Opening Doors, Guarding the Threshold: The 13th FINL

The number 13 is often viewed as either lucky or foreboding, and may just be apt for the Philippines’ latest Foreign Investment Negative List (FINL). As the country sharpens its bid for foreign capital, the government has released the 13^th FINL. The FINL updates the sectors where foreign equity participation remains restricted or prohibited. Set against the backdrop of amendments to key investment laws — including the Public Service Act (PSA), Retail Trade Liberalization Act, and Foreign Investments Act — it serves not only as a guidepost for foreign investors, but also as a signal of the country’s evolving approach to economic liberalization.

Promulgated by President Ferdinand R. Marcos, Jr. through Executive Order (EO) No. 113, the 13^th FINL became effective on 2 May 2026 and formally superseded the 12^th FINL issued in 2022. Consistent with the long-standing “negative list” framework adopted under the Foreign Investments Act, all investment activities not expressly included in the FINL are deemed open to up to 100% foreign equity participation, subject to applicable licensing, regulatory, and capitalization requirements.

The 13^th FINL retains the familiar bifurcated structure consisting of List A and List B restrictions. List A continues to cover sectors where foreign ownership limitations are imposed by the 1987 Constitution or specific statutes, such as mass media, advertising, natural resource exploitation, educational institutions, and public utilities. The 13^th FINL also incorporates developments arising from recent legislative reforms and clarifies the scope of activities that remain subject to constitutional foreign equity limitations.

List B, on the other hand, continues to cover activities restricted for reasons of national security, defense, public health and morals, and the protection of micro, small, and medium enterprises (MSMEs). Unlike List A, these restrictions are policy-driven and may be adjusted by the Executive branch every two years. The 13^th FINL introduces notable changes under List B, reflecting the government’s approach to the regulation of strategic and emerging industries.

In particular, the 13^th FINL now permits up to 100% foreign ownership (previously 40%) in telecommunications entities, in line with the PSA amendments, subject to reciprocity requirements. Where reciprocity is absent, foreign ownership is instead capped at 50%.

The updated FINL likewise formally liberalized renewable energy projects. Whereas previous FINLs left some degree of uncertainty due to the 40% foreign equity cap historically tied to the constitutional restriction on exploring and utilizing natural resources, the 13^th FINL expressly confirms that solar, wind, and tidal energy projects may now be fully foreign-owned. This development aligns with the administration’s push for energy security and sustainability, which has become especially crucial with the looming energy crisis threat, and is consistent with Department of Justice Opinion No. 21, series of 2022, which clarified that inexhaustible renewable energy sources such as solar, wind, hydro, and ocean or tidal energy are not subject to the 60:40 foreign equity limitation. By clarifying these sources as kinetic and limitless rather than exhaustible natural resources restricted by the 1987 Constitution, this Opinion effectively opened the sector to 100% foreign ownership. Interestingly, however, unlike other renewable energy sources, hydropower projects involving the appropriation of natural water resources remain subject to the 40% constitutional limitation.

In contrast, the 13^th FINL slightly backtracks in some sectors and reinstates certain restrictions in defense-related industries. While certain activities were liberalized in prior issuances, the updated FINL re-imposes a 40% foreign equity limitation on the manufacture, repair, storage, and operation of military materiel, including weapons systems, ammunition, and military technologies. This shift appears intended to align with the objectives of the Self-Reliant Defense Posture Revitalization Act, which promotes technology transfer and domestic capability-building through greater local participation.

The 13^th FINL also clarifies some areas that previously gave rise to differing interpretations. In the retail trade sector, for instance, the 13^th FINL confirms that enterprises with paid-up capital below PHP 25 million are not entirely closed to foreign investors, but may accommodate up to 40% foreign equity participation. Full foreign ownership remains available only upon compliance with the capitalization thresholds under the Retail Trade Liberalization Act.

Another significant clarification relates to the corporate practice of architecture. While the 12^th FINL broadly referred to restrictions on the practice of professions, the 13^th FINL now expressly prohibits foreign equity participation in corporations engaged in the practice of architecture, reinforcing the position that professional qualifications cannot be exercised through corporate entities with foreign ownership. This treatment appears more restrictive than other regulated professions where reciprocity mechanisms may still apply.

Finally, the 13^th FINL retains the existing MSME capitalization thresholds while continuing to recognize lower capitalization requirements for innovation-driven enterprises. Domestic market enterprises with paid-in capital below USD 200,000 generally remain subject to a 40% foreign equity cap, with the reduced threshold of USD 100,000 also remaining for enterprises that utilize advanced technology as certified by the Department of Science and Technology, are recognized startups, or employ at least 15 Filipino workers. These carve-outs demonstrate the government’s intention to incentivize innovation, technology transfer, and employment generation while maintaining a level of protection for domestic enterprises.

The 13^th FINL reflects the government’s continuing effort to respond to global economic pressures, evolving priorities, technological developments, and increasing competition for foreign capital. By incorporating legislative reforms and addressing long-standing ambiguities in foreign ownership rules, the updated FINL seeks to strike a balance among investment liberalization, national security considerations, and constitutional safeguards. At its core, the 13^th FINL is a policy instrument that signals the country’s broader direction toward a more competitive and investment-friendly economy.

With several sectors now opened further to foreign participation — particularly telecommunications and renewable energy — the coming years will be crucial in determining whether the 13^th FINL can effectively support economic growth, innovation, and investor confidence. Ultimately, whether 13 proves lucky for foreign investors or cautionary will hinge not only on the breadth of liberalization, but also on the consistency, predictability, and clarity of the regulatory environment governing foreign investments in the Philippines. 

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

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