The retail industry’s share to the economy could jump to 20 percent by the end of 2024 or early next year despite the decline in consumption in restaurants and hotels; health; and clothing and footwear.
Roberto Claudio, president of the Philippine Retailers Association (PRA) told reporters on the sidelines of the National Retailers Conference and Expo last week, the industry has been adding 1 to 2 percentage points to GDP annually, which stood at 18.6 percent in 2022.
Claudio attributed second quarter decline in consumption to the weather and to shopping exhaustion.
“People were not going out,” he said, adding that 2023 was a recovery year for retail with the spending euphoria extending to Christmas of the same year.
Another factor that Claudio cited is the shift in preference of consumers to online shopping platforms in the fashion category.
“Sales could be higher actually in fashion but buyers shifted to online. That category has been affected. A lot of brick and mortar stores in fashion are complaining because they are losing sales to online,” Claudio added.
Claudio predicts online shopping could account for 25 percent of total retail in two to three years from about 15 to 20 percent as of 2023. This share has grown 10 times from just 2 to 3 percent prior to the pandemic.
Claudio expressed hope the government would act fast on the reforms that would put brick and mortar stores in equal footing with e-commerce merchants.
PRA anticipates the signing into law of the imposition of value-added tax (VAT on online merchants.
PRA also proposed to deputize the e-commerce platforms to collect the full withholding tax on their merchants and remit the same to the government to capture the levy.
The group has also asked for the removal of the de minimis rule where shipments of a certain amount are exempt from customs regulation.
“Easily, online foreign merchants have a cost advantage of 17 percent – 12 VAT plus at least 5 percent duty – because they are not subject to these payments,” Claudio said.
He also urged the government to speed up implementation of the Internet Transactions Act where merchants need to register to the Department of Trade and Industry and the Bureau of Internal Revenue before they can sell online.
