2019News

Senate committee studying amendment to foreign investment act

By Camille A. Aguinaldo, January 24 2019; Business World

https://www.bworldonline.com/senate-committee-studying-amendment-to-foreign-investment-act/

Image Credit to Business World

THE Senate committee on economic affairs on Thursday opened its inquiry into the bill seeking to amend Republic Act No. 7042 or the Foreign Investments Act of 1991.

Senate Bill No. 2102, filed by committee chair Senator Sherwin T. Gatchalian, lowers the employment threshold for foreigners investing $100,000 in domestic small and medium-sized enterprises from 50 to 15 direct employees.

It also excludes the practice of professions from the coverage of the Foreign Investment Act to allow other laws to govern foreign nationals practicing their profession in the Philippines.

Mr. Gatchalian said the bill would be among the priority measures of the Senate committee on economic affairs for the remainder of the 17th Congress.

“Yes, this will be a priority bill. The House has approved its version. So we will try to finish this before the long break,” Mr. Gatchalian told reporters after the hearing.

Congress has about two weeks left before it adjourns on Feb. 8. It will resume session on May 20.

It was pointed out during the hearing that the employment threshold provided in the bill needed further study given that having 15 employees may be sufficient for a certain industry such as technology, but not enough for other industry, such as manufacturing.

“Let’s say from a technology viewpoint because we’re investors in technology… 15 is not a lot in terms of labor, but that’s not small for a tech company. If we’re wanting tech companies, programmers, even if they start with five or six, that’s already significant for them. So if we want upgrade rather than downgrade jobs, the requirements are different,” said trade committee chairman George Siy of the Federation of Filipino-Chinese Chamber of Commerce and Industry (FFCCCI).

“There are some industries that are capital-intensive wherein the asset size is big but the employees are fewer. It could be labor-intensive, especially micro enterprises, so even if the asset size is small, they have a lot of employees. We will need further study on this,” said Assistant Director Alicia M. Opena of the Department of Trade and Industry’s (DTI) Bureau of Small and Medium Enterprise Development.

Asked if he will make changes to the bill, Mr. Gatchalian said he will need to study the right employment threshold. He is also looking to balance the proposed measure with the interests of micro and small enterprises.

“We need to study carefully what is the appropriate threshold for employment… We’re considering maybe to classify, just possibly. We’re not yet sure whether to do it per industry or we will give the leeway to NEDA (National Economic Development Authority) to recommend or it will be placed in the (implementing rule and regulations.) We’ll study it carefully,” he told reporters.

Another feature of the bill empowers the NEDA, DTI, Board of Investments (BoI), Securities and Exchange Commission (SEC) to review the negative list yearly and submit its report to Congress. The government agencies are also directed to report to Congress investment-related matters requiring necessary legislation.

The bill also requires the government to create a web portal containing the Philippines’ investment policies that will guide investors on potential areas of investments.

American Chamber of Commerce of the Philippines, Inc. (AmCham) senior adviser John D. Forbes hoped the proposed measure would be passed by the Senate before the 17th Congress ends in mid-2019.

“The Senate and House is about to conclude the third year of Congress. It would be nice in a way if this could be approved even though there’s five or six legislative days… So I would encourage the committee to try to move forward with it in this Congress. As the outside world looks at the Philippines, this would stand as a significant reform,” he said. — Camille A. Aguinaldo

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