Senator Risa Hontiveros has cautioned lawmakers against lowering the minimum capital investment for foreign investors, saying this could further hurl local businesses still reeling from the COVID-19 pandemic.
During the period of interpellation on the proposed amendments to the Retail Trade Liberalization Act, Hontiveros warned that reducing the minimum capital requirement for foreign retailers from US$2.5M to US$300,000, or around P15 million, would be a “death knell” for small and medium Filipino entrepreneurs who were hardest-hit by the stringent lockdowns.
“Technically, an enterprise worth P15M in asset size is still a small enterprise. A head to head competitor of any foreign retail industry entering the market would be our own small enterprises, like grocery stores, souvenir shops, rice retailers, shops in Baclaran and Quiapo owned and run by our Muslim Filipino brothers and sisters,” Hontiveros said during the period of interpellations on Senate Bill No. 1840 on Wednesday, March 10.
“These are the stores that according to Asian Development Bank’s (ADB) study have suffered the most from the pandemic. How will they be protected from the sudden competition from small but numerous foreign retailers?” she asked.
The senator said the measure may create an uneven playing field for local micro, small and medium enterprises (MSMEs) as foreign counterparts are more likely given export assistance by their governments and trade associations.
Compared to them, she said the country’s MSMEs do not receive the same level of government aid and not have access to low-cost manufacturing facilities.
“Imagine, Chinese companies are able to procure goods at a lower price because they have direct access to manufacturers in mainland China,” she pointed out.
“The subsidies we give to our small businesses are just enough to ‘keep the lights on’ but not enough for them to gear up and compete against a sudden influx of small foreign retailers,” she lamented.
Hontiveros said she will propose an amendment that seeks to increase the minimum required paid up capital to an amount that is cognizant of the benefits of foreign investment.
“While I support measures that will help the economy bounce back, create jobs and bring prices down for consumers, lowering the minimum paid-up capital investment for foreign investors may further hurt small local businesses still reeling from the pandemic. This sudden drop can mean the difference between life and death for our Filipino retailers,” she explained.
“Whatever measure we propose that seeks to strengthen the economy should also be geared towards helping our local MSMEs. We cannot leave our SMEs flailing in the ocean. Especially not at this time,” Hontiveros emphasized.