Senate OKs bill easing entry of foreign retail enterprises in PH

Published May 19, 2021, 8:12 PM

by Vanne Elaine Terrazola

Voting 20-0-0, the Senate approved on third and final reading a bill that would open up the Philippines’ retail sector to foreign enterprises.

Senate of the Philippines (Senate PRIB)

Senators voted to pass on Wednesday, May 19, Senate Bill No. 1840, which proposes to amend the Retail Liberalization Act of 2000 (Republic Act No. 8762) and lower the required paid-up capital of foreign retail businesses.

President Duterte earlier certified the bill as urgent, with government economic and finance managers saying it will encourage the entry of investors and further boost economic recovery following the COVID-19 pandemic.

The bill sets a minimum paid-up capital of P50 million for foreign retailers who want to engage or invest in the retail trade business. The current law sets the required capital at US$2.5 million, or its equivalent in Philippine peso.

For investments for establishing a store, the minimum capital per store is currently US$830,000.

“We are liberalizing it, but not too low, so that the competition will be at the medium level…plus that you want to attract quality,” Senate President Pro Tempore Ralph Recto, who proposed the amount, said during the plenary debates.

Senator Aquilino “Koko” Pimentel III, sponsor of the bill, initially proposed a minimum capital of P15 million.

Senate Minority Leader Franklin Drilon found the P50 million threshold “very high and will not achieve the purpose that we had when the bill was orginally presented.”

“We wanted to attract investments in this area, in the retail trade, and I think P50 million sets the bar very high, in effect it is a limitation,” Drilon said.

But Drilon later conceded to the Recto’s proposal.

Senator Risa Hontiveros, who earlier said that liberalizing retail trade “is not our wisest option”, also accepted the Recto amendment, believing the local retailers would be amenable to the amount.

SB 1840 also proposes to mandate the entry of foreign retailers coming from countries that does not prohibit the entry of Filipino retailers.

In the case of foreign retailers who will invest retail trade through more than one store, the proposed capital for each store must be P25 million, “provided that this requirement shall not apply to a domestic corporation at least 60 percent Filipino-owned.”

The required minimum paid-up capital shall be reviewed every three years, and recommendations from concerned agencies shall be submitted to Congress.

Foreign retailers shall also be encouraged to promote locally-manufactured products by having a stock inventory of products made in the Philippines.

Before its approval, Pimentel moved to simplify the measure, taking out any reference to online retailing and e-commerce so as not to regulate them.

He also proposed to delete Section 3 paragraph 2 of the RA 8762 which defined “high-end or luxury goods” and the provision of the same law mandating the National Economic Development Authority to update a list of foreign retailers of high-end and luxury goods.

Pimentel said these are “no longer relevant.”