Liberalized retail trade still gov’t priority

The Department of Trade and Industry (DTI) wants to make it easier for foreign businesses to set up shop here, easing their burden at a time when the health crisis has left Filipino mom-and-pop stores struggling to even pay rent.

In a recent Zoom conference with foreign business groups, Trade and Industry Secretary Ramon Lopez said the government wanted to improve the investment climate in the Philippines as part of its strategy to recover from the economic impact of the pandemic.

To do this, the DTI wanted Congress to pass economic bills, including amendments to the retail trade law and the Public Service Act. The House of Representatives already passed these amendments in March, but the Senate is yet to pass the counterpart bills.

Lopez also reiterated his support for Create, or the Corporate Recovery and Tax Incentives for Enterprises Act, which would give corporate tax cuts and rationalize tax breaks. This, too, has not passed in the Senate. While amending the Public Service Act will open the country to big foreign investors, amending the retail trade law will open it to small ones, and possibly even make an already difficult business environment worse for local micro, small and medium-sized enterprises (MSMEs). Under the retail trade law, foreign retailers can only enter the Philippine if their minimum paid-up capital investment is at least $2.5 million. The law specifically set that requirement to spare Filipino MSME retailers from foreign players that might push them out of competition.

However, the lower House amended the minimum paid-up capital investment to $200,000, or close to just P10 million. Doing this especially now, according to the Philippine Retailers Association (PRA), would be unfair to local MSMEs.

“In light of the business economics of what this pandemic has created where major retailers worldwide are declaring bankruptcy or downsizing, very few foreign retailers will venture into the Philippines even if the threshold is reduced,” PRA vice chair Roberto Claudio said in a Viber message on Wednesday.

“We will only subject our Filipino MSME retailers to unfair competition. Also, this will negate [the] program of “Buy Local” initiative [which was] launched to help our local industries recover from the negative economic effects of this pandemic. What good will prioritizing this bill do for our economy?” he said.It remains to be seen if the bills would be passed this year, but Lopez said these would be given top priority.

“If you ask the economic managers, [these are] at the top of the list, but of course, [that’s] aside from the Create tax reform [bill],” he said.

“We’ll continue to push for [these], hopefully, within the year,” Lopez said.