Retailers group pleads for delay in retail liberalization, says MSMEs will be hurt

MANILA - The head of a retail industry group on Wednesday 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.

Rosemarie Bosch-Ong, President of the Philippines Retailers Association and SVP and Chief Operations Officer of Wilcon Depot, said efforts to remove barriers to entry for foreign retailers should be postponed considering how badly medium, small and micro enterprises (MSMEs) have been affected by the pandemic.

Last September, the Senate passed a bill seeking to amend Republic Act No. 8762 or the Retail Trade Liberalization Act (RTLA) of 2000 by lowering the minimum paid-up capital for foreign retail investors to $300,000.

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.

A similar bill was passed by the Lower House in March, that puts the minimum paid-up capital at $200,000.

The government has said that retail trade liberalization will attract more foreign investments into the sector.

Ong however warned that this measure will hurt small businesses.

“Foreign retailers with very deep pockets will take advantage of our small local retailers," Ong said.

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"We know the PCC (Philippine Competition Commission) favors competition, but in the current situation we are in as businesses try to recover from losses during the lockdown, and the consumer has low appetite for buying. It is not the right time to invite small foreign investors with $200k startup capital to the country,” Ong said.

The PCC meanwhile said it would be hard for the agency to support calls "that would restrict entrants into a marketplace."

"But as stated, we do support a transitory period in the process of reducing this threshold,” said PCC Commissioner Johannes Bernabe.

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