fia - jfc statement

8/13/2019 FIA - JFC Statement

http://slidepdf.com/reader/full/fia-jfc-statement 1/4

February 11, 2014

JFC Statement on Senate Bill 1424 – Foreign Investment Act amendments

In 1991, the Foreign Investments Act (FIA) or Republic Act 042 (amen!e! in 199" by RA#19) $as enacte! liberali%ing the entry o& &oreign investments into the country by opening the!omestic mar'et to 100 &oreign investment proect e*cept in areas+sectors i!enti&ie! in the ForeignInvestment egative -ist (FI-). /his lan!mar' la$ is inten!e! to attract more &oreign investments tothe hilippines thereby e*pan!ing employment opportunities &or Filipinos.

e recommen! passage o& the t$o amen!ments sought in 3 1424.

First, it is our vie$ that that the practice o& pro&essions is not a germane provision in theForeign Investment egative -ist (FI-), a !ocument create! by the Foreign Investment Act. /he

The Arangkada Philippines Project (TAPP)

www.arangkadaphilippines.com



FI- is inten!e! to catalogue limitations on &oreign euity in non5ban'ing business sectors.

The Arangkada Philippines Project (TAPP)




/he constitution creates a policy bias in &avor o& hilippine citi%ens, but not a strict legal barrier

to the participation o& &oreign pro&essionals. Although ection 14, Article 6II o& the hilippine7onstitution states that 8the practice o& all pro&essions in the hilippines shall be limite! to Filipinociti%ens, this statement is imme!iately &ollo$e! by 8save in cases prescribe! by la$. Almost all o& thela$s regulating pro&essions contain reciprocity provisions. (see attache! is the list)

/here are 4 la$s governing the practice o& speci&ic pro&essions, an! 42 contain 8reciprocityprovisions allo$ing &oreigners to practice their pro&ession in the hilippines, provi!e! their countries o&origin also allo$ Filipinos to practice these. In a!!ition, a upreme 7ourt rule limits the practice o& la$to hilippine nationals. Four la$s regulating criminologists, &oresters, pharmacists, an! ra!io an! *5raytechnologists state the pro&ession is restricte! to hilippine nationals an! contain no reciprocityprovision.

7onsi!ering that certain la$s governing each pro&ession allo$ &oreign nationals to practice inthe hilippines un!er reciprocity arrangements, it is e*tremely mislea!ing to inclu!e such item in theFI- as a nationali%e! activity. /his e&&ectively !iscourages &oreign pro&essionals $ho coul! other$isebe allo$e! to practice here by virtue o& reciprocity &rom $or'ing in the hilippines an! sharing theiri!eas an! technical 'no$5ho$, contrary to the inclusive policy o& the FIA.

3ecause millions o& Filipinos $or' abroa! an! support the hilippine economy $ith theirremittances, it shoul! be in the national interest to see' the re!uction o& restrictions on pro&essionals inother countries, &or e*ample, in the negotiations on the :eneral Agreement on /ra!e in ervices(:A/) un!er the /; an! the A<A Frame$or' Agreement on ervices(AFA). At the same time,having more &oreign pro&essionals practicing in the hilippines can bring ne$ s'ills, i!eas, connections

an! integration into global net$or's o& service provi!ers, an! support sunrise sectors li'e R=>,me!ical travel an! retirement.

In short, more &oreign pro&essionals practicing in the hilippines $ill mean more obs &orFilipinos at home.

/he practice o& pro&ession is not an investment activity un!er the scope o& the ForeignInvestment Act an! there&ore shoul! not be inclu!e! in the FI-.

econ!ly, the FIA allo$s 100 &oreign o$nership in !omestic mar'et activities above aminimum investment o& ?100,000 ($ith a!vance! technology or employing @0 !irect employees),

other$ise ?200,000. o$ever, operationally spea'ing, a B?100,000 enterprise 5 only a little over h4.C million 5 cannot imme!iately sustain a labor &orce o& @0 persons.

hen the la$ $as enacte! in 1991, the minimum $age in the ational 7apital Region $as142 an! to!ay, it is 4"". hp 4.C million is not enough to sustain a labor &orce o& @0 persons at thecurrent minimum $age. o as not to ren!er pointless this provision o& the la$, an! to align it $ith thespirit o& the FlA, there is a nee! to retain the employment reuirement but lo$er the threshol! to a morereasonable number. /his $ill allo$ smaller investments to come in an! go into in!ustries li'e tourism$hich $ill &acilitate the entry o& more &oreign nationals an! investments.




/he >epartment o& /ourism targets tourist arrivals by 201". e e*pect that an increasingnumber o& tourists $ill come &rom 7hina an! Dorea. /o support their nee!s, $e shoul! allo$ &oreignnationals to invest in small retail establishments to meet the cultural an! !ietary nee!s o& thesenationals (e.g. &oreign language gui!e services, restaurants an! the li'e).

e encourage the 7ommittee to consi!er /hailan! $here the minimum investment amount is 1million baht (appro*imately ?CC,000), e*clu!ing the cost o& lan! an! $or'ing capitalE ho$ever, smallan! me!ium &oreign5o$ne! enterprises in certain activities $ith minimum investment o& @00,000 baht(appro*imately ?1",00), e*clu!ing the cost o& lan! an! $or'ing capital, are also allo$e!

/he lo$ threshol! o& the &oreign investment capital reuirement in /hailan! has enable! the/hais to attract a many smaller &oreign investors $ho have enriche! the countrys vibrant tourismin!ustry by provi!ing a larger variety o& cuisines an! special services &or &oreign visitors, inclu!ing in avariety o& languages. In a!!ition, this lo$ threshol! has enable! the !evelopment o& many small&oreign5o$ne! enterprises in the creative in!ustries such as !esign an! I/ applications an! similarbusinesses that starts small an! subseuently stea!ily gro$s employing increasing number o& /hai$or'ers.

www.arangkadaphilippines.com Page

fia - jfc statement

Documents