As of the end of 2025, the Philippines remains a popular emerging market in Southeast Asia, thanks to its optimized investment policies, steady economic growth, and demographic dividend of a young population. Its investment system, centered on the Foreign Investments Act, combined with the in-depth implementation of the CREATE MORE Act and the adjustment of the 2025 new Negative List, has formed a more competitive framework. Based on the 2025 perspective, this guide analyzes key investment points from four dimensions to provide practical operation guidance.

I. Core Framework of the Philippines' Investment Environment

1. Legal and Policy Basis

The Philippines' legal system for foreign investment continues to improve, with the 1991 Foreign Investments Act as its foundation. The 2025 new Negative List has reduced 11 restrictive items compared to the 2022 version, further lowering thresholds in sectors such as retail and value-added telecommunications services. Foreign capital can fully access industries not included in the list. The concurrently implemented Revised Corporation Code has raised the foreign ownership ceiling from 40% to 60%, significantly lowering entry barriers for most industries.

The 2024 CREATE MORE Act has fully released dividends in 2025, unifying the corporate income tax rate to 20% and extending the preferential period to 24-27 years. Manufacturing and tourism industries enjoy electricity cost deductions and reinvestment subsidies, while export-oriented enterprises receive zero tax rates for local purchases and tax exemptions for imported materials. The 2025 Investment Priorities Plan (IPP) issued by the Board of Investments (BOI) tilts toward AI applications, green infrastructure, and other fields to strengthen policy guidance.

2. Investment Advantages and Challenges

Advantages: The GDP is expected to grow by 5.48% in 2025, led by the service industry with a rebound in agriculture. Boasting a high English proficiency rate and labor costs maintained at 220-450 US dollars per month, its median population age of 26 is well-suited for AI applications, which can bring significant increments to the economy. Leveraging the RCEP and the Philippines-Korea Free Trade Agreement, it has become a preferred destination for supply chain layout.

Challenges: Risks of policy continuity and occasional corruption persist. Although infrastructure has improved, there is still a funding gap to fill. The Securities and Exchange Commission (SEC) has tightened registration reviews, resulting in a high failure rate due to document errors. Uncertainties in U.S. tariff policies and a slowdown in industrial output growth pose potential pressures on export-oriented enterprises.

II. Key Investment Industries and Access Rules

1. Encouraged Industries (Liberal Foreign Access, Obvious Policy Inclination)

(1) Information Technology and BPO Services: This industry maintains a leading position, with AI-powered intelligent outsourcing and data services emerging as new hotspots. Foreign capital can hold 100% ownership with no minimum capital requirement. In 2025, PEZA relaxed remote work restrictions for administrative positions; enterprises settling in PEZA enjoy tax reductions, import equipment tax exemptions, and other preferential policies, driving a significant increase in investment enthusiasm.

(2) Export-Oriented Manufacturing: Foreign capital can hold full ownership, focusing on fields such as electronic components and auto parts. Enterprises settling in PEZA enjoy benefits including simplified customs clearance and additional deductions for R&D expenses. Major projects are eligible for customized incentives and 4-7 years of corporate income tax exemptions, with strong policy support.

(3) Tourism and Hotel Industry: The industry is recovering strongly, allowing 100% foreign ownership. High-end hotels, eco-resorts, and other projects are included in the encouraged scope. In addition to conventional tax incentives, enterprises also enjoy electricity cost deductions and reinvestment subsidies. Coupled with the upgrading of local consumption, niche segments show prominent potential.

(4) Infrastructure and Logistics: The "Build, Build, Build" program continues to advance, with the PPP model being the main way for foreign capital to participate. Foreign capital can hold 100% ownership in public service projects such as telecommunications and airports. Green infrastructure projects can prioritize access to funding support and tax incentives, becoming a new investment direction.

2. Restricted Industries (Limited Foreign Ownership, Minor Rule Adjustments)

(1) Mining and Natural Resources Development: It follows the "60-40" joint venture rule, limiting foreign ownership to no more than 40%. 100% foreign participation requires an FTAA (Financial or Technical Assistance Agreement) signed by the President. In 2025, an additional carbon emission reduction plan requirement was added, raising compliance thresholds.

(2) Retail Trade: Liberal policies are maintained; foreign capital can hold 100% ownership if the paid-in capital meets the standard. Under the RCEP framework, it enjoys preferential regional commodity quotas, with reduced local purchase ratio requirements. However, regular reporting of sales data is mandatory, making supervision more transparent.

