Business Briefer: Opportunities for Foreign Investment in the Philippines

by Atty Anrei Christia C. Mallari, Associate Lawyer

Overview

The Philippines offers robust opportunities for foreign investment, bolstered by recent reforms. The Foreign Investments Act of 1991 and the Ease of Doing Business and Efficient Delivery of Government Services Act of 2018 allow foreign investors to hold up to 100% equity ownership, subject to specified government restrictions. These laws also provide streamlined procedures and faster processing for business and non-business government transactions, while offering fiscal and non-fiscal incentives for high-value investments. Prime investment sectors include renewable energy, financial technology (fintech), and healthcare, each offering high-growth potential aligned with national priorities.

1. RENEWABLE ENERGY

1. Ownership and Management Control

• Foreign investors enjoy 100% ownership in Philippine renewable energy projects. 
• Foreign investors may engage in the exploration, development, and utilization of the country’s renewable energy resources, such as solar, wind, biomass, ocean or tidal energy.
• There is also no nationality restriction in the operation of power plants in the Philippines utilizing fossil fuels, such as coal, oil and natural gas.
• Notwithstanding full foreign ownership of certain renewable energy projects, the appropriation of waters directly from the source for power generation remains limited to Filipino citizens or qualified juridical persons under the Water Code and relevant jurisprudence.

2. Fiscal Incentives of Renewable Energy Developers

Renewable energy (RE) developers registered under the Renewable Energy Act of 2008 may qualify for the following incentives, subject to registration and compliance with implementing rules.

1. Income tax holiday (“ITH”) for  the first seven (7) years of commercial operations;
2. Exemption from tariff duties and taxes on the importation of RE machinery, equipment, materials and parts for 10 years from issuance of the Certificate of Registration, when used for RE facilities;
3. Special realty and related taxes on machinery, equipment and other improvements actually and exclusively used for RE facilities, capped at 1.5% of original cost less accumulated normal depreciation or net book value.
4. Net operating losses incurred during the first 3 years of commercial operation may be carried over and deducted from gross income for the next 7 consecutive taxable years, under prescribed conditions.
5. After the ITH period, an RE developer may be subject to a 10% corporate income tax rate on net taxable income, instead of the regular 25% rate, provided specified conditions are met.
6. If the RE project does not avail of the ITH before full operation, it may apply accelerated depreciation on RE capital equipment.
7. Zero percent VAT on (i) the sale of power or fuel from RE sources to specified buyers and (ii) certain RE‑related transactions (e.g., purchases by RE developers), as further detailed and operationalized in RR 7‑2022.
8. Exemption from all national taxes on proceeds from the sale of carbon emission credits generated from qualified RE projects.
9. Tax credit equal to 100% of the VAT and customs duties that would have been paid had RE machinery, equipment, materials and parts been imported, where these are instead purchased domestically for use in the RE project, subject to conditions.

3. Non-Fiscal Incentives of Renewable Energy Developers

Renewable energy developers are also entitled to several key non‑fiscal incentives under the Renewable Energy Act of 2008 and its implementing rules.

1. Renewable Portfolio Standards (“RPS”) place an obligation on certain electric power industry participants to source or produce a minimum share of their electricity from eligible renewable energy resources;
2. Feed-in-Tariff (“FIT”) System requires specified industry participants to purchase electricity from qualified renewable energy generators at a guaranteed fixed price for a defined period as determined by the ERC;
3. Renewable Energy Market (“REM”) which serves as the trading platform for Renewable Energy Certificates, enabling market participants to comply with RPS and allowing renewable energy output to be sold and traded without the need for individual bilateral supply contracts.;
4. Green Energy Option Program (“GEOP”), a mechanism that allows qualified end-users to choose renewable energy resources as their source of electricity supply.;
5. Net-Metering, a consumer-based scheme where an end-user that generates electricity from an eligible on-site renewable energy facility can export excess generation to the local distribution grid and use such exported energy to offset its electricity consumption from the distribution utility.; and
6. Accelerated depreciation may be applied to the plant, machinery, and equipment of a renewable energy project if the project does not receive an income tax holiday before it becomes fully operational.

