Philippines Opens Doors to Foreign Investment, Allows 100% Foreign Ownership in Key Public Services

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Philippines Opens Doors to Foreign Investment, Allows 100% Foreign Ownership in Key Public Services

By Bing Jabadan – TheNATIONWEEK.Com | January 5, 2026

MANILA, Philippines – In a move poised to reshape its economic landscape, the Philippines is now permitting 100% foreign ownership in select public services, including international airports, railways, and telecommunications, under Republic Act No. 11659, also known as the amended Public Service Act (PSA). The landmark legislation, enacted in February 2022 and further refined in March 2023 following extensive public consultation, aims to attract foreign capital and expertise, ultimately bolstering the country’s competitiveness and integration into global value chains.

The implementing rules and regulations (IRR) for the amended PSA, which took effect on April 1, 2023, clarify the distinction between “public services” and “public utilities,” a crucial distinction under the 1987 Constitution that previously restricted foreign ownership in public utilities to a maximum of 40%. This amendment allows for full foreign ownership in sectors previously capped at 40%, specifically identifying railways, airports, expressways, and telecommunications as eligible for complete foreign investment.

Strategic Sectors Retain Ownership Limits:

While opening key sectors to foreign investment, the Philippines maintains restrictions on foreign ownership in vital public utilities deemed critical to national security. These sectors, limited to a maximum of 40% foreign ownership, include:

• Electricity distribution and transmission
• Seaports
• Water pipeline distribution and sewerage
• Public utility vehicles

This strategic approach aims to balance the benefits of foreign investment with the need to safeguard essential infrastructure.

National Security Safeguards:

Recognizing the potential risks associated with foreign investment in sensitive sectors, the government has implemented robust safeguards to protect national security. These include:

Presidential Veto Power:

• The President retains the authority to prohibit or suspend any foreign investment in public service based on the recommendation and review of a state agency.

Restrictions on State-Owned Enterprises:

• Foreign state-owned enterprises are restricted from owning capital stock in public utilities or critical infrastructure.

Reciprocity Clause: 

• A reciprocal clause prevents foreign nationals from owning a majority share in critical infrastructure unless their country grants the same rights to Filipino investors.

Stringent Standards:

• Telecommunications businesses are obligated to meet relevant ISO standards, and all operating public services will be mandated to perform annual audits to assess costs and service quality.

Boosting MSMEs and Global Value Chain Integration:

The reforms are particularly aimed at benefiting the Philippines’ micro, small, and medium-sized enterprises (MSMEs), which constitute 99% of businesses and 60% of total employment. The government hopes that increased foreign investment will lead to enhanced technical cooperation, enabling MSMEs to achieve economies of scale and develop more competitive products and services, ultimately strengthening their participation in global value chains.

Part of Broader Economic Reforms:

The amendment of the Public Service Act is part of a broader series of economic reforms in the Philippines designed to improve business competitiveness. These reforms include allowing 100% foreign ownership of renewable energy projects and domestic enterprises, including micro-enterprises.

By opening its doors to foreign investment while implementing strategic safeguards, the Philippines aims to unlock its economic potential, attract much-needed capital and expertise, and ultimately improve the lives of its citizens. The success of these reforms will depend on effective implementation and continued monitoring to ensure that the benefits are widely shared and that national security is adequately protected.