Further Retail Trade Lib Will Not Bring FDIs

Manila Bulletin, October 22, 2017 | Go to article overview

Further Retail Trade Lib Will Not Bring FDIs


By Bernie Cahiles-Magkilat

Further liberalization of the domestic retail trade to foreign retailers will not bring in the much needed foreign direct investments (FDI), but instead usher in small and non-reputable foreign players, reduce the quality of the already world-class local industry, kill the local micro and small retailers, and pave the way for an underground economy, domestic retailers and exporters warned.

Philippine Retailers Association Vice Chairman Roberto Claudio and Philippine Exporters Confederation President Sergio Ortiz-Luis Jr. said further liberalization of the domestic retail trade is not the solution to shore up FDIs into the country.

Socio-Economic Planning Secretary Ernesto Pernia, backed by Trade and Industry Secretary Ramon M. Lopez, would like to lower the minimum investment requirement from $2.5 million to $200,000 to allow 100 percent foreign ownership in the retail industry. The government is looking into the domestic retail sector as having the potential to attract FDIs and may be included in the further opening up of the Foreign Investment Negative List.

In the Retail Trade Liberalization Act of 2000, foreign players are allowed to enter if their capital exceeded $2.5 million. Such threshold was meant to provide an exclusive space for Filipino MSME retailers to grow in.

Stressing the enormity of the implications once this plan is implemented, Claudio said that PRA already submitted to the National Economic and Development Authority (NEDA) the organization's official position. PRA officials were also seeking an audience with Pernia in the first week of November.

"We would like to meet with Secretary Pernia because what they are proposing is conflicting, they are sending mixed signals," he said.

Local retailers said further opening of the retail trade sector to small foreign investors cannot shore up the dwindling foreign direct investments inflow into the country.

Claudio noted that other than the minimum investment per store of $830,000 or the minimum paid up capital of $2,500,000, the domestic retail segment is already wide open to foreign investors.

Instead of encouraging big foreign retailers to tie up or forge joint venture with the locals, Claudio said the NEDA and DTI plan is doing the reverse.

Sergio Ortiz-Luis Jr., president of PhilExport, said the plan to allow a minimum of $200 million entry point for foreign retailers cannot bring in additional FDIs and technology into the country.

"You liberalize for two reasons - you want capital and technology to come in. What capital and technology can come in with only $200,000? These small foreign retailers might even source their capital here and crowd out our small retailers. I don't know why they are liberalizing to that extent," said Ortiz-Luis.

"You bring in 1,000 foreign retailers at $200,000 each investment, but you are going to kill our small retailers. …

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