THE COMPETITION regulation body is proposing a grace period for the lowering of the capitalization requirement for foreign retail investors.

The Retail Trade Liberalization Act (RTLA) or House Bill No. 59 passed on third reading in March seeks to reduce the required minimum paid-up capital for foreign retail investors to $200,000, or around P10 million, from $2.5 million.

Under the version being tackled by the Senate, the proposed capitalization requirement is $300,000 or just below P15 million.

“Perhaps we can have a short transition period commencing with a $300,000 minimum capitalization requirement and then after x number of years, whether it’s three years or some other period, lower it down to $200,000,” Philippine Competition Commission (PCC) Commissioner Johannes Benjamin R. Bernabe said in a webinar organized by the American Chamber of Commerce of the Philippines on Friday.

“That might be a more suitable way of addressing the concerns about the actual figure to be finally agreed upon, and also provide some degree of grace period for the local MSMEs (micro-, small-, and medium-sized enterprises) to adjust,” he added.

The RTLA has been touted by the Trade department and foreign business chambers as a means to attract more foreign direct investments (FDI), especially after the Philippines was ranked as one of the most restrictive in terms of FDI regulations by the Organisation for Economic Cooperation and Development.

But local retailers flagged the RTLA as a threat to MSMEs as it could subject them to unfair competition from foreign investors.

The PCC said it supports the amendments to the RTLA but with measures to address the challenges faced by MSMEs.

Mr. Bernabe said there should be easing of regulatory permit requirements in improving credit access. The traditional criteria for credit access should be made more flexible for small businesses during the pandemic, he said.

Some other flanking measures include “enhancing the ability of MSMEs to partake of improvements in technology, reducing high electricity costs, and providing for a stronger linkage between the manufacturing supply base and those which are in the supply sector, the retail trade sector,” he said. — Jenina P. Ibañez