Senate moves to lift foreign ownership restrictions on financing companies, lending houses
January 19, 2016 at 14:00
Senate moves to lift foreign ownership restrictions on financing companies, lending houses
Press Release | January 18, 2016
The Senate today passed on third and final reading a bill which will open up financing companies, investment houses, lending companies and adjustment companies to foreign ownership, to help increase the flow of investments and jobs into the country.
Senate Bill No. 3023, sponsored by Senator JV Ejercito, chair of the Senate Economic Affairs Committee, seeks to amend foreign ownership restrictions in specific laws governing adjustment companies, lending companies, financing companies and investment houses cited in the country’s Foreign Investment Negative list.
Senate President Franklin M. Drilon said that the SBN 3023 complements other pro-economic reform measures which have been passed by the Senate in order to help prepare the country’s economic fundamentals in light of the upcoming integration of Southeast Asian markets under the ASEAN Economic Community (AEC).
“Much like the Philippine Competition Act which was made into law last year, this measure is just one of the improvements to our economic policies which we are pushing for here in the Senate, in order to make the country more competitive and more compliant to international standards, thus maximizing our true economic potential,” Drilon said.
According to Ejercito, by promoting cooperation and harnessing such opportunities for the Philippine economy, the bill will encourage foreign partners “to invest more into our country, and will diversify the financial services to Philippine enterprises.”
“Job and career opportunities for our countrymen would open once the Foreign Investment Negative List is slightly freed up from too many restrictions,” he added.
The measure amends all laws that impose nationality requirements or limitations to foreign investment companies, thereby allowing these companies to be owned 100 percent by foreign investors.
“Currently, foreign investors are allowed up to 60% ownership in financing companies and investment houses. Whereas, foreign investors in lending companies are allowed to have up to 69% equity participation while 40% is allowed in adjustment companies,” Ejercito said.
Under the Constitution, foreign investors are only allowed up to 40 percent on certain businesses and industries. They are restricted from exploiting the country’s natural resources and public utilities, including mass media.
Under the measure, lending and financing companies may be wholly owned by foreign nationals. They, however, are not allowed to own stocks unless their country of origin accords the same rights to Filipinos.
Also under the measure, financing companies shall be organized in the form of stock corporations, and shall have a paid-up capital of not less than P10 million.
Investment houses, on their part, may be wholly owned by foreign nationals, and they may become members of the board of directors.
Republic Act No. 7042, also known as the “Foreign Investments Act of 1991, as amended by RA 8179, provides for the formulation of a regular foreign investment negative list, covering investment areas or activities which are open to foreign investors and those reserved to Filipino nationals.
Last May 29, 2015, the Tenth Regular Foreign Negative List, issued under Executive Order 184, removed from the list lending companies, financing companies and investment houses. (Yvonne Almirañez)
Source: www.senate.gov.ph
