The Philippines is opening its market to small foreign retailers with a paid-up capitalization of $200,000, Trade Secretary Ramon Lopez said Monday.
Lopez said the Philippines was now prepared “to allow many brands into the country.”
“With the retail liberalization law, we will be opening up to medium-sized retailers to come over and have them create market access for our MSME Filipino retailers as well,” Lopez said in a news briefing.
He said medium-sized foreign brands could now enter the Philippine market at almost 100 percent foreign equity, unlike in the past when they were mostly brought in by huge local retailers.
The government plans to reduce the current minimum paid-up capital for the retail industry to $200,000 from the current $2.5-million limit under the revised Regular Foreign Investment Negative List.
The National Economic Development Authority proposed the lower paid-up up capital to attract more investors.
Local business groups, however, opposed the proposal, saying this could hinder the development of local MSMEs. The Philippine Chamber of Commerce of the Philippines said many member companies started to ask the group’s stance on the issue.
PCCI president George Barcelon said there was no guarantee that foreign retailers would stay for long in the country, as they would have nothing to lose with the little amount they invested.
“Let’s be prudent in the sense that we want to attract legitimate companies with substantial capital and technology to come and invest. If we allow this very low threshold, then this is going to be the lowest threshold in Asean. If other countries are not doing this, then why should we,” he said.
Barcelon said foreign brands might even borrow money from local banks and crowed out local MSMEs that lacked credit support and business location.