MANILA - Foreign business groups in the Philippines are backing the House’s proposal to lower the minimum capitalization requirement to $200,000 for foreigners to enter the country’s retail sector.
The Joint Foreign Chambers (JFC) said it sent a letter to the House and Senate, expressing support for the House’s version of the proposed amendment to the required minimum capital for foreigners in the Retail Trade Liberalization Act (RTLA).
The Senate, last week, approved a minimum paid up capital of $1 million for foreign entry in retail.
Under the current RTLA, foreigners can set up wholly-owned enterprises with a minimum paid-up capital of $2.5 million, subject to certain requirements.
The JFC said the Senate’s version still poses a major impediment to new foreign direct investment in retail.
“This still-protectionist level is far higher than in Cambodia, Indonesia, Singapore, Vietnam, and others, who also have large numbers of MSMEs like the Philippines,” the JFC said.
The group said Indonesia has some 5 million retail firms “but without such a high barrier to foreign retail investors.”
“We encourage legislators to look beyond the current crisis and consider the major impact this amendment can contribute to make the Philippine economy quickly recover post-pandemic, the JFC said in its letter.
The JFC said the entry of more foreign retail investors will create jobs at every stage of the retail process as well as in firms servicing the retail sector.
Last year, a local retail industry group said the liberalization of the Philippines retail trade sector should be delayed as smaller local players may be unable to compete with new foreign entrants because of the effect of the pandemic on local businesses.