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The Philippines has introduced a new law allowing foreign investors to lease private land for up to 99 years, replacing the previous 50-year lease term with a 25-year extension. This move aims to enhance the country's competitiveness in attracting long-term offshore funding for commercial and industrial projects. The law addresses investor concerns about lease contract stability, especially for multi-decade investments, as the Philippine Constitution prohibits foreign ownership of private land.
The Philippines has enacted a new law permitting foreign investors to lease private land for up to 99 years, a significant extension from the previous maximum of 50 years with a 25-year extension. Signed by President Ferdinand Marcos Jr., the legislation aims to bolster the country's appeal to international investors seeking long-term commitments for commercial and industrial ventures. This policy change addresses concerns about the stability and predictability of lease agreements, which have been a deterrent for foreign investment in the past. Advertisement
The new law, known as Republic Act No. 12252, amends the Investor's Lease Act of 1993. It allows foreign investors to enter into lease agreements for private lands with a maximum term of 99 years, applicable to various sectors including industrial estates, factories, agro-industrial enterprises, tourism, agriculture, agro-forestry, and ecological conservation. The legislation requires that leases be registered with the local Registry of Deeds and recorded on the property's title, ensuring legal clarity and protection for investors.
Foreign investors are also required to register their projects under the Foreign Investments Act of 1991 and the Corporate Recovery and Tax Incentives for Enterprises Act, as amended by the CREATE MORE Act. These requirements aim to streamline the investment process and provide a stable environment for foreign investments.
The Philippines has faced challenges in attracting foreign direct investment (FDI), with net FDI declining by 27% to USD 2.96 billion by the end of May 2025, compared to USD 4.04 billion a year earlier. This decline has been attributed to uncertainties in land lease terms and other regulatory factors. The new law is expected to create a more stable and predictable leasehold system, addressing these concerns and making the Philippines more competitive in the Southeast Asian region.
The Philippine Economic Zone Authority (PEZA) has welcomed the new legislation, stating that it provides foreign investors, particularly those in economic zones hosting multinational companies in manufacturing, agro-industrial processing, tourism, renewable energy, logistics, and IT-BPM sectors, with the long-term security and flexibility needed for capital-intensive projects with long gestation periods.
While the extended lease term offers numerous advantages, including increased foreign direct investment and job creation, it also presents challenges. Local firms may view foreign investors as direct competition, potentially hindering growth and collaboration. However, experts believe that the benefits outweigh the challenges, and the law will foster a more dynamic and competitive business environment in the Philippines.
Source: Reuters
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