The Retail Trade Law (RA 8762 ) provides stringent restrictions that discourage foreign retail entrepreneurs to invest in the country and as such needs to be amended, according to the American Chamber of Commerce (AmCham).
AmCham senior adviser John Forbes made the observation in a briefing last month where he emphasized that the country has failed to attract new investors in the retail market. The restrictions do not only curtail investment inflow but also put the country at competitive disadvantage compared to its neighbours in ASEAN region, he added.
Forbes’ conclusion: It is time to amend RA 8762.
Cited, in particular, is the provision that enterprises with paid-up capital of less than P2.5 million shall be reserved exclusively for local entrepreneurs. Foreign capitalists can only put up retail businesses capitalized upwards of P2.5 million.
The position of the American Chamber was supported by the Joint Foreign Chambers of Commerce, which, in a letter sent to the Senate in October 2011, reiterated that the Retail Trade Act has not achieved its objective of liberalizing foreign ownership in the retail trade sector due to various restrictions.
Forbes asserted there was no reason for the Philippine government 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.
The joint federation had a similar view. 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.”
Forbes also cited the goal of the government to attract 10 million tourists by 2016. To achieve this target, “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.
To ease the restrictions imposed by the Retail Trade Act, the Chamber has proposed 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.
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