Philippines: A calculated bet to catch up with neighbours on foreign direct investments

Manila: The Philippines trails regional peers in foreign direct investment, posting $5.5 billion net inflows from January to September 2025 — dwarfed by Vietnam's $28.5 billion over the same period.

Manila seeks to reverse this.

Philippine legislators passed Republic Act No. 12252, which was signed by President Ferdinand Marcos Jr on September 3, 2025.

This Act liberalises private land leasing for qualified foreign investors while preserving constitutional land ownership restrictions.

Effective 15 days post-publication, the law extends lease terms to 99 years from the prior 75-year maximum under RA 7652, targeting job creation in manufacturing, tourism, and agro-industry.

At its core, RA 12252 addresses investor hesitancy over land tenure security.

Previously limited to 50-year initial leases renewable once for 25 years, foreign nationals could now secure near-permanent use rights for approved projects — up to 1,000 hectares for agribusiness, provided usage matches registered investments under laws like the Foreign Investments Act (RA 7042) and CREATE MORE Act (RA 12066). 

Oversight falls to Investment Promotion Agencies (IPAs) such as the Board of Investments (BOI), Philippine Economic Zone Authority (PEZA), and regional authorities like Clark Development Corp. 

Leases must register with the Registry of Deeds (RoD), annotated on titles, and tie directly to productive purposes; subleasing requires landowner consent and compliance.

There are guardrails to temper potential abuse. 

Projects must commence within three years, subject to BOI/Fiscal Incentives Review Board (FIRB) timelines and revocation for delays or misuse. 

Violations — excessive terms or improper land use — render contracts void ab initio (from the start), with penalties up to ₱10 million fines and six years imprisonment for responsible officers. Existing leases under RA 7652 remain valid but ineligible for automatic 99-year extensions. 

This structure balances investor certainty with state control, allowing termination via due process while prohibiting arbitrary cancellations of registered contracts.

The law positions the Philippines competitively without necessarily granting “freehold” ownership.

It complements reforms like CREATE MORE's tax perks, cheaper renewables, and the Right-of-Way Law (RA 12289), potentially unlocking industrial parks, eco-tourism estates, and factories. 

Japanese and South Korean firms have signalled interest, mirroring Vietnam’s success in drawing electronics and renewables giants through similar land access.

Challenges persist.

Corruption scandals — budget scams involving lawmakers, officials, and contractors, Manila's legendary traffic and infrastructure woes — undermine confidence, as highlighted by recent Ombudsman Jesus Crispin Remulla's judiciary critique and Marcos's ₱92.5 billion budget vetoes targeting “unprogrammed funds”.

Remulla declared recently that corruption plagues not just the executive and legislative branches, but the judiciary with equal "severity".

Speaking on a Manila radio show, he spotlighted the anti-graft court Sandiganbayan's controversial acquittals as evidence of systemic issues.

Remulla specifically recalled the fertilizer fund scam, where former Department of Agriculture Undersecretary Jocelyn "Joc-joc" Bolante walked free despite facing plunder charges over the P723-million scandal.

"'Yung Sandiganbayan ang galing din mag-acquit, ano? Lahat ng dahilan para mag-acquit, meron ang Sandiganbayan," Remulla said, implying the court masterfully finds legal loopholes to exonerate the accused. (Translation: "The Sandiganyan [anti-graft court] is good in acquittals, right? All excuses to acquit.")

“(May mga) abogado na gumagapang. Kaya nga 'yung corruption sa atin, huwag ninyong sasabihing sa executive lang ’yan o legislative. Matindi ho 'yung judiciary. Matindi ho ’yan. Panoorin n’yo lahat ng judges. Panoorin n’yo 'yung mga justices. Panoorin natin," the Ombudsman said. (Translation: "There are lawyers who crawl [through corridors of influence]. That's why our corruption — don't say it's only in the executive or legislative. The judiciary is severe. It's severe. Watch all the judges. Watch the justices. Let's watch them.")

The remarks echo ongoing public frustration with high-profile acquittals, including Juan Ponce Enrile's recent PDAF pork barrel case clearance, amid Marcos Jr.'s budget vetoes targetting discretionary spending traps.

RA 12252’s investment linkage and IPA monitoring aim to mitigate graft risks, but enforcement remains key. 

Without parallel judicial reforms, scandals could deter the FDI surge needed to hit single-digit poverty by 2028.

Dispassionate observers note RA 12252 as pragmatic evolution, not revolution. 

It extends leasehold stability to match ASEAN rivals while upholding the 1987 Constitution's citizenship requirements. 

Success hinges on implementation: streamlined IPA approvals, transparent monitoring, and corruption accountability. 

If effective, it could narrow the FDI gap, spurring employment in priority sectors. Failure risks perpetuating the status quo — promising reforms amid persistent governance hurdles. 

Unlocking stability in land leases is just the start.

Remulla's call underscores deepening scrutiny of judicial integrity as essential to broader anti-corruption reforms and making development more inclusive.

Manila's playbook merits watching, but results will dictate its legacy.