This content is from: Local Insights

Philippines: SEC advice on online platforms

Rose Marie M King-Dominguez
In a May 8 2014 opinion, the Philippines' Securities and Exchange Commission (SEC) advised that the provision of 'an online platform intended to increase the sale of a particular product' is a mass media activity. Under the

Constitution, ownership and operation of mass media enterprises is wholly reserved to Filipino citizens.

The 2014 opinion echoes a 2012 one that said that engaging 'in the operation of a voucher platform on the internet with the purpose of increasing the sales of a particular product or service... in effect disseminates information to the general public through the internet and is thus considered a mass media entity'.

Some foreign investors looking at internet-based businesses in the Philippines have found the SEC opinions to be a bit of a head-scratcher. They imply that the operation or ownership of any platform or site that is able to disseminate information to the public, is reserved for Filipinos. Since practically all sites that can be accessed by anyone with an internet connection disseminate some level of information, the opinions seem to say that companies otherwise engaged in activities that allow foreign ownership (partly or wholly) (such as wholesale trading or telecommunications) cannot own or operate sites or other digital platforms. The opinions also seem to advise that it is impossible – except for

Filipinos – to support commerce online, apparently contradicting the policy and intent of e-commerce laws. They also limit locally-based facilities that could be available to residents.

Such far-reaching restrictions on an aspect of business as ubiquitous as the use of the internet could not have been the SEC's intention. The SEC will likely have an opportunity to clarify these issues in the future.

Rose Marie M King-Dominguez

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