By means of John Victor D. Ordoñez, Reporter
A move aimed at extending the maximum term for land leases entered into by foreigners to 99 years is likely to help the Philippines attract more investment, analysts said.
“Investors may be more inclined to commit to projects in the Philippines if they view the availability of longer-term leases as a guarantee of stability,” said John Paolo R. Rivera, Senior Research Fellow of the Philippine Institute for Development Studies , in a Viber message.
He said industrial parks, economic zones and tourism-related projects are expected to benefit as foreign companies are more likely to invest if they can be assured of longer land leases.
Last week, the House of Representatives and the Senate approved separate bills that would allow foreigners to lease land from ages 75 to 99. Both bills allow foreign investors to sublet properties unless barred by contract.
Under both versions, foreign private land leases related to tourism will be allowed if the investments are not less than $5 million. Of this amount, 70% must be injected into the project within three years years after a contract is signed.
The bill is one of President Ferdinand R. Marcos Jr.’s priority measures, which the government aims to approve before June 2025.
Lawmakers have yet to come up with a conciliatory version of the measure through a bicameral legislature conference committee.
However, Mr Rivera said the government must come up with clear guidelines for the measure and provide safeguards for local stakeholders.
“There may be concerns that longer lease terms could encourage speculative investment, where land is tied up for longer periods without being used productively,” he said.
“Extending lease terms could also lead to potential disputes with local communities over land use and allocation, especially in areas where indigenous rights and agricultural interests are at stake.”
The 1987 constitution bans foreigners from owning land in the country, but the 31-year-old Investors’ Lease Act allows foreign investors to lease private land for 50 years, renewable only once after 25 years.
“If the 99-year rental law is passed into law, it will contribute to a more favorable investment climate for foreign investors,” Calixto V. Chikiamco, president of the Foundation for Economic Freedom, said in a Viber message.
He cited a provision in a Senate bill that requires a lease to be registered with the Land Registration Authority (LRA), which he said would improve the “security and bankability” of leases.
Both bills allow foreign investors to lease land for agriculture, agroforestry and ecological conservation purposes.
They will also be allowed to enjoy longer leases to build industrial estates, factories, assembly or processing plants and tourist sites.
Subleases must be registered with the LRA’s register of deeds, according to copies of the bills from both the House of Representatives and the Senate.
The proposed measures also impose a fine of P1 million to P10 million on people who enter into illegal rental agreements.
Only the Senate version imposes prison terms of up to six years for lease violators. Members of Congress have abolished prison sentences.
The Senate version also provides that in the case of companies, associations or partnerships that violate lease agreements, the president, manager, director, trustees or other ofFicers will be held criminally liable.
Both versions also stipulate that only the Board of Investments or relevant investment promotion agencies may review and approve long-term leases.
Lease contracts will also be canceled if an investment project is not started within three years.
Leonardo A. Lanzona, an economics lecturer at Ateneo de Manila University, said the government would be better off with a comprehensive plan that would ease the entry and exit of foreign companies in local markets.
“We are going to replace the restrictions to attract big companies that want to take control of our markets in the long term because of their absolute control over the country,” he said in a Facebook Messenger chat.
Mr. Rivera said the Philippines still needs to work on improving the overall investment climate.
“Investors view rental terms as part of a broader investment climate, and the Philippines must continue to improve other aspects of its investment climate,” he said.