The Philippines is very much Asian in this respect. Personal relationships probably count for more than a big name coming through the door. You can be a well-recognised name, but unless you have that personal relationship with somebody, or you are introduced by somebody, people will be scared to deal with you as a partner because they don’t know what makes you tick.
Going back to foreign ownership, it is usually 60/40 in favour of a Filipino investor, particularly with public utility companies such as telecoms. If you want to get into telecoms and you are a big name, people will say 60/40, but the big carrier in the Philippines, which is Philippines Long Distance Telephone (PLDT), has found a solution. This has been challenged by the government and litigated all the way to our Supreme Court, which found in favour of PLDT.
Foreign investors from Hong Kong were dealing with PLDT for a long time and they found a way to secure more than 40 per cent. The foreign investors acquired the lion’s share, and it succeeded because if you work with somebody whom you know, they will do the necessary to make your business succeed. It’s legal, but you are sailing very close to the wind. The formula is applicable to other types of business as well. The Foreign Investments Act Negative List provides good guidance on businesses, subject to foreign equity ceiling. If the business is not included in the negative list, then the law allows the business to be owned 100 per cent by foreigners.
