60-40 foreign investment rule exempts renewable energy sources: DOJ
The Department of Justice (DOJ) has exempted the renewable energy market from the 60-40 foreign investment rule where at least 60% of a Philippine business should be owned by a Filipino citizen, while the rest can be owned by the foreign investor.
In its opinion released on Thursday (Sep 29), the DOJ explained that Section 2, Article XII of the 1987 Constitution excludes sun, wind, and hydro energy sources as it “only covers things that are susceptible to appropriation.”
However, the DOJ noted that "appropriation of waters, direct from the source, for power generation" should still continue observing the 60-40 equity rule.
“The intent of the constitutional foreign ownership restriction was to preserve for Filipinos limited and exhaustible resources,” the DOJ added.
Meanwhile, the Justice department said that the Department of Energy (DOE) still has to amend its implementing rules and regulations (IRR) of Republic Act No. 9513 or the Renewable Energy Act of 2008 following the opinion.
In response, DOE Secretary Raphael Lotilla said that the agency is already looking into revisions for RA 9513. He also thanked the DOJ for the development.
“The DOE is preparing the necessary amendments to Rule 6, Section 19 of the IRR of the RE Law,” Lotilla said in a statement.
“We express our appreciation to DOJ Secretary Crispin ‘Boying’ Remulla and his legal team for this favorable development which will pave the way for the opening of foreign investments in renewable energy development," he added.
More investments expected
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the DOJ’s legal opinion would encourage more investments in the renewable energy sector which could increase power supply and bring down prices, among others.
“This would further facilitate the increased shift to renewable power from coal/oil/petroleum to reduce carbon emissions/footprint and also reduce reliance on imported oil/coal/petroleum,” Ricafort said in a message.
Additionally, the move could also help increase the foreign direct investment (FDI) into the Philippines according to China Banking Corp. Chief Economist Domini S. Velasquez.
“Opening up renewable energy to greater foreign ownership will help increase FDIs to the Philippines. Supplemented by other liberalization laws, such as the amendments to the Public Service Act and Retail Trade Liberalization Act, among others, we expect to attract more foreign investors to the country,” Velasquez said.
Pola Rubio is a news writer and photojournalist covering Philippine politics and events. She regularly follows worldwide and local happenings. She advocates for animal welfare and press freedom. Follow her on Twitter @polarubyo for regular news and cat postings. The views expressed are her own.
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