Japan chamber backs liberalized retail trade

MANILA, Philippines — The Japan Chamber of Commerce and Industry of the Philippines Inc. (JCCIPI) has expressed support to moves that will further open up retail trade in the country, saying this will allow the entry of more small and medium-sized Japanese firms into the local market.

“This easing restrictions for foreign investment, if this includes easing of retail trade, then it’s better. It’s better if you include that,” JCCIPI president Hiroshi Shiraishi said.

Shiraishi said small and medium enterprises (SMEs) from Japan are currently aggressively looking to expand their footprint in the Philippines.

Socioeconomic Planning Secretary Ernesto Pernia earlier said the government intends to further open up retail trade to drastically lower the foreign capital limit from the current $2.5 million to $200,000, a move in line with the easing of the Foreign Investment Negative List.

He said allowing greater participation of foreign players in retail trade would increase competition that would push local companies to innovate and create better products.

Such proposal, however, worried some local businessmen, saying it would negatively impact the country’s SMEs.

“The $200,000 entry from abroad, it is the micro and small retailers that will come here, probably even borrow that money here and crowd out our SMES. You try to attract investors because of the investment they will bring in or the technology they bring in. What can you expect from these MSMEs to bring in here in terms of technology and capital to the Philippines? Why even lower it and crowd out our SMEs?” Philippine Chamber of Commerce and Industry honorary chairman Sergio Ortiz-Luis Jr. said in an earlier interview.

Ortiz-Luis said the entry of these micro and small foreign retailers would further worsen the already difficult environment for the country’s SMEs.

The JCCIPI, however, said even if the country’s rules and regulations loosen up, Japanese SMEs would still need business partners in the Philippines, including local SMEs as well.

“More SMEs are interested in the Philippines but somehow they also need  partners because SMES are more domestic companies in Japan, not global enterprises. So that means they need some partner assistance and support on how is the market in the Philippines,” Shiraishi said.

As of end-2016, there were a total 1,440 Japanese companies in the Philippines.

Japan has been a major source of investment for the Philippines, with cumulative direct investment, from 2000 to 2016 reaching P635.9 billion, topping that made by Netherlands and the US at P480.8 billion and P430.5 billion, respectively.