(3) Financial Services: The banking industry is fully open, while the foreign ownership ceiling for the securities industry remains 40%. The 2025 Capital Market Efficiency Enhancement Act has been implemented, reducing transaction tax rates to lower costs for foreign capital. Foreign banks must meet higher capital adequacy ratios and cooperate with cross-border capital flow supervision.

3. Prohibited Industries (Full Foreign Restriction, Unchanged Scope)

Fields such as land ownership (foreign capital can only lease, with a maximum term of 50 years, renewable for another 25 years), mass media, professional services, small-scale mining, and gambling remain off-limits to foreign capital in 2025 due to sovereignty protection or public security considerations, with no changes to the rules.

III. Mainstream Investment Methods and Operational Paths

1. Equity Investment (Establishing New Enterprises or Taking Stakes)

(1) Joint Venture Model: Applicable to restricted industries. Under the Revised Corporation Code, the foreign ownership ceiling is raised to 60%. Joint ventures must be registered with the SEC; it is advisable to cooperate with local compliant enterprises to reduce policy risks.

(2) Wholly Foreign-Owned Enterprise Model: 100% foreign ownership is allowed in non-listed industries. The minimum paid-in capital for enterprises with foreign ownership exceeding 40% is reduced to 100,000 US dollars. Encouraged projects such as AI and green manufacturing can be approved preferentially, with a more streamlined registration process.

2. Merger and Acquisition Investment (Acquiring Equity in Local Enterprises)

M&A processes have become more standardized in 2025, requiring approval from the board of directors, shareholders' general meeting, and SEC; special industries need prior approval from competent authorities. Transaction tax reductions can be used to optimize costs. It is recommended to hire local institutions to verify the compliance of the target enterprise to avoid tax and labor disputes.

3. Agreement-Based Investment (FTAA and PPP Models)

(1) FTAA Agreement: Limited to large-scale mining projects, with an approval cycle of 12-18 months. Foreign parties must assume full-process responsibilities and meet environmental and employment indicators to obtain long-term operating rights.

(2) PPP Model: Focused on infrastructure projects, with a maximum concession period of 50 years. Foreign capital must participate through open bidding; forming a consortium with local enterprises can increase the winning probability, while relying on ODA funds to reduce financial pressure.

4. Special Zone Investment (Settling in Economic Zones)

PEZA is the preferred choice for foreign capital, realizing digital approval in 2025. R&D-oriented enterprises enjoy 200% expense deductions. Subic and Clark Freeports have added preferential policies for cross-border e-commerce, making them suitable for laying out regional distribution centers to radiate the Asia-Pacific market.

IV. Investment Compliance Processes and Safeguard Measures

1. Registration Process

(1) Ordinary Enterprise Registration: Complete name verification, document submission, tax registration, and special licensing in sequence. In 2025, additional requirements for capital flow certificates and compliance commitments were added, taking 3-6 weeks for the entire process. Strict control over document authenticity is required.

(2) Special Zone Enterprise Registration: Submit an application to PEZA and sign an investment agreement. Dedicated liaison officers can shorten the approval cycle to 2-4 weeks. Subsequent tax and licensing procedures are handled with the registration certificate.

2. Investment Protection and Rights

Capital and returns can be freely remitted overseas. Assets shall not be expropriated except for public purposes, in which case fair compensation shall be provided. The China-Philippines Double Taxation Avoidance Agreement remains in effect; for Chinese investors holding ≥25% equity, the dividend withholding tax rate is reduced to 10%, which can be enjoyed through compliant declaration.

3. Compliance Risks and Responses

Track policy updates and hire local law firms to verify access rules; strictly fulfill tax declaration obligations and standardize related-party transactions; establish a localized compliance team to respond to operational supervision requirements such as environmental protection and employment, reducing audit risks.

V. 25 Investment Summary and Recommendations

In 2025, investment opportunities in the Philippines are concentrated in AI-enabled services, export manufacturing, green infrastructure, and other fields. The policy environment continues to optimize, but supervision and economic volatility risks still require vigilance. Investors should prioritize encouraged industries, prefer special zone and PPP models, and strengthen full-process compliance management with the support of local institutions.

In the long run, the Philippines' demographic and trade advantages are significant. It is recommended to adopt a "steady layout, phased advancement" strategy, enter the market with small-scale pilots, expand after familiarizing with the rules, and accurately seize dividends in emerging tracks.