4. Market Opportunities

The Philippine renewable energy (RE) sector has increasingly positioned itself as a high-growth industry with significant investment potential, driven by supportive government policies, expanding renewable energy targets, declining technology costs, and a range of available market entry mechanisms. Under the Philippine Energy Plan and related programs, the government aims to increase the Renewable Energy share in the generation mix to around 35 percent by 2030 and 50 percent by 2040, anchoring a multi‑decade pipeline of greenfield and expansion projects. These policy initiatives have already translated into substantial investment activity, with the Board of Investments and the Department of Energy reporting approximately PHP 1.35 trillion of approved investments in 2024, roughly 95 percent of which are attributed to renewable energy projects.

Taken together, these developments underscore the Philippines’ growing position as a key renewable energy investment destination in Southeast Asia. For foreign investors, the combination of liberalized ownership rules, robust fiscal incentives, rising demand for clean electricity, and multiple bankable routes to market presents a significant opportunity not only to participate in the country’s energy transition but also to scale long-term investments in a rapidly expanding sector.

2. FINANCIAL TECHNOLOGY

Developments in the Philippine fintech market have accelerated significantly in recent years. In 2022, the number of registered e-money accounts—the most widely held type of financial account in the country—reached approximately 257.5 million. Digital financial adoption is expected to continue expanding, with projections indicating that around 81 million Filipinos will be using digital financial services by 2025. As a result, the Philippine fintech sector is well positioned for sustained expansion, supported by widespread internet and smartphone adoption and the forward-looking regulatory approach of the Bangko Sentral ng Pilipinas. These developments are laying the groundwork for a dynamic fintech landscape marked by increasing investment in digital infrastructure, the growth of local startups, the entry of international firms, and continued government support for financial innovation.

1. Ownership and Management Control

• A fintech entity in the Philippines can be 100% foreign-owned, provided minimum capital requirements are met and BSP and/or SEC licensing is secured.
• Foreign investors with majority or full ownership retain full management rights, appointing directors and officers without nationality restrictions in eligible fintech sectors.

2. Regulatory Compliance

• Foreign investors who wish to establish a fintech business in the Philippines must register with the appropriate government bodies, such as the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP), to be allowed to operate legally in the country. 
• A Fintech startup can apply for any of the following licenses from the BSP and/or the SEC:

1. Electronic Money Issuer (“EMI”);
2. Regulatory Sandbox Framework;
3. Virtual Asset Service Provider (“VASP”); 
4. Operator of a Payment System (“OPS”);
5. Merchant Payment Acceptance Activities;
6. Money Service Business (“MSB”);
7. Electronic Financial and Payment Service (“EFPS”);
8. Digital Banks;
9. Crowdfunding;
10. Lending and Financing; and
11. Crypto-Asset Service Provider.

3. Incentives

Fintech firms pursuing Strategic Investment Priority Plan (SIPP)-eligible activities—such as R&D incorporating fourth industrial revolution digital technologies or advanced manufacturing of innovative products and services—can access incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. Available benefits encompass income tax holidays and enhanced deductions for qualifying expenses.

4. Market Opportunities

The Philippine fintech market presents substantial opportunities for foreign investors, with revenues projected to reach approximately USD 1,156.41 million in 2025 and expand to around USD 4,661.14 million by 2034, reflecting a compound annual growth rate (CAGR) of 16.75% from 2026 to 2034. This sustained expansion is driven by increasing digital adoption, particularly in provincial and underserved markets, as well as the continued shift toward digital financial services across the economy.

Regulatory developments have further strengthened the sector’s attractiveness. The Bangko Sentral ng Pilipinas has provided greater regulatory clarity through frameworks governing digital banking licenses, electronic money issuers (EMIs), virtual asset service providers (VASPs), and emerging open finance initiatives. At the same time, improvements in digital connectivity infrastructure have lowered barriers to market entry and facilitated the participation of foreign investors.¹

These developments, together with opportunities to support adjacent sectors such as renewable energy financing, position the Philippine fintech industry as an increasingly attractive destination for foreign investment.

