$300,000 minimum investment approved

Published September 12, 2020, 5:00 AM

by Bernie Cahiles-Magkilat

For  foreign retailers coming in

Congress and the executive branch have agreed in principle to lower the minimum paid up capital for foreign retailers to $300,000 and the minimum per store investment of $300,000 saying this would be attractive enough for foreign investors while protecting small Filipino retailers.

Marikina Representative Stella Quimbo, Board of Investments legal counsel Atty. Elyjean Portoza, and Philippine Competition Commissioner Johannes Bernabe agreed to amend the Retail Trade Liberalization Act of 2000 during a webinar organized by the American Chamber of Commerce of the Philippines.

Under the 20-year old law, the minimum paid-up capital requirement for foreign retailers was pegged at $2.5 million and the minimum investment per store at $830,000.

There have been various pending bills proposing to lower these threshold capital requirements to $200,000 and $150,000.

BOI Counsel Portoza cited the need to adopt the middle ground figures because local retailers are still faced with capability issues to face foreign competition.

Portoza said that having a uniformed $300,000 minimum paid-up requirement and minimum $300,000 investment per store would provide more consistency in its proposed amendments.

Local retailers are also challenged in balancing the production of high-quality goods and competitive pricing.

But setting high capital requirements might discourage entry of new players in the market.

Nevertheless, she said that the amendments to the investment threshold will encourage production of high quality products at a competitive price

Liberalizing domestic retail is also expected to result in increased flow of capital into the country as an opportunity that would provide them access to needed capital.

It will also promote sound business practices/technological transfers.

On the proposal to include retail e-commerce, the BOI said they have already adopted a policy requiring all those engaged in retail to secure board approval for them to be able to engage in retail online.

For the regulation of the ecommerce platform operator, which is not engaged in retail trade, should not be covered.

The BOI is of the opinion that the retail ecommerce platform operator could be covered by another legislation.

On the proposed review of the minimum paid requirement every 5 years, the BOI said this is just basically institutionalizing automatic review.

But BOI said it might be seen as very short period and investors might look at it as unstable policy because investment plans could take longer.

It could discourage investors for fear that policies may change while they are still in the research or implementation stage.

“By the time they are ready to invest there is possibility, by reason of the provision of this review, rules will change,” she said.