Antitrust body backs lower capital requirements for foreign retailers

MANILA, Philippines — The Philippine Competition Commission (PCC) is in favor of amendments to the Retail Trade Liberalization Act but notes this should be done with measures to help micro, small and medium enterprises (MSMEs) address challenges in ease of doing business.

Speaking at the online conference organized by the American Chamber of Commerce of the Philippines Inc. (AmCham), PCC commissioner Johannes Bernabe said the antitrust body fully supports the proposed measure which seeks to reduce the minimum capital requirement for foreign firms entering the country’s retail sector.

Under House Bill 59 approved on third and final reading at the House of Representatives, the minimum paid-up capital requirement will be lowered to $200,000 from $2.5 million and remove the per store investment requirement of $830,000 for foreign retail firms.

Meanwhile, the counterpart measure pending at the Senate seeks to bring down the minimum paid-up capital requirement to $300,000, and reduce the investment requirement per store to $150,000.

“Whatever number is agreed on, whether $200,000 or $300,000, these are options which take us in the right direction because it lessens restrictions on competition. It allows large domestic firms to compete with equally large sized firms who are going to enter via reduced capitalization requirement,” Bernabe said.

He said the entry of foreign retail firms would benefit both local players and consumers as a wider variety of suppliers and goods would reduce costs.

Foreign retailers can also help develop the industry through introduction of new technology and innovation which smaller players may adopt or use.

While PCC supports cutting the minimum paid-up capital requirement, Bernabe said such should go along with measures to support MSMEs given challenges in doing business.

He said among the measures that can be implemented is to make it easier for MSMEs to tap financing.

“Perhaps another way to help MSMEs to make credit accessible is to make sure criteria traditionally used are relaxed and made more flexible particularly during this time of pandemic and health crisis,” he said.

Marikina Rep. Stella Luz Quimbo said that while one of the most common concerns on the bill is its impact on MSMEs, she said the proposed measure is pro-competition and pro-small players.

She also said foreign direct investments would mostly be from larger companies and not direct competitors of micro and small enterprises.

“Attracting foreign investors does not mean turning our back to Filipino brands and goods.  In fact, more foreign direct investment in many ways will also improve business operations for local businesses. In the longer term, they can help stimulate economic growth which we can all take part in,” she said.

AmCham is pushing for amendments to the Retail Trade Liberalization Act as the measure is seen to help attract investments and generate jobs to support the country’s recovery from the crisis.