Valenzuela City Rep. Weslie Gatchalian is pushing for the amendments of Republic Act No. 8762 or the Retail Trade Liberalization Act to remove the barriers to foreign investments in the local retail sector.
Gatchalian, the chairman of the House committee on trade and industry, said House Bill No. 59 aims to open up the Philippine retail industry and promote a greater variety of products, more choices of goods for consumers, the inflow of new technology and employment of more Filipinos.
The new bill consolidates the related proposals filed by more than 40 members of the House of Representatives.
“The Philippines’ wholesale and retail trade industry is one of the most important sectors of the Philippine economy,” Gatchalian said in his sponsorship of the bill.
“Hence, if we can encourage more foreign investments into the country by liberalizing our retail trade sector, this would mean more employment opportunities for Filipinos,” he said.
The proposed bill seeks to reduce the minimum paid up capital and locally produced stock inventory requirements for foreign retail business enterprises.
He said RA 8762 imposes a steep minimum paid-up capitalization requirement for foreign ownership of a retail establishment in the Philippines. It requires a minimum paid-up capital of US$2.5 million which is considered restrictive, as shown by the fact that only 22 foreign retailers have entered the domestic market since the law was passed in 2000.
On top of the minimum paid-up capital requirement, the law requires that the investments for establishing a store shall not be less than US$830,000.00.
HB 59 proposes to lower the minimum paid-up capital required of foreign-owned partnerships, associations and corporations from US$2.5 million to US$200,000.
It also seeks to remove the requirements for foreign investors acquire shares of stock of local retailers offer a minimum of 30 percent of their equity to the public through any stock exchange.
The bill also proposes to eliminate the required net worth, number of retailing branches, and retailing track record conditions for foreign retailers to engage in retail trade in the Philippines.
It also aims to reduce the required locally manufactured products carried by foreign retailers from 30 percent to 10 percent of the aggregate cost of their stock inventory.
However, the bill states that only nationals from countries which allow the entry of Filipino retailers shall be allowed to engage in retail trade in the Philippines.
“The lowering of the paid-up capital requirement is expected to increase FDIs, foster competition and innovation in the retail industry, and most importantly, provide consumers with more choices of goods and services with better quality at lower prices. Further, with the influx of capital, this measure is expected to create more jobs for Filipinos,” Gatchalian said.
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