Problems relating to Trade and Investment on The Philippines
21. Restrictions on land ownership |
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Issue |
Issue details |
Requests |
Reference |
| (1) Land Ownership Restricted to FFEs | - Member firm (MF) of JBCTIF having established its fully owned manufacturing subsidiary in the Philippines (MFS) has no alternative but to lease the land property, its ownership being denied to FFEs.If MF chooses to purchase the land property, nevertheless, it must divest its capital contribution (CB) to less than 40%. If so, MF must resolve the difficulties such as: (1) finding reliable partners willing to purchase 60% of CB, if MF is unaware of any suitable candidate, (2) weakened control in MFS against the local partner holding part of the land property. | - It is requested that GOP deregulates its restrictions upon FFEs on landownership. | - The 1987 Constitution of the Republic of the Philippines, Article XII, Section 2. - Foreign Investment Act of 1991 |
| (Action) - By amendment of the Constitution during the administration of President Estrada, a policy was established to seek the economic revitalization by permitting the ownership of land property by foreign capitals. However, this policy met with a strong opposition and is now being held in abeyance. - The Bill to amend The Condominium Act envisages extending its application to the Industrial Estates. If this amendment takes place, it will enable foreign capitals investing in the Industrial Estates to own land properties. - The Bill is still pending at the committee level of both Senate and House of Representatives. One of the striking characteristics of the amendment Bill is amendment to the Condominium Act. - Foreign investors under the Bill will be permitted to the following: -- A greater guarantee for the land ownership; -- Less than 40% ownership in horizontally expandable housing complex; -- Less than 40% ownership in industrial zones; and -- Improvements in concept concerning the extent of the alien's land property ownership in the context of the 75 years Land Lease Act. - Under the Land Lease Act, amended, the lease period of the property is now allowed to the maximum of 75 years, namely, 50 years of the original lease contract with an extension of 25 years. - With the purpose of curbing potential tax evasion by FFEs, C.A.No.108, An Act to Punish Acts of Evasion of the Laws on the Nationalization of Certain Rights, Franchise or Privileges exists. In the event of violations, penalty of imprisonment, fines, dissolution/confiscation of the business/assets will result. - On 1 August 2004, FIC reduced from 250,000RM to 150,000RM the minimum price of the property aliens are authorized to acquire, by implementing the New Guideline. - Executive Order No. 98, s. 2012, "Promulgating The Ninth Regular Foreign Investment Negative List entered into force on 22 November 2012" restricts eligibility for admission to an examination of the real estate service providers "only to Philippine nationals". |
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