More investments seen flowing to retail trade

By Louella Desiderio – The Philippine Star
January 10, 2022


MANILA, Philippines — The Department of Trade and Industry (DTI) said the signing into law of a measure that lowers the minimum paid-up capital for foreign retailers would help encourage more investments into the country.

“We thank the President and the Senate and Congress for passing the Retail Trade Liberalization (RTL) Act. We in the economic team have long been pushing for the passage of this law, and even proposed for the presidential certification of its urgency, together with the other major economic reforms, such as the Foreign Investment Act and the Public Services Act,” Trade Secretary Ramon Lopez said in a Viber message.

Republic Act 11595, which amended the RTL Act of 2000, was signed by President Duterte last month.

Under the law, the minimum paid-up capital for foreign retailers has been reduced to P25 million from the previous requirement of $2.5 million or around P125 million.

In addition, foreign retailers with more than one physical store will need to have a minimum investment of P10 million per store.

Lopez said reforms easing the restrictions on foreign ownership like the RTL are key to unlocking the Philippines’ investment growth potential, as such would make the country more attractive to foreign investors.

“More investments would certainly generate more jobs that we need in the post pandemic recovery period,” he said.

He said more foreign participation would also lead to greater competition and benefit consumers and user-industries through better services, quality and prices.

“More competition in retail can lead to more innovations, better services to consumers, and actually more market opportunities for MSMEs (micro, small and medium enterprise) products,” he said.

He also said the lower minimum capitalization still provides a threshold of protection for micro, small and medium enterprises (MSMEs).

Philippine Retailers Association (PRA) president Rosemarie Ong said the minimum required proposed capitalization of P25 million for the entry of foreign retailers under the newly signed law is accepted by the group.

“Although this is lower than the original law’s minimum paid-up capital requirement of $2.5 million or around P125 million for foreign retailers, the PRA hopes that it will generate foreign investment the RA 11595 was intended for,” she said.

She said the lower minimum paid up capital amount, however, will put the country’s MSMEs at a disadvantage.

“We have 98 percent of businesses in the MSME category, which are the backbone of our economy. We have opened our retail industry to foreign retailers since RA 8762 in the year 2000. Major foreign retailers have already entered the country since then,” she said.