House OKs lower capital for foreign retail

MANILA, Philippines — The House of Representatives  has approved a bill easing the capital requirement for foreign investors in the country’s retail trade industry.

Voting 156-13 with three abstentions on the last day of session before the Lenten break, Congress passed on third and final reading House Bill 59 that amends Republic Act 8762 or the Retail Trade Liberalization Act.

The measure specifically intends to lower the required minimum paid-up capital for foreign retail trade investors from the current $2.5 million to $200,000 to make it easier for foreigners to invest in retail trade.

Proponents led by Tarlac Rep. Victor Yap explained that lowering the minimum paid-up capital will attract more foreign investments in the country’s retail sector.

They said the measure will lead also to a greater variety of products, more competitive local players, inflows of new technology and more jobs for Filipinos.

Several foreign chambers have earlier supported the measure.    

Under RA 8762, foreigners are barred from fully owning enterprises with a paid-up capital of less than $2.5 million. 

This requirement is among the highest in the ASEAN and has been deemed restrictive by foreign investors. 

In lowering the minimum paid-up capital to $200,000, proponents explained that the financial risk of entering a new foreign market is significantly decreased, resulting in a more attractive investment environment for foreign retailers.

They added that this measure removes the requirement for foreign investors to acquire shares of stock of local retailers, eliminates the required net worth, number of branches and track record conditions for foreign retailers to engage in retail trade in the country, and reduces the required locally manufactured products carried by foreign retailers to 10 percent, from 30 percent of the total cost of their stock inventory.

The country’s minimum paid-up capital in retail trade activities was previously set at $10 million, before it was lowered to $5 million.

In the past two decades, more than 20 foreign retailers entered the Philippine market.