By Jenina P. Ibanez, Journalist
THE MEASURE which aims to lowering the minimum investment hurdle for foreign retailers to 25 million pesos would likely lead to competition that could hurt many small local businesses, a group of retailers said.
Congress has approved the report of the Bicameral Conference Committee on the conflicting provisions of Senate Bill 1840 and House Bill 59, which amends the 20-year Trade Liberalization Act of detail (RTLA). It will be forwarded to Malacañang for signature by President Rodrigo R. Duterte.
According to the reconciled version, the minimum paid-up capital requirement for foreign retailers is now set at 25 million pesos, or about $500,000, with a per-store requirement of 10 million pesos. This amount is below the existing law’s minimum payment requirement for foreign retailers of 125 million pesos or $2.5 million.
“With the small minimum amounts, our MSMEs (micro-, small and medium-sized enterprises) will be most atffected by foreign competition, foreigners already in the country and small informal retailers from outside the country,” Philippine Retailers Association Vice President Roberto S. Claudio said in an email on Wednesday.
There were 957,620 business enterprises operating in the country in 2020, of which 952,969 or 99.5% are MSMEs, according to the survey by the Philippine Statistics Authority (PSA).
Foreign business groups have supported changes to the RTLA in an effort to increase foreign direct investment.
Foreign business groups had backed the House version setting a minimum paid-up capital of $200,000 or 10 million pesos, calling the Senate version that set the minimum at $1 million or 50 million pesos an obstacle the new foreign direct investments needed in the context of the global economic slowdown.
Mr Claudio said 25 million pesos, or the small investment limit, will mean the economy will not gain substantial foreign investment, especially during the global health crisis.
“But a decision has been (made) and we understand that the liberalization bills are ready to be signed by the president,” he said.
“While the Association of Philippine Retailers has accepted the removal of other limitations from the original bill, we continue to stress that the minimum investment of 25 million pesos is too low to benefitIft of any significant foreign investment and can simply cause damage to our micro, small and medium enterprises! We hope that our economic managers and our legislators will achieve the objectives of the liberalization legislations.
Deputy House Minority Leader and Marikina Representative Stella Luz A. Quimbo, who served on the bicameral conference committee, expressed optimism that the new version of the RTLA will spur foreign investment. in retail.
In a statement, it said the minimum requirement of 10 million pesos per store is “consistent with the objective of protecting MSMEs and opening up medium and large enterprises to foreign competition”.
Ms. Quimbo also noted that the measure directs the Department of Commerce, the Securities and Exchange Commission and the National Economic Development Authority to review the minimum paid-up capital required, which has been set at 25 million pesos every three years. .
“This is to ensure that the threshold respects the spirit of liberalization of the retail sector,” she said, noting that this will help create more jobs and lead to better quality and more afforderable products.
Amendments to the RTLA are one of the priority economic measures advocated by the government, alongside amendments to the Civil Service Act and the Foreign Investment Act. — with entries from Russell Louis C. Ku
