The House of Representatives has approved on second reading a bill that eases the entry of foreigners in the retail trade business.
House Bill 9057 that amends Republic Act 8762 or the “Retail Trade Liberalization Act of 2000” sets the minimum capitalization of foreigners and foreign entities that seek to engage in the retail trade at the peso equivalent of 200,000 dollars
The bill, principally authored by Deputy Speaker Arthur Yap, provides that the foreign capital infused shall not be taken out by the investors until the time he stops doing business in the Philippines.
In addition, the bill shall also open up the Philippine retail industry, which would result in a greater variety of products, more choices of goods for consumers, inflow of new technology, and employment for more Filipinos.
The proposed law provides that foreign-owned partnerships, associations, and corporations organized under the Philippine law may engage or invest in the retail trade business with a minimum paid-up capital of the equivalent in Philippine Peso of US$200,000. It shall apply upon their registration with the Securities and Exchange Commission and the Department of Trade and Industry.
The bill requires all foreign investors to maintain the full amount of its paid-up capital in the Philippines, unless they notify the SEC and the DTI of their intention to cease operations in the country.
It stipulates that failure to maintain the amount of the paid-up capital shall subject the foreign investor to penalties or restrictions on any future trading activities and business in the Philippines.
The measure shall remove Section 6 of RA 8762, which states the requirements for foreign investors who are acquiring shares of stock of local retailers.
It shall also delete Section 7 of the same law on the requirement for public offering of shares of stock by foreign owned retail enterprises.
Section 8 or the Use of Foreign Retailers of High-End Goods shall be also amended through the bill, by eliminating the required net worth, number of retailing branches or franchises, and retailing track record conditions for foreign retailers to engage in retail trade in the Philippines.
Meanwhile, the bill provides that only nationals from or juridical entities formed or incorporated in countries which allow the entry of Filipino retailers shall be allowed to engage in retail trade in the country.
Therefore, the DTI shall be mandated to pre-qualify all foreign retailers before they are allowed to conduct business in the country. It shall keep record of qualified retailers who may establish these retail stores.
The measure also calls for the Inter-Agency Committee on Tariff and Related Matters Authority under the National Economic and Development Authority Board to formulate and regularly update the list of foreign retailers of high-end or luxury goods, and submit an annual report to Congress.
It shall also reduce the required locally manufactured products carried by foreign retailers to at least 10 percent, which was previously set at 30 percent.