On April 13, 2026, Malacañang promulgated the Thirteenth (13th) Regular Foreign Investment Negative List (FINL) through Executive Order No. 113, s. 2026, replacing the 12th FINL issued in 2022. The updated list reflects statutory amendments and policy shifts intended to further liberalize foreign investment, while preserving restrictions grounded in the Constitution and national security considerations. By narrowing restrictions and refining definitions, the 13th FINL aligns the country’s investment policy with the goals of the 2022 Strategic Investment Priority Plan (2022 SIPP), aiming to transition the Philippines from a protectionist regime to a targeted, innovation-driven economy.

Below is a practical overview of key changes in the FINL and what they mean for investors.

At a Glance: What Investors Should Note

1. Explicit prohibition on foreign participation in corporate architectural practice
2. Full liberalization of telecommunications, subject to reciprocity
3. Clarified 40% cap for sub-₱25 million retail enterprises
4. Confirmed liberalization of renewable energy, with limited exceptions
5. Reintroduction of foreign equity limits in defense-related “materiel”
6. Retention of MSME protections with innovation-based exceptions

1. Corporate Practice of Architecture: Express Prohibition

The 13th FINL introduces a more granular approach to the “Practice of Professions” category compared to the 12th FINL. While the 12th list maintained a broad and generalized listing of professions, the 13th list specifically singles out the corporate practice of architecture as an activity with zero foreign equity. This refinement reflects a policy shift toward precision in sectoral restrictions, reducing the ambiguity that previously allowed for creative corporate structures that might attempt to bypass constitutional mandates.

The restriction on professional practice is rooted in Article XII, Section 14 of the 1987 Constitution, which reserves professional practice to Filipino citizens. The professional regulation landscape has been defined by long-standing disputes, such as the conflict between civil engineers and architects regarding the signing and sealing of building plans. The Professional Regulatory Board of Architecture (PRBoA) has consistently maintained that personal qualifications for a profession cannot be possessed by a corporation, a stance supported by the Department of Justice (DOJ) and upheld by our Supreme Court.

The 13th FINL now expressly includes the corporate practice of architecture among activities reserved entirely to Philippine nationals. This removes ambiguity under prior FINLs, which broadly referred to the practice of professions without clearly addressing corporate structures.

Practical Implications:

• Foreign investors cannot hold equity in architectural firms
• Structuring through corporate vehicles does not circumvent the restriction
• Existing arrangements should be reviewed for compliance exposure

2. Telecommunications: Full Foreign Ownership with Reciprocity

The 13th FINL formalizes the transition of telecommunications from a restricted public utility to a liberalized public service, allowing up to 100% foreign equity. This is a significant development from the 12th FINL era, where the sector was in a transitional phase following the 2022 amendments to the Public Service Act (RA 11659). The 13th FINL clarifies that this 100% ownership is subject to a reciprocity clause, which means that in the absence of reciprocity from the foreign national’s home country, equity is capped at 50%.

For decades, the term “public utility” was not defined by law, leading courts to apply a strict 40% foreign equity cap to telecommunications. This restriction resulted in high market concentration and a “digital divide,” with the World Bank noting that Philippine internet lagged behind ASEAN peers in affordability and speed. The liberalization in the 13th FINL is designed to attract global telecom giants who were previously unwilling to enter as mere minority partners.

The 2022 SIPP placed telecommunications under Tier II as a “creative or knowledge-based industry”. The publicly available draft 2025-2028 SIPP goes further, identifying next-generation networks and cybersecurity as Tier III priorities, the highest category for fiscal incentives. Because telecommunications are now classified as “critical infrastructure,” foreign investors must also navigate enhanced safeguards, including a prohibition on foreign state-owned enterprises and mandatory ISO certifications on information security.

Practical Implications:

• Foreign investors may fully own telecom entities where reciprocity exists
• Jurisdiction-specific analysis is required to determine eligibility
• Critical infrastructure safeguards continue to apply

3. Retail Trade: Clarified Treatment Below Capital Threshold

A major point of clarification in the 13th FINL relates to retail trade. The list reinforces the PHP 25 million minimum paid-up capital requirement for full foreign participation established by the 2021 amendments to the Retail Trade Liberalization Act (RA 11595). More importantly, the 13th FINL clarifies that retail enterprises with capital below this threshold are limited to 40% foreign equity, rather than being absolutely prohibited.

This aims to balance the need for foreign direct investment (FDI) with the protection of the country’s micro, small, and medium enterprises (MSMEs). Historically, a massive USD 2.5 million (currently equivalent to around Php 150,338,750.00) threshold shielded local “sari-sari” stores but also limited consumer choice and kept retail prices high. The current PHP 25 million floor is designed to attract mid-sized international brands while ensuring foreign entrants contribute high-quality infrastructure through a per-store investment requirement of PHP 10 million.

