Local retailers are opposing a proposal that will easily allow foreign companies to penetrate the local retail sector.
Philippine Retailers Association chairman emeritus Samie Lim said Filipino retailers would be at a disadvantage if the government lowered the foreign retail capitalization requirement to $200,000 from the current $2.5 million.
“They will be here for business they can easily get into. They cannot become manufacturers or bankers, so it will be easy for them to start a business. A business $200,000 worth is just an SME in their country of origin. And if we let them in, they will wipe out our own SMEs,” he said.
He said if foreign small and medium enterprises were allowed to come up with a capital of $200,000, they would slowly eat up competition to the detriment of local SMEs. The Philippines, he said, “will be just a nation of consumers and we will no longer be able to create a nation of middle-class SMEs.”
The Philippines has opened retail trade since 20 years ago through licensing, franchising and joint ventures, allowing foreign players to come in with investments of not less than $7.5 million.
The required investment decreased over time to $5 million and then to $2.5 million as a compromise with Congress.
“When they opened in the last 20 years, they promised Congress that they will come and will sell 30 percent Philippine product. They also promised that after so many years of being here, these companies will divest a portion of their shares to the local retail sector. They have not done that. So why are we going to the next step when they have not even kept their promises to this day,” Lim said.
Retailers, worried the government will approve the proposal in November, plan to issue a position paper to express their concern.
“They will call for a meeting at the last minute but nothing will change. They’ll have it on record that they’ve met with us when we have not met at all. We’re not going to fall for that,” Lim said.
He noted that the group had data supporting their position and proving that the entry of small foreign retailers would “lead to the slaughter of local SMEs.”
Retailers, he added, were aware the government was merely trying to put an impression that many investors were coming in to the Philippines.
“This is just for show that we have 10 more investors worth $200,000 each. As far as we are concerned, that’s a joke. They’re (government) just trying to window dress the scorecard of their performance,” Lim said.