Retail liberalization bills filed

Six bills have been filed in Congress seeking to liberalize the retail industry, specifically lowering the thresholds for foreign players to invest in the country.

The bills aim to amend the Retail Trade Law or Republic Act 8762 passed in 2000 which reserves to Filipino citizens and corporations wholly owned by Filipino citizens retail enterprises with paid-up capital of less than $2.5 million “shall be reserved exclusively for Filipino citizens and corporations wholly owned by Filipino citizens.”

This requirement is among the highest in Asean, and is deemed restrictive by foreign investors, the bills’ proponents said.

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To relax barriers to entry of foreign investment in retail trade, the bills aim to lower the required minimum capital for foreign retail investors to $200,000.

The House Committee on Trade and Industry will hear the bills on September 24, with retail stakeholders expected to attend.

The house bills were introduced by introduced by Represenatives Estrellita Suansing and Horacio  Suansing Jr,  Xavier Jesus Romualdo,  Luis Raymund  Villafuerte Jr., Joey Sarte Salceda, Lorna Silverio and  Victor Yap.

Some of the bills propose to reduce the required locally manufactured products carried by foreign retailers from 30 percent to 10 percent  of aggregate cost of their inventory.

Salceda said despite the passage of RA 8762 almost two decades ago, the country, retail trade investments and job creation capability in this sector remain in the doldrums.

“By comparison, the country lags behind its Asean neighbors in terms of investment growth in this sector. Needless to say, R.A. 8762 has failed to accomplish its objectives,” Salceda said in his explanatory note to HB  1222.

Silverio said in her explanatory note to HB 3502, countries like Singapore and Indonesia allow foreign direct investments in the retail trade sector without setting minimum capital requirements and without limits on foreign equity participation.

“This makes the Philippines dead last in the ranking of Southeast Asian nations behind Singapore, Vietnam, Malaysia, Thailand and Indonesia because of the guidelines covering foreign direct investments.” Silverio said.

Suansing’s HB 192 meanwhile removes the following requirements for foreign investors: acquire shares of stocks of local retailers and for public offering of shares of stocks by foreign-owned retail enterprisesand  eliminate the required net worth of retailing branches, and retailing track record conditions for foreign retailers to engage in retail trade in the Philippines;

Romualdo’s HB 344  removes the requirement for foreign investors to acquire shares of stock of local retailers and on offering of shares of stock by foreign owned retail enterprises under the current law.

Another feature of Romualdo’s bill is that it respects the rule of reciprocity and permits only nationals from, of juridical entities formed or incorporated in countries which allow the entry of Filipino retailers to engage trade in the Philippines.

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