If implemented, it would be a 92% cut from the required minimum paid-up capital under Republic Act No. 8762 or the Retail Trade Liberalization Act of 2000.
The law states that a retail enterprise with paid-up capital of less than $2.5 million “shall be reserved exclusively for Filipino citizens and corporations wholly owned by Filipino citizens.”
Socioeconomic Planning Secretary Ernesto Pernia told reporters on Monday, October 2, that lowering the required capital would allow more foreign players to do business in the country.
“The purpose is to make the consumers happier,” Pernia said on the sidelines of the opening of the 28th National Statistics Month in Mandaluyong City.
The plan to liberalize retail trade would form part of the “shortened” list of investment areas or activities reserved solely for Filipinos, which is set to be released by the government by year-end.
“We’ll make them (local players) more competitive and they will be forced to be internationally competitive,” Pernia also said.
The Philippines’ required minimum paid-up capital of $2.5 million is among the highest in ASEAN. For instance, foreign-owned retailers can wholly own a store in Singapore without any required minimum capital, thanks to the country’s free enterprise economy.
In Thailand, meanwhile, foreign retailers will only need a minimum capital of $598,890 to wholly own a store there, as stated under the country’s Foreign Business Act of 1999.
To relax foreign restrictions in retail trade, former senator Sergio Osmeña III in 2014 introduced Senate Bill 2121, proposing to remove the equity and capitalization requirements in the Retail Trade Liberalization Act of 2000.
Also in the same year, then Isabela 4th District representative Giorgidi Aggabao filed House Bill 4403, also proposing the easing of restrictions in the existing law.
Pernia said the National Economic and Development Authority (NEDA) will hopefully sign the new Foreign Investment Negative List by 2017.
Former president Benigno Aquino III in 2015 issued Executive Order No. 184, or the 10th Regular Foreign Investment Negative List, which mainly kept intact the foreign ownership restrictions in the previous list. The government is mandated to release a new list every two years.
“It is being revised now. The final form will be more aggressive. It will be closer to ASEAN [neighbors]. The negative list is still a long list and I want it to be shortened drastically,” Pernia had said. – Rappler.com