The draft 2025-2028 SIPP complements these rules as foreign retailers who can integrate advanced logistics or specialized products into these priority value chains may not only benefit from such liberalized ownership rules but also qualify for significant tax incentives.

Practical Implications:

• Minority foreign participation is permitted for smaller retail ventures
• Full foreign ownership requires compliance with capitalization thresholds

4. Renewable Energy: Codifying the RE Revolution

The 13th FINL provides the definitive codification of the liberalization of the renewable energy (RE) sector, confirming that solar, wind, hydro, and ocean energy projects are no longer subject to the 40% foreign equity limitation. This transition began in the 12th FINL era following DOJ Opinion No. 21, s. 2022, but the 13th FINL provides the regulatory certainty required for long-term infrastructure investment.

The historical driver for this shift was the realization that the Philippines remains heavily reliant on imported fossil fuels, which accounted for approximately 6.1% of GDP in 2022. The legal breakthrough came from distinguishing “inexhaustible” kinetic energy (sun and wind) from the depletable natural resources the Constitution seeks to protect. By February 2025, the Department of Energy had already awarded over 1,400 service contracts, including several to wholly foreign-owned companies for offshore wind and large-scale solar.

The 2022 SIPP categorized RE under Tier I and II (Green Ecosystems). The draft 2025-2028 SIPP elevates specialized energy technologies, such as “hydrogen energy” and “green fuels,” as high-priority areas for 100% foreign ownership. However, a residual restriction remains: the appropriation of water directly from a natural source for hydropower still requires 60% Filipino ownership due to existing Water Code regulations.

Practical Implications:

• Full foreign ownership is available for solar, wind, and similar projects
• Hydropower involving water rights remains subject to the 60-40 rule

5. Defense Sector: Reintroduction of Equity Limits and the “Materiel” Clause

A notable change in the 13th FINL is the introduction of restrictions on “materiel”, or military technology and weapons systems, under List B. This is a major departure from the 12th FINL, which had removed defense-related products from the restricted list, previously allowing 100% foreign participation at that time. The 13th FINL re-imposes a 40% foreign equity cap on the development and operation of materiel by in-country enterprises.

This policy shift is driven by the Self-Reliant Defense Posture Revitalization (SRDPR) Act (RA 12024), signed in late 2024 to build domestic capacity amid escalating regional tensions. Historically, the Philippines has been a reactive buyer of foreign military hardware. RA 12024 was promulgated to transform the country into a producer by incentivizing local manufacturing.

The draft 2025-2028 SIPP, if passed as currently drafted, supports this transition by upgrading “defense-related manufacturing” to Tier III. This would allow defense firms to enjoy the longest available income tax holidays while being subject to the 40% equity cap, which ensures technology transfer to local partners, which is a core requirement of the SRDPR Act program.

Practical Implications:

• Regulatory approvals and clearances are required
• Increased scrutiny applies to defense-related investments

6. MSME Protection and Innovation-Based Exceptions

The 13th FINL maintains the protection for micro and small domestic market enterprises but reinforces the innovation-based exceptions introduced by the Foreign Investments Act amendments (RA 11647). Foreigners are generally prohibited from owning more than 40% of enterprises with paid-in capital of less than USD 200,000. However, the threshold is lowered to USD 100,000 for ventures that utilize advanced technology, are endorsed as startups, or employ at least 15 Filipino nationals.

This policy reflects a trend where knowledge-heavy but capital-light tech startups are increasingly seen as engines of economic growth. The draft 2025-2028 SIPP complements this by prioritizing “AI, Data Science, and emerging technologies” like quantum technology under Tier III. By keeping the USD 200,000 barrier for low-tech services while opening an express lane for innovation, the 13th FINL acts as a filter for high-quality FDI.

Practical Implications:

• 40% cap applies to enterprises below USD 200,000 capitalization
• USD 100,000 threshold applies to qualified startups and tech ventures

Closing Observations

The 13th FINL underscores the need for proactive compliance and disciplined investment structuring. Companies should reassess foreign ownership limits, approval processes, and regulatory monitoring, with close coordination across legal, compliance, and business units.

The new list should be read alongside the Strategic Investment Priority Plan (SIPP), whether the current 2022 plan or the draft 2025-2028 plan rumored to be released before the President’s SONA, as this outlines priority sectors eligible for fiscal and non-fiscal incentives.

As the country navigates a national energy emergency and ever-changing economic conditions, the 13th FINL and the SIPP together provide a clearer framework for investment planning and growth.