THE House of Representatives approved on third and final reading a priority measure that aims to further open up the retail sector to foreign companies on Wednesday.
With 156 affirmative votes, 30 negative and three abstentions, the lower chamber passed House Bill (HB) 59 which seeks to amend Republic Act (RA) No. 8762 or the Retail Trade Liberalization Act (RTLA) of 2000.
The measure lowers the required minimum paid-up capital for foreign retail investors to $200,000 (around P10 million). Under the present law, enterprises with a minimum capital of $2.5 million or more may be fully owned by foreigners.
HB 59 also reduced the required locally manufactured products of foreign retailers to 10% of the aggregate cost of their stock inventory, from the current 30%.
The approved measure also removes the requirements under RA 8762 for foreign investors to acquire shares of stock of local retailers and for a public stock offering to be conducted by foreign-owned retail companies.
HB 59 also eased qualifications for foreign retailers to enter the Philippines. It removed the current law’s required net worth, number of retailing branches and five-year retailing track record conditions for foreign firms to enter the country’s retail industry.
At the same time, the bill allows only nationals “from/or judicial entities formed or incorporated in countries which allow the entry of Filipino retailers, to engage in retail trade in the Philippines.”
The Joint Foreign Chambers of the Philippines (JFC) have expressed their support for the bill, saying that “this will increase competition, create jobs, support tourism, and improve consumer choice, to the benefit of the economy and the Filipino consumer.”
“The amendments proposed by HB 59, such as lowering of the minimum paid-up capital requirement to $200,000 from $2.5 million, will attract new foreign investment in the retail sector on par with that received by our ASEAN neighbors. The $200,000 minimum investment required will protect the over 400,000 micro and small retail and wholesale businesses comprising more than 90% of all Philippine-owned retail and wholesale businesses in the country,” the JFC said in a statement.
However, House Minority Leader and Manila Rep. Bienvenido M. Abante, Jr. said that the amendments to the RTLA is “a drastic approach” which will have “unintended consequences.”
“The slide from $2.5 million to a measly $200,000 or a reduction equivalent to 92%… a very big number, is not a mere cause for concern. It’s not a cut above the knee, it’s cutting the head off! Why would we want to do this? Coupled with the 20% reduction on required locally manufactured products, and whatever Filipino retailers we have will fall to the ground,” he said in a speech during the plenary session.
Mr. Abante further argued that HB 59 will not follow the “Filipino First” policy which was designed for the “collaboration and establishment of special foreign relations, all the while promoting Filipino participation in our own national economy.”
“Instead, whatever Filipino participation we have, will most likely be marginalized and left unprotected. Instead of passing HB 59, we should pass a law that will protect our own, one that will help our Filipinos,” he said.
Counterpart measures in the Senate are still pending at the committee level. — Genshen L. Espedido