DOJ says Executive Order No. 65 does not violate 60-40 rule

November 7, 2018

The Department of Justice ( DOJ) on Wednesday said President Rodrigo Duterte's Executive Order No. 65 allowing more foreign investments and permits foreigners to practice some professions in the country is legal.

Justice Secretary Menardo Guevarra said Wednesday that EO 65, which allows full foreign ownership in some business sectors and increases foreign equity in radio networks and public works, does not violate the 40-percent limit for foreign ownership and prohibition on foreign equity in mass media under the 1987 Constitution.

"We don't see anything objectionable on EO 65. It does not violate the limits on foreign investments set in the Constitution," Guevarra said in an interview.

The executive order issued by the Palace last Oct. 29 was the 11th foreign investment negative list, which enumerates areas or activities open to foreign investors and aims to draw more foreign direct investments.

"Public utilities, educational institutions, development of natural resources and ownership of private lands remain subject to the 60-40 rule," he said.

EO 65 allows 100-percent ownership or investment participation of foreigners in Internet businesses, lending and financing, wellness industry, higher education teaching (non-professional courses) and training centers and high-level skills development (not part of formal education system).

He said the increases in foreign equity in private radio communications networks from 20 percent to 40 percent and on construction and repair of locally-funded public works from 25 percent to 40 percent also do not violate the law.

"Foreign equity in mass media, except recording and Internet business, is still banned. The 60-40 rule also still applies to private radio communications network," he said. DMS