Historically, the Philippine legal landscape was defined by "Filipino First" policies and strict constitutional "60-40" equity caps. However, a series of landmark legislative reforms between 2021 and 2022 drastically altered this trajectory, opening vast sectors of the economy to 100% foreign ownership.

For investors looking to enter the Philippine market, understanding the interplay between the Foreign Investments Act, the Public Service Act, and the Retail Trade Liberalization Act is essential.

1. The Foundation: The Foreign Investments Act (FIA)

The Foreign Investments Act of 1991 (RA 7042), as amended by RA 11647, serves as the primary framework. Under this law, foreign investors can own 100% of a domestic enterprise unless the activity is specifically restricted by the Regular Foreign Investment Negative List (FINL).

The FINL Framework

The FINL identifies sectors where foreign equity is limited:

List A: Limited by the Constitution (e.g., Mass Media - 0%; Land Ownership - 0%; Natural Resources - 0%; Advertising - 30%).
List B: Limited for reasons of security, defense, risk to health and morals, and protection of local small-and-medium enterprises.

Small and Medium Enterprises (SMEs)

Foreigners can own 100% of "export enterprises" regardless of capital. However, for "domestic market enterprises," the following capital requirements apply:

Minimum Paid-in Capital: Generally USD 200,000.
Reduced Capital (USD 100,000): This lower threshold applies if the enterprise involves advanced technology (verified by DOST) or employs at least 15 Filipino direct hires.

2. Breakthrough Reform: The Public Service Act (PSA)

Perhaps the most significant shift occurred with RA 11659, which amended the 85-year-old Public Service Act.

Prior to this amendment, "public services" were conflated with "public utilities," the latter being constitutionally restricted to 40% foreign equity. The new law clarifies that only a narrow set of sectors are considered "public utilities."

Sectors Now Open to 100% Foreign Ownership:

Telecommunications
Railways and Subways
Airlines and Expressways
Airports
Shipping/Maritime sectors

Remaining Restricted "Public Utilities" (Capped at 40%):

The following are still strictly limited due to their nature as natural monopolies or essential infrastructure:

Electricity Transmission and Distribution
Water Pipeline Distribution and Sewerage Systems
Petroleum and Piped Gas Pipeline Systems
Public Utility Vehicles (PUVs)
Seaports

3. Retail Trade Liberalization Act (RTLA)

The Retail Trade Liberalization Act (RA 8762), as amended by RA 11595, lowered the entry barriers for foreign retailers.

Capital Requirement: The minimum paid-up capital for 100% foreign-owned retail enterprises is now PHP 25 million (approximately USD 450,000).
Per-Store Requirement: Each physical store must have a minimum investment of at least PHP 10 million.
Qualification: The foreign retailer no longer needs to prove a five-year track record or a certain net worth, simplifying the registration process significantly.

4. Renewable Energy: A Recent Milestone

In late 2022, the Department of Energy (DOE) issued Circular No. 2022-11-0034, amending the Implementing Rules and Regulations of the Renewable Energy Act of 2008.

This effectively removed the 40% cap on the exploration, development, and utilization of solar, wind, hydro, and tidal energy. Foreigners can now hold 100% equity in renewable energy projects, though the ownership of the land where these projects sit remains restricted to Filipinos (leasing is the standard workaround).

5. Incentives and Registration (CREATE Act)

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act provides the fiscal counterpart to ownership liberalization.

Registration: 100% foreign-owned entities must register with the Securities and Exchange Commission (SEC) for corporations or the Department of Trade and Industry (DTI) for sole proprietorships.
Investment Promotion Agencies (IPAs): To avail of tax holidays and duty-free imports, companies usually register with PEZA (Philippine Economic Zone Authority) or the BOI (Board of Investments).

6. Prohibited and Restricted Activities

Despite liberalization, certain areas remain "off-limits" or strictly capped under the 12th FINL:

Sector	Foreign Equity Limit
Mass Media	0% (Except Recording)
Practice of Professions	0% (Subject to Reciprocity)
Small-scale Mining	0%
Private Security Agencies	0%
Private Radio Communications	40%
Educational Institutions	40% (Except those established by religious groups/entities)

Summary of Legal Considerations

For a 100% foreign-owned entity to operate legally, it must ensure it does not fall under the Negative List and meets the specific paid-in capital requirements of the FIA or RTLA. While the "Public Utility" definition has narrowed, the Philippine government retains the power to review foreign investments in "critical infrastructure" for national security reasons.