How Foreigners Can Work in Nationalized and Partly-Nationalized Industries

If you’re a foreign national looking to work in the Philippines, then you will need a working visa and an Alien Employment Permit (AEP).

In a previous blog postwe told you how foreigners can obtain their AEP from the Department of Labor and Employment (DOLE). For industries that are legally prohibited from hiring foreign nationals, the blog post also lists the steps the employer needs to take if they want to be exempted from the rule.

Under these special circumstances, you will need additional documents to work in The Philippines.

Nationalized and Partly-Nationalized Industries

The Foreign Investments Act of 1991 (FIA) regulates the participation of foreign nationals in local activities. Under this act, nationalized and partly-nationalized industries are among those listed in the Foreign Investment Negative List (Negative List). Among the industries that foreign nationals cannot invest or work in are the mass media, professional practices (ex. pharmacy, radiology, law, etc.), mining, public utilities, advertising, and gambling.

Foreigners can be hired to work in nationalized and partly-nationalized industries only if there are no Filipinos with the technical skills to do the job. In such cases, the foreign national who is hired is required to train their Filipino colleagues in their area of expertise.

These foreign hires will need to obtain:

  • An Authority to Employ permit from the DOJ
  • A Special Temporary Permit (STP) from the:
    • Professional Regulation Commission (PRC)
    • Department of Trade and Industry (DTI) or Department of Environment and Natural Resources (DENR) for mining

Certain industries under the Negative List may have different requirements. For example, if the employer is a retailer included in the negative list, the foreigner must also submit an updated General Information Sheet (GIS).

Moreover, PRC Resolution No. 2012- 668 lays down the guidelines and requirements for a Special Temporary Permit, including the kind of foreign professionals that must apply for the permit.

They are:

  • Foreign professionals who wish to practice in the Philippines under reciprocity of other international agreements
  • Foreign consultants in foreign-funded, joint venture, or foreign-assisted projects of the government
  • Foreign employees of Philippine and foreign private firms or institutions pursuant to law
  • Foreign health professionals on humanitarian missions
  • Filipino professionals who have emigrated and become naturalized citizens of the countries they moved to

Role of the Anti-Dummy Law

The Anti-Dummy Law (Commonwealth Act No. 108) imposes criminal and civil penalties on people who violate foreign equity restrictions. This means that Filipinos must own at least 60% of a nationalized and partly-nationalized enterprise.

The exceptions to the 60% Filipino-owned enterprise are:

  • Mass media and the practice of some professions – 100% Filipino ownership Private recruitment companies for local or overseas employment – 75% Filipino ownership
  • Advertising – 70%  Filipino ownership
  • Retail trade enterprises with a paid-up capital of less than US$2.5 million

P.D. No. 715 amended the Anti-Dummy Law to allow foreigners to sit as members of the board of directors in partially nationalized industries in a number proportionate to their allowed equity in the company. SEC Memorandum Circular No. 8 Series of 2013 clarifies that Filipino ownership applies to the total number of outstanding shares of stock whether or not these stockholders are entitled to vote in the election of directors.

To learn more about Philippine business laws, contact Duran & Duran-Schulze Law at info@duranschulze.com or (+632) 478 5826.

Sources: Professional Regulation Commission