Longer lease for foreign investors

Longer lease for foreign investors | Daily Tribune

On 3 September 2025, President Ferdinand Marcos Jr. signed into law Republic Act 12252 amending the Investors’ Lease Act to extend the maximum period by which foreign investors may lease private land in the Philippines. From the previous cap of 75 years (50 years, renewable for 25), foreign entities may now lease land for up to 99 years.

The rationale behind the measure is straightforward: long-term stability. Many industries — manufacturing, infrastructure, agro-processing, tourism — require not just years but decades of planning and investment. A longer leasehold period allows investors to recover capital, expand operations, and reinvest with greater predictability. In theory, the change will help make the Philippines more competitive against its neighbors, several of which have been more successful in attracting foreign direct investment (FDI).

Recent data underscore the urgency. Central bank figures show that net FDI inflows to the Philippines fell by 27 percent in the first five months of 2025, amounting to just US$2.96 billion. In comparison, Vietnam and Indonesia secured more than US$20 billion each in the same period. The gaps highlight the need to make the investment climate more attractive, and government sees a longer lease horizon as part of that strategy.

Still, the law does not remove constitutional restrictions on foreign land ownership. It simply lengthens the time frame within which foreign investors may use private land, whether for industrial estates, factories, or other long-term projects. Ownership remains firmly reserved for Filipino citizens and corporations at least 60 percent Filipino-owned. In this sense, the law works within constitutional boundaries while attempting to offer investors greater assurance.

The measure, however, has not been without criticism. Farmers’ groups and civil society organizations have expressed concern that longer leases may lead to land consolidation in the hands of a few, the potential displacement of rural communities, and heightened pressure on agricultural areas. Some view it as tilting too far in favor of foreign capital at the expense of local stakeholders.

On the other hand, proponents argue that the law can help unlock capital for development, create jobs, and promote technology transfer. For example, industrial parks, manufacturing hubs, and renewable energy projects typically require significant land use over long periods. Investors are more likely to commit when their tenure is nearly as long as the lifecycle of their facilities.

Importantly, the law grants the President the discretion to impose shorter lease periods in industries deemed vital to national security or strategic development priorities. This provision aims to strike a balance: encouraging long-term investment while safeguarding areas considered sensitive.

The broader question is whether lease extensions alone are enough to move the needle. While a 99-year lease is attractive on paper, investors often weigh other factors more heavily: regulatory consistency, ease of doing business, infrastructure reliability, governance and the quality of human capital. Addressing these areas remains critical if the Philippines is to position itself as a destination of choice for sustained investment.

What the new law provides is a signal — that the country is willing to adapt and innovate within constitutional limits to compete regionally. Whether this signal translates to meaningful inflows depends not only on the extended time horizon but also on complementary reforms that will make the Philippines a more predictable and efficient place to do business.

Ultimately, Republic Act 12252 is neither a panacea nor a peril. It is a policy tool — one that creates space for investors to look at the Philippines with a longer view. The challenge ahead lies in ensuring that this longer lease also results in longer-lasting benefits: inclusive growth, rural development, and a balance between foreign participation and national interest.