House body eases foreign retailer rules

The House of Representatives Committee on Trade and Industry on Tuesday approved the bill that makes it easier for foreigners to break into the country’s retail space.

The committee invoked Section 48 Rule 10 of the Rules of the House of Representatives — which allows expedited approval of measures that had bagged final-reading fiat in the preceding Congress that ended in early June — in approving House Bill No. 9057, which will amend Republic Act No. 8762 or the Retail Trade Liberalization Act.

Kung ano yung na-approve sa 17th Congress, ayun ’yung na-approve today (We approved whatever was approved in the 17th Congress),” said Valenzuela 1st-District Rep. Weslie Gatchalian, committee chairman, told reporters after the hearing.

The measure is designed to remove barriers to foreign investments in the retail sector by:

• setting the minimum paid up capital at $200,000 — compared to the current $2.5-million requirement for entities that are fully foreign-owned — and scrap the minimum investment requirement of $830,000 per store;

• removing the $250,000 paid-up capital per store for enterprises engaged in high-end or luxury products;

• reducing the proportion of locally manufactured products required to be carried by foreign retailers to 10% of the aggregate cost of their stock inventory from 30% currently;

• removing other requirements like the $200-million minimum net worth of enterprises with paid-up capital of $2.5-7.5 million and $50 million for those selling high-end or luxury products, as well as the five-year track record in retailing, among others.

A counterpart measure, Senate Bill No. 921, has been filed in the Senate.

“Very important ito sa ating mga foreign investors… para sa gayun ay di na nila kailangan pa makipag-partner (This measure is very important for foreign investors, who will no longer have to team up) with our local companies which are owned by monopolies, oligarchs. Maliit ka man na negosyante (Whether you are a small business) or medium-sized, you can set up shop in the Philippines,” Mr. Gatchalian explained.

In a position paper, the Department of Trade and Industry supported the proposed amendments to the law. “The current foreign equity restrictions on retail trade have contributed to an unfavorable investment environment and effectively shielded domestic enterprises from competition. Efforts at further liberalizing this sector would not only encourage greater investments into the country but also create a competitive environment that encourages continuous innovation,” the department said.

But the Philippine Retailers Association has opposed the reform, arguing in a position paper that “[c]onsequently, foreigners will now be able to engage in and potentially dominate every aspect of Philippine retailing, ironically enough in a region where countries with economies and economic conditions similar to itself extend substantial quantitative and/or qualitative measures meant to nurture and safeguard their respective MSME retailers against outsiders.”

 BusinessWorld

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