Banking & Finance

Bill setting Minimum Capital and Requirements for Foreign Retailers approved

Date: 05 March 2019; Type: Legal News; Source: House of Representatives

The House of Representatives approved on second reading House Bill No. 9057, which seeks to set the minimum paid up capital and locally produced stock inventory requirements for foreign retail business enterprises.

HB 9057, principally authored by Deputy Speaker Arthur Yap, aims to remove barriers to foreign investments in the local retail sector as it seeks to amend Republic Act No. 8762 or the “Retail Trade Liberalization Act of 2000.”

In addition, it shall also open up the Philippine retail industry, which would result in a greater variety of products, more choices of goods for consumers, inflow of new technology, and employment for more Filipinos.

To this end, the measure provides that foreign-owned partnerships, associations, and corporations organized under the Philippine law may engage or invest in the retail trade business with a minimum paid-up capital of the equivalent in Philippine Peso of US$200,000. It shall apply upon their registration with the Securities and Exchange Commission (SEC) and the Department of Trade and industry (DTI).

The bill requires all foreign investors to maintain the full amount of its paid-up capital in the Philippines, unless they notify the SEC and the DTI of their intention to cease operations in the country.

It stipulates that failure to maintain the amount of the paid-up capital shall subject the foreign investor to penalties or restrictions on any future trading activities and business in the Philippines.

The measure shall remove Section 6 of RA 8762, which states the requirements for foreign investors who are acquiring shares of stock of local retailers.

It shall further delete Section 7 of the same law on the requirement for public offering of shares of stock by foreign owned retail enterprises.

Section 8 or the Use of Foreign Retailers of High-End Goods shall be also amended through the bill, by eliminating the required net worth, number of retailing branches or franchises, and retailing track record conditions for foreign retailers to engage in retail trade in the Philippines.

Meanwhile, the bill provides that only nationals from or juridical entities formed or incorporated in countries which allow the entry of Filipino retailers shall be allowed to engage in retail trade in the country.

Therefore, the DTI shall be mandated to pre-qualify all foreign retailers before they are allowed to conduct business in the country. It shall keep record of qualified retailers who may establish these retail stores.

The measure also calls for the Inter-Agency Committee on Tariff and Related Matters Authority under the National Economic and Development Authority Board to formulate and regularly update the list of foreign retailers of high-end or luxury goods, and submit an annual report to Congress.

It shall also reduce the required locally manufactured products carried by foreign retailers to at least 10 percent, which was previously set at 30 percent.

Co-authors of this measure include Reps. John Marvin "Yul Servo" Nieto (3rd District, Manila), Ferjenel Biron M.D. (4th District, Iloilo), Xavier Jesus Romualdo (Lone District, Camiguin), Lorna Silverio (3rd District, Bulacan), Rosanna Vergara (3rd District, Nueva Ecija), and Manuel Zubiri (3rd District, Bukidnon), among others.

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