Overview of Foreign Business Ownership in the Philippines

The Philippines has become one of the fastest-growing economies in Asia over the past few years. With a stable political climate and a growing consumer market, the country has attracted many foreign investors who are looking to expand their business operations in the region. However, foreign business ownership in the Philippines is subject to certain restrictions and limitations.

Foreign business ownership refers to the investment or ownership of a business by individuals or entities from another country. In the Philippines, foreign business ownership is essential to the country's economic growth and development. The inflow of foreign investments brings in new capital, technology, and expertise, creating employment opportunities and spurring economic activity.

In this blog, we will provide an overview of foreign business ownership in the Philippines, including its importance, laws, restricted industries, setting up a foreign-owned business, benefits, challenges, and risks.

Foreign Investment Act of 1991

The Foreign Investment Act of 1991 is the primary law governing foreign business ownership in the Philippines. The law was enacted to promote foreign investment and protect the rights of foreign investors. It aims to attract foreign investments that will help stimulate economic growth and development.

The law provides for the following features and objectives:

  • Encourage foreign investment in areas that will promote the country's economic development.
  • Ensure that foreign investors receive fair treatment and are protected from discrimination.
  • Promote technology transfer and employment generation.
  • Encourage the participation of Filipino citizens in the ownership, management, and operation of industries and enterprises.
  • Ensure that the entry of foreign investments will not be contrary to national security or public morals.

Despite the government's efforts to attract foreign investments, the law imposes certain restrictions and limitations on foreign ownership.

Restricted Industries and Sectors

The following industries and sectors are subject to foreign ownership restrictions in the Philippines:

  • Mass media (except recording)
  • Retail trade enterprises with a paid-up capital of less than US$2.5 million
  • Cooperatives
  • Small-scale mining
  • Private security agencies
  • Utilization of marine resources in archipelagic waters, territorial sea, and exclusive economic zone
  • Ownership of private lands
  • Educational institutions

The reason for these restrictions is to protect the interests of Filipino citizens and ensure that they have control over strategic industries and sectors. However, foreign investors can still participate in these industries through joint ventures or partnerships with Filipino citizens or corporations.

Key Requirements for Setting Up a Foreign-Owned Business in the Philippines

The process of setting up a foreign-owned business in the Philippines involves the following steps:

  1. Register with the Securities and Exchange Commission (SEC)
  2. Obtain necessary permits and licenses from the relevant government agencies
  3. Register with the Bureau of Internal Revenue (BIR) and obtain a Tax Identification Number (TIN)
  4. Apply for business permits and licenses from the local government units (LGUs)
  5. Comply with labor laws and regulations
  6. Open a bank account and deposit the minimum capital required by law

Foreign investors must also comply with the following key requirements and documents

  • Foreign Investment Application Form (FIA)
  • Proof of inward remittance of investment
  • Articles of Incorporation and By-laws
  • Bank Certificate of Deposit
  • Treasurer's Affidavit
  • Tax Clearance Certificate

Foreign Business Ownership Benefits

Foreign business ownership in the Philippines is beneficial to both foreign investors and the country's economy. The government offers incentives and benefits to attract foreign investors, such as tax holidays, exemptions, and reduced tax rates. These incentives aim to create a favorable business environment for foreign investors and promote economic growth.

Foreign business ownership also has a positive impact on the Philippine economy. It generates employment opportunities, promotes technology transfer, and fosters the growth of local industries and businesses. Foreign investments also contribute to the country's GDP, increase export capacity, and improve the balance of payments.

Challenges and Risks

Despite the benefits of foreign business ownership in the Philippines, foreign investors may face challenges and risks. Some of these challenges and risks include:

  • Bureaucratic red tape and delays in obtaining necessary permits and licenses
  • Inconsistent implementation of laws and regulations
  • Corruption and political instability
  • Inadequate infrastructure
  • Cultural and language barriers
  • Market competition and saturation

To mitigate these challenges and risks, foreign investors can partner with local firms, seek the assistance of professional advisers, and conduct due diligence on their prospective investments.


In conclusion, the Philippines is a great place to set up a business. It's important to understand the local culture and regulations, but once you do, you can take advantage of the low cost of setting up a business, the friendliness of Filipinos, and the cost-efficiency of having access to skilled labor.

No matter what type of business you might be looking to start in the Philippines, there are plenty of resources to help you get it done faster and easier than ever before. With the right knowledge and support system in place, anyone with an entrepreneurial spirit can make their mark in the beautiful nation that is The Philippines!

Pinoy Attorney

Written by : Pinoy Attorney