3. HEALTHCARE

The Philippine government enacted Republic Act 11223 or the Universal Health Care (UHC) Law in 2019, allowing all Filipinos access to healthcare services under the government’s health insurance program.  Currently, the UHC law mandates that all Filipinos be automatically enrolled in the National Health Insurance Program under the Philippine Health Insurance Corporation (PhilHealth), granting eligibility to health benefits packages. Consequently, the government’s commitment to providing all Filipinos with access to quality care has created an urgent need for diagnostic centers and primary care networks.

1. Ownership and Management Control

• The Foreign Investments Act, as amended, allows 100% foreign ownership of domestic enterprises. The minimum paid-in capital is $200,000, reducible to $100,000 if the project involves advanced technology as determined by the Department of Science and Technology (DOST) or directly employs at least 15 Filipinos. 
• The Public Service Act, as amended, defined the sectors considered as public utilities, and which are subject to the 40% foreign equity restriction imposed by the Constitution. Other sectors, which were not identified as public utilities but are considered as public service, are allowed to be owned up to 100%.  Healthcare services are not public utilities, allowing 100% foreign equity in hospital operations and clinics.

2. Regulatory Compliance

• The Department of Health (DOH) and Philippine Health Insurance Corporation (PhilHealth) are among the key local bodies that oversee healthcare standards. These institutions are responsible for quality checks and for maintaining databases that track healthcare outcomes.

3. Incentives

• The tax landscape for healthcare in the Philippines is governed by the CREATE MORE Act, which updated the original CREATE Act to be even more investor-friendly. Under the Strategic Investment Priority Plan (SIPP), healthcare is categorized as a priority sector. However, the depth of incentives depends on whether the facility is a Specialty Hospital (typically Tier II/III) or a Diagnostic Lab (typically Tier I).
• Specialty hospitals (e.g., oncology, cardiology, or neurology centers) are viewed as “Pioneer” or high-value activities because they address gaps in the Philippine medical value chain.

• They are granted an Income Tax Holiday (ITH) – usually 5 to 7 years, depending on the location. Strategic Tip: Locating in “Less Developed Areas” (LDAs) outside Metro Manila grants the full 7-year ITH.
• After the ITH ends, specialty hospitals can choose a 20% Corporate Income Tax (CIT) rate (down from the standard 25%) while enjoying enhanced deductions:
  • 100% additional deduction for training expenses for Filipino medical staff.
  • 50% additional deduction for labor expenses.
  • 100% additional deduction for R&D expenses.
• Specialty hospitals are entitled to 100% exemption on customs duties for high-end medical machinery (MRI, PET scanners, etc.) and spare parts.
• Specialty hospitals are also entitled to  0% VAT on local purchases and VAT-exempt importation of capital equipment “directly attributable” to hospital operations.
• Diagnostic labs are generally classified under Tier I (Basic Needs). While still lucrative, the duration of the tax “shield” is shorter.
  • They are granted an Income Tax Holiday (ITH) – typically 4 to 5 years.
  • Similar to hospitals, labs can avail of the 20% CIT rate under the Enhanced Deductions regime.
  • Duty-free importation is still available for lab equipment (automated analyzers, genomic sequencers), provided the technology is not available locally in sufficient quality or quantity.
  • Under current BOI guidelines, ITH only applies to revenues derived from actual medical/diagnostic services. Ancillary income is taxed at the regular 25% CIT.

4. Market Opportunities

The Philippines EHealth Market Report 2026 highlights a paradigm shift toward “mobile-first” healthcare. Currently, no legislation supports health IT in the Philippines. However, the Philippine Department of Health and the Philippine Health Insurance Corporation (PhilHealth) issued Joint Administrative Order 2021-002, also known as the Mandatory Adoption and Use of National Health Data Standards for Interoperability.  Accordingly,  PhilHealth – the nation’s health insurance provider-  has created an IT roadmap outlining its strategies for establishing standards for PhilHealth’s IT policies for investment, planning, and execution.

