The Board of Investments said it supports the proposal to reduce the paid-up capital requirement for incoming foreign retail investors.
Elyjean Pordoza of the Board of Investments said in a webinar Friday the Department of Trade and Industry and the BOI were backing any move to lower capitalization and ease the entry of retail investors into the country.
“We have come to an agreement with the Senate to lower the minimum paid-up requirement to $300,000 from the current $2.5 million. We want foreign retailers to come in but at the same time we have businesses to protect. So we agreed to that to cover for small medium enterprises,” she said in the webinar organized by the American Chamber of Commerce of the Philippines.
The BOI proposed several amendments to the Retail Trade Liberalization Law, such as the inclusion of retail e-commerce; reduction of the minimum paid-up capital requirement from $2.5 million to $300,000; retention of reciprocity requirement; removal of pre-qualification requirement; and employment requirement of at least 50 percent local employees.
It also supports the proposed reduction of minimum investment requirement per store/branch from $830,000 to $150,000 and the review of the minimum paid-up capital requirement every five years by the DTI, the Securities Exchange Commission and the National Economic Development Authority.
“The objective of the bill is to allow the entry of more retail investors. Amendments to the bill also promote the ease of doing business making it easier for foreign retailers to come in,” Pordoza explained.
The BOI said it would try to manage challenges with the possible influx of foreign retail companies, including the capability of local retailers to face foreign competition.
Balancing the production of high-quality goods and competitive pricing and the high level competition are additional challenges not only for the country’s MSME but also for new players who might find it initially discouraging, it said.
“These are just the challenges that we envision. But the opportunities will somehow balance that because it will be able to encourage production of high-quality products at a competitive price that’s very good for consumers,” Pordoza said.
The House of Representatives approved on third and final reading the proposed liberalization of retail trade sector before the country faced various stages of lockdown amid the health crisis.