Further liberalization of retail trade will benefit the country, a Cabinet official said in brushing aside concerns raised by local businessmen.
“I am okay with the liberalization of the retail [sector]to the point that there will still be a floor,” Trade Secretary Ramon Lopez said, referring to a proposal to reduce the minimum paid-up capital requirement for foreign retailers.
“We are in a way supporting that because it will have benefits also. It will create jobs and more outlets where SMEs (small and medium-sized enterprises) can sell their products,” he added.
Socioeconomic Planning Secretary Ernesto Pernia has said that the government would cut the minimum paid-up capital requirement to $200,000 from $2.5 million under planned changes to Foreign Investment Negative List (FINL).
An executive order for the 11th FINL will be signed by President Duterte before the end of the year, Pernia said.
“I think that’s okay because the more retail stores, the more market for SME products if they will be sourcing from local producers. What we need to keep is the protection on the domestic market enterprise,” Lopez said.
The Philippine Chamber of Commerce and Industry and the Philippine Exporters Confederation, Inc. have criticized the move, warning of business displacements.
The European Chamber of Commerce of the Philippines, on the other hand, has said that lowering the minimum capital requirement would send the signal that the Philippines was “open for business.”
“ I think the local [businessmen]might see the light. What is happening now is that [foreign retail businesses]entering the country…[are]all brought in as franchise by a Filipino company … If they don’t pay the franchise fee, then prices will be lower,” Lopez said.
Further retail trade liberalization may also “take time,” he noted.
“There will be a debate. It will require a law, or a revision, so it will take time. But our local SMEs are already competing now. Even if we open it up, I think they (foreign retailers) will come here with a joint venture partner so there will be a wider choice for consumers,” Lopez said.
“Definitely it will open more opportunities. What is important is the more business that will come in… [this means]more investments for the country,” he added.