Philippines Extends Land Lease for Foreign Investors to 99 Years

In a significant policy shift, President Ferdinand Marcos Jr. has signed a new law boosting foreign investment prospects in the Philippines by extending land leases for foreign investors to up to 99 years. This new development marks a substantial increment from the previous allowable lease term, which capped at 50 years with a possible extension of 25 years.

The recently enacted Republic Act 12252 revises the Investors' Lease Act to foster a more favourable business environment for international stakeholders. Historically, while foreigners were restricted from land ownership under the 1987 Constitution, they were permitted to lease land, a provision aimed at attracting overseas investment while safeguarding national resources. The prior 50-year limit, with an optional 25-year renewal, provided some flexibility but often necessitated negotiations for extensions or new contracts.

Now, the law allows for an aggregate lease period not exceeding 99 years. This can potentially empower foreign investors by offering a more prolonged and stable investment horizon. However, the act also retains the authority to impose reduced lease terms, particularly in sectors deemed critical to national security or when the sustainability of vital infrastructure services is at stake. Such determinations will be overseen by the Fiscal Incentives Review Board (FIRB) or other relevant agencies.

To qualify for these extended leases, foreign investors must meet specific criteria, including having an approved investment project under the existing Foreign Investments Act of 1991. The new law emphasises transparency and compliance by mandating thorough documentation, including a technical description of the property involved.

Additionally, the lease contract comes with stipulations to ensure that land is utilised as intended. If an investor fails to commence the designated project within three years of signing the lease, the contract can be terminated, emphasising the government's commitment to genuine developmental progress rather than mere speculative holding.

For foreign individuals or entities leasing land without accompanying investments, the regulations remain unchanged under Presidential Decree 471. Consequently, such leases are limited to 25 years, underscoring the difference in rules between investment-related leases and residential or other non-investment leases.

Despite the positive outlook, the new law leaves certain areas undefined. Specifically, it does not clearly state the maximum number of renewals permissible under the 99-year framework or detailed procedures for lease renewals. Queries regarding these details have been posed to the Presidential Palace, awaiting further clarification.

Non-compliance with the terms of these contracts may lead to severe penalties, ranging from fines of 1 million to 10 million pesos, or imprisonment from six months to six years, depending on judicial discretion.

The amendment is part of broader efforts by the Philippine government to make the country more attractive to foreign capital amid regional competition. As countries vie for international investment, the ability to offer long-term security and stability can be a significant advantage.

Observers will be keen to see how this change affects foreign investment flows and whether it stimulates the anticipated economic benefits. As the government fine-tunes its fiscal and investment policies, this development represents a pivotal move in aligning the Philippines with global investment norms, potentially paving the way for increased economic collaboration and growth.

This legislative change reaffirms the Philippines' commitment to accommodating foreign investors, with further updates anticipated as practical measures and responses from government bodies are communicated.

  Adapted by ASEAN Now from PhilStar 2025-09-05