House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) lauded the signing by President Duterte of the amended Foreign Investments Act, which he said could make the country a “leading startup hub in Southeast Asia.”
The new law allows qualified non-Philippine nationals to do business in the country or invest in a domestic enterprise up to 100 percent of its capital, and liberalizes the practice of professions not governed by existing special laws. It also allows foreign investors to set up 100% ownership of small- and medium-sized enterprises.
Salceda, who principally authored the House version of the measure, said the law could boost the country’s bid to be “a leading startup hub in Southeast Asia, especially for tech and other companies seeking to solve long-standing problems in financial inclusion, agricultural productivity, health delivery, and other key services.”
“The fact of the matter is that disruptions in the global economy now come from small, tech-driven startups. Under the FIA amendments, tech startups would be able to locate in the Philippines with less friction, move their professionals and experts in, and teach Filipinos and improve conditions in lagging sectors of the economy,” he explained.
“In other words, the FIA amendments could make the Philippines a leading destination for entrepreneurial problem solvers. And we have a lot of problems that need fixing. The law could be complemented by the establishment of special investors and experts’ visas for tech startups of the size that the FIA amendments now allow in the country,” he added.
Salceda, a noted economist, pointed out that the current special investors’ resident visa allows in foreigners who seek to invest US$75,000 or more in the country. “I strongly suggest that we alter that a bit to also allow startup founders who may not have met that investment criterion yet, but are willing to locate their desirable startups in the country,” he stressed.
He explained that “the effect of a tech startup founders’ visa in the country is that while they may not necessarily be investors themselves, they may potentially attract investors with capital to invest in their own startups, which will be Philippine-based.”
He said the FIA amendments pave the way for “’expert and highly technical personnel visas,’ similar to the EB-1 or Einstein Visas granted by the United States for people who are highly acclaimed in their field as well as respected academic researchers and multinational executives.”
“Encouraging the world’s best to live and work in the Philippines could only mean well for knowledge transfer in the country. And the FIA amendments pave the way for that by liberalizing the practice of professions not governed by special laws. That means, professionals such as biomolecular engineers who helped invent the COVID-19 vaccines, astrophysicists, and other key professionals in higher and advanced sciences from foreign countries can participate in Philippine development more easily,” he further explained.
Salceda said he is in talks with the Department of Trade and Industry for the agency to make a more aggressive push on promoting the country as a more open investment destination, given the investment liberalization laws and the Corporate Recovery and Tax Incentives for Enterprises or CREATE Law enacted under President Duterte. He also principally authored and sponsored the CREATE Law.
He said such DTI initiative is necessary because “many foreign investors may still mistake us for the most restrictive FDI regime in ASEAN, which we were prior to the reforms instituted by President Duterte.”
“The Retail Trade Liberalization Act and the Foreign Investment Act amendments are already laid out, and the Public Service Act amendments are due to lapse into law by end of this month. The CREATE Law, of course, is also the most massive fiscal stimulus ever undertaken in the country’s history. So, in terms of FDI openness, we are a very different country now than we were before the pandemic. And investors need to know.” Salceda explained.
“That is why investment roadshows, briefings with equities analysts and corporate managers, and other public relations work with the world’s investing community will be needed. I will have more serious discussions with the Department of Trade and Industry on funding these efforts, which I think will return their cost many times over,” Salceda added.