THE GOVERNMENT is moving to open up the country’s retail sector further to foreign brands by reducing the paid-up capital threshold for enterprises to be reserved exclusively for Filipinos.
Socioeconomic Planning Secretary Ernesto M. Pernia told reporters yesterday that economic managers are looking to reduce the paid-up capital threshold to just $200,000 from the prevailing $2.5 million under Republic Act No. 8762, or the Retail Trade Liberalization Act of 2000.
Rule III Section 1 of RA 8762 provides that “[e]nterprises with paid-up capital of the equivalent in Philippine pesos of less than US$2,500,000 shall be reserved exclusively for Filipino citizens and corporations wholly owned by Filipino citizens.”
“We’ll make them more competitive and they will be forced to be internationally competitive. The purpose is to make consumers happier,” Mr. Pernia told reporters on the sidelines of an event in Mandaluyong City.
“It used to be $2.5 million. We are using $200,000.”
Sought for comment, European Chamber of Commerce of the Philippines (ECCP) President Guenter Taus replied in an e-mail: “ECCP feels very positive about the potential reduction of the paid-in capital requirement for the entry of foreign retailers in the Philippines.”
“Let us not forget that this requirement is one of the major causes of the low level of foreign direct investments in the country,” Mr. Taus said.
“If the paid-in capital requirement is eliminated or reduced, the competitiveness of the Philippines will surely increase, thus favouring foreign investments,” he added.
“It goes without saying that the elimination of barriers to market access for foreign retailers will have a positive spill-over effect on the economy, stimulating economic growth, creating more jobs, increasing competition, providing Filipino consumers with better choices and higher quality goods at lower prices.”
John D. Forbes, senior adviser of the American Chamber of Commerce of the Philippines, noted separately that “[t]he limit in the 2000 law was set too high and has resulted in few investments over 17 years.”
“It makes sense to reduce to the same minimum capital requirement of other domestic enterprises in the Foreign Investment Act (of 1991, or RA 7042),” Mr. Forbes said in a mobile phone message.
The government is also reviewing the draft 11th Foreign Investment Negative List to free up industries for foreign ownership without having to go through time-consuming legislation.
Mr. Pernia said the National Economic and Development Authority (NEDA) Board — chaired by President Rodrigo R. Duterte — will review the FINL “[h]opefully in our next NEDA Board meeting.”
“We haven’t yet set a date, but there would definitely be one before the end of the year,” said Mr. Pernia, who had earlier cited professions, public utilities and foreign contracting for government projects as other fields to be opened to foreign participation. — Elijah Joseph C. Tubayan