Gov’t urged to amend retail trade law
High equity limit deters flow of new investments
The government should amend the retail trade law as it imposes various restrictions to foreign retail investors wanting to do business in the country.
Aside from deterring investment inflow, these restrictions also put the country at a serious competitive disadvantage compared to its neighbors in the region.
John Forbes, senior adviser of the American Chamber of Commerce and Industry (AmCham), Wednesday said that it was time to review the law because the country has failed to attract many players in the retail market.
One of the provisions deemed “restrictive” by foreign investors under Republic Act No. 8762 or the Retail Trade Liberalization Act of 2000 stated that enterprises with paid-up capital of less than $2.5 million “shall be reserved exclusively for Filipino citizens and corporations wholly owned by Filipino citizens.” Only enterprises with a minimum paid-up capital of $2.5 million or more may be wholly-owned by foreigners.
“I don’t think there’s reason to protect the retail trade sector. If you look throughout Asia, you’ll find that the Philippines has one of the most protectionist regimes on retail trade, while others are much open,” Forbes explained.
“And keep in mind that if the goal of the government is to have 10 million tourists by 2016, it would be good to have in retail trade as many restaurants as possible, serving different kinds of food, and as many bars as possible,” he said in a briefing Wednesday.
To make the Retail Trade Act more liberal, Forbes said that their best proposal was to reduce the equity limit and make it more consistent with the minimum provisions set in other existing laws such as the Foreign Investment Act.
In a letter sent to the Senate in October 2011, the Joint Foreign Chambers of Commerce reiterated that the Retail Trade Act has not achieved its objective of liberalizing foreign ownership in the retail trade sector due to various restrictions.
It pointed out that the capital requirement of $2.5 million was “not only the highest in Asia after Malaysia, but is also uncommon among the economies examined.”
Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of INQUIRER.net. We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City,Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94