The Philippine medical device industry is highly dependent on imports. With the expansion of the Health Facilities Enhancement Program” (HFEP) – a flagship initiative of the Department of Health –  there is a high demand for high-end medical imaging and laboratory equipment.

References:

¹Department of Energy, Department Circular No. DC2022-11-0034: Prescribing Amendments to Section 19 of Department Circular No. DC2009-05-0008 Titled, “Rules and Regulations Implementing Republic Act No. 9513, otherwise known as ‘The Renewable Energy Act of 2008’” (15 November 2022), accessed at Link..pdf.
²Department of Justice, DOJ Opinion No. 21, s. 2022, on foreign ownership in renewable energy projects and limitations under the Water Code (29 September 2022).
³Rep. Act No. 9513, An Act Promoting the Development, Utilization and Commercialization of Renewable Energy Resources and for Other Purposes (16 Dec. 2008) (Renewable Energy Act of 2008).
⁴Philippine News Agency, New RE Plan Targets 35% Share of Power Generation by 2030 (Nov. 15, 2023), Link (last visited Mar. 3, 2026); Department of Energy, Philippine Energy Plan, DOE Link. (last visited Mar. 3, 2026).
⁵Department of Energy, DOE Lauds Record-Breaking P1.35 Trillion Investments, Driven by Renewable Energy Growth (Sept. 17, 2024), DOE Link (last visited Mar. 3, 2026); SolarQuarter, Philippines Achieves Record Investments in Renewable Energy Amid DOE Policy Reforms (Sept. 19, 2024), link
⁶Bangko Sentral ng Pilipinas, The 2023 Annual Report of the National Strategy for Financial Inclusion (NSFI) 2022–2028, link.pdf (accessed Feb. 23, 2026).
⁷Manila Bulletin, 58 M Filipinos Spent 4.4M Hours on E-wallet Apps (Apr. 9, 2023), Link (accessed Feb. 23, 2026).
⁸Foreign Investments Act of 1991, Republic Act No. 7042 (June 13, 1991), as amended by Republic Act No. 11647 (Mar. 3, 2022).
⁹IMARC Group, Philippines Fintech Market Size, Share, Trends & Forecast 2034, (accessed March 6, 2026).
¹⁰Bangko Sentral ng Pilipinas, Circular No. 1166 (Amended EMI Regulations) and Circular No. 1170 (Customer Due Diligence and e-KYC), discussed in Chambers and Partners, Fintech 2024 – Philippines: Trends and Developments, link (accessed Mar. 3, 2026).
¹¹Ibid.
¹²Foreign Investments Act of 1991, Republic Act No. 7042 (June 13, 1991), as amended by Republic Act No. 11647 (Mar. 3, 2022).
¹³Public Service Act, Commonwealth Act No. 146 (Nov. 7, 1936), as amended by Rep. Act No. 11659 (Mar. 21, 2022).
¹⁴An Act Amending Sections 27, 28, 32, 34, 57, 106, 108, 109, 112, 135, 237-A, 269, 292, 294, 295, 296, 297, 300, 301, 308, 309, 310, and 311 and adding new sections 135-A. 295-a, 296-A, and 297-A of the NIRC of 1997, as amended and for other purposes, R.A. No. 12066 (Nov. 8, 2024).
¹⁵Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, R.A. No. 11534 (Mar. 26, 2021).
¹⁶Office of the President of the Philippines, Memorandum Order No. 61: Approving the 2022 Strategic Investment Priority Plan (May 24, 2022).¹⁷

Author

This article is authored by Attorney Anrei Christia C. Mallari, Associate Lawyer at Zosa Borromeo Ong Vaño & Mirhan Law, whose practice focuses on Corporate and Commercial Law, Corporate Structuring and Governance, Commercial Contracts and Advisory, Regulatory and Compliance Advisory, and Financial Technology.