertinent to investment policies, programs, and procedures;

B) Information on relevant industries and services that will be promoted for investment

purposes;

C) Database of Filipino micro, small and medium enterprises that could be potential

partners of foreign investors;

D) Regional and provincial investment information; and

E) Such other relevant information needed in setting up businesses in the Philippines

such as laws, regulations and government issuances.

SEC. 6. Oversight Committee. The NEDA shall submit to Congress every April 30 of the
year the output of the stakeholders’ analysis on the contribution to the economy of the

investment areas, industries or sectors that will be liberalized and excluded in the Foreign


Investment Negative List. It shall likewise recommend to Congress investment-related matters

requiring legislation.

The NEDA is hereby directed to make the necessary amendments to the implementing
rules and regulations of R.A. 7042, as amended, in order to reflect the changes embodied in this
Act.

SEC. 7. Implementing Rules and Regulations. - The NEDA is hereby directed to make
the necessary amendments to the implementing rules and regulations of R.A. 7042, as amended,

in order to reflect the changes embodied in this Act.

SEC. 8. Separability Clause. - If any portion of this Act shall be held invalid or
unconstitutional, such invalidity or unconstitutionality shall not affect the other provisions

hereof which shall remain in full force effect.
SEC. 9. Repealing Clause. - All laws, decrees, orders, rules and regulations or provisions
thereof which are inconsistent with this Act are hereby repealed, amended or modified

accordingly.

SEC. 10. Effectivity Clause. - This act shall take effect fifteen (15) days after its

publication in the Official Gazette or in a newspaper of general circulation.

Approved,