Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City

18% Congress
First Regular Session

HOUSE BILL NO. _3502

Introduced by: HON. LORNA C. SILVERIO

EXPLANATORY NOTE

specifically to allow entry of foreign direct investments in the retail to stimulate
economic growth therefore providing more jobs and better choices ‘the Filipino
consumers at lower cost.

The Philippines passed the Retail Trade Liberalization taw in the year 2000
to

Since the passage of the law, the goals of liberalization has not yet been
achieved, the unemployment rate is pegged at 5.4% as of July 2016, the opportunity for
employment has been lessened without such investments from the foreign retailers.

In order to make our country equally competitive in the world stage, issues like
these need to be addressed in the existing Retail Trade Liberalization Law of 2000. The
law provides for a US$ 2,500,000 capital requirement before a foreign entity may 100%
‘own a retail establishment. In comparison, countries like Singapore and Indonesia allow
Foreign Direct Investments (FDI) in the retail trade sector without setting minimum
capital requirements and without limits on foreign equity participation.

This makes the Philippines dead last in the ranking of Southeast Asian nations
behind Singapore, Vietnam, Malaysia, Thailand and Indonesia beacuse of the
guidelines covering foreign direct investments.

Let us encourage the entry of more market players in our business landscape
because it will mean more job opportunities and market competition will result to quality
goods and services being provided for the Filipino at lower costs. This bill proposes to
do away with these barriers to foreign investment by removing equity and capitalization
requirements in the said law to create a better and a business and consumer friendly
environment in the Philippines.

In view of the foregoing, approval of this bill is earnestly sought

Boge b fir


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

18" Congress
First Regular Session
HOUSE BILL No. __3°92

a

Introduced by: Representative Lorna C. Silverio

a

AN ACT
AMENDING REPUBLIC ACT NO. 8762, OTHERWISE KNOWN AS THE RETAIL
‘TRADE LIBERALIZATION ACT, AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Section 5 of Republic Act No. 8762 is hereby amended to read as
follows:

©aortronrkon =

Sataaranss

“Sec. 5. Foreign Equity Participation. - Foreign-owned partnerships,
associations and corporations formed and organized under the laws of the
Philippines may, upon registration with the Securities and Exchange
Commission (SEC) and the Department of Trade and Industry (DTI), or in
case of foreign owned single proprietorships, with the DTI, engage or invest
in the retail trade business [, subject to the following categories: WITH A
MINIMUM PAID-UP CAPITAL OF THE EQUIVALENT IN
PHILIPPINE PESO OF TWO HUNDRED THOUSAND US DOLLARS
(USS 200,000.00).

[Category A - Enterprises with paid-up capital of the equivalent in
Philippine Pesos of less than Two million five hundred thousand US dollars
(US$2,500,000.00) shall be reserved exclusively for Filipino citizens and
corporations wholly owned by Filipino citizens.]

[Category B - Enterprises with a minimum paid-up capital of the
equivalent in Philippine Pesos of Two million five hundred thousand US
dollars (US$2,500,000.00) but less than Seven million five hundred thousand
US dollars (US$7,500,000.00) may be wholly owned by foreigners [except for


©eartroanr on =

en 26

14

the first two (2) years after the effectivity of this Act wherein foreign
participation shall be limited to not more than sixty percent (60%) of total
equity.)

[Category C - Enterprises with a paid-up capital of the equivalent in
Philippine Pesos of Seven million five hundred thousand US dollars (USS
7,500,000.00) or more may be wholly owned by foreigners Provided,
however, That in no case shall the investments for establishing a store in
Categories B and C be les than the equivalent in Philippine Pesos of Eight
hundred thirty thousand US dollars (US$830,000.00),]

[Category D - Enterprises specializing in high-end or luxury products
with a paid -up capital of the equivalent in Philippine Pesos of Two hundred
fifty thousand US dollars (USS250,000.00) per store may be wholly owned by
foreigners]

The foreign investor shall be required to maintain in the Philippines
the full amount of [the prescribed minimum] ITS PAID UP capital, unless the
foreign investor has notified the SEC and the DTI of its intention to repatriate
its capital and cease operations in the Philippines. The actual use in Philippine
operations of the inwardly remitted [minimum] capital [requirement] shall be
monitored by the SEC.

Failure to maintain the [full] amount of {the prescribed minimum]
PAID UP capital REQUIRED IN THE IMMEDIATELY PRECEDING
PARAGRAPI, prior to notification of the SEC and the DTI, shall subject the
foreign investor to penalties or restrictions on any future trading
activities/business in the Philippines.

Foreign retail stores shall secure a certification from the Bangko
Sentral ng Pilipinas (BSP) and the DTI, {which will] TO verify or confirm
THE inward remittance of [the minimum required) THEIR capital
investment.”

Sec. 2. Section 6 of Republic Act No. 8762 is hereby deleted.
Sec. 3. Section 7 of Republic Act No. 8762 is hereby deleted.
Sec. 4. Section 8 of Republic Act No. 8762 is hereby amended to read as

follows:


Oona on =

sees

“Sec, 8. Qualification of Foreign Retailers. — [No foreign retailer shall
be allowed to engage in retail trade in the Philippine unless all the following
qualifications are met:}

[@) A minimum of Two hundred million US dollar
(US$200,000,000.00) net worth in its parent corporation for Categories B and
C, and Fifty million US dollar (US$50,000,000.00) net worth in its parent
corporation for category D; }

[(b) (5) retailing branches or franchises in operation anywhere around
the world unless such retailer has at least one (1) store capitalized at a
minimum of Twenty-five million US dollars (US$25,000,000.00);]

[(©) Five (5)-year track record in retailing; and ]

[@] 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 Philippines.

The DTI is hereby authorized to pre-qualify all foreign retailers,
subject to the provisions of this Act, before they are allowed to conduct
business in the Philippines.

The DTI shall keep a record of qualified foreign retailers who may,
upon compliance with law, establish retail stores in the Philippine. [It shall
ensure that parent retail trading company of the foreign investor complies with
the qualifications on capitalization and track record prescribed in this section]

‘The Inter- Agency Committee on Tariff and Related Matters Authority
OF THE NATIONAL ECONOMIC AND DEVELOPMENT
AUTHORITY (NEDA) Board shall formulate and regularly update a list of
foreign retailers of high-end or luxury goods and render an annual report on
the same to Congress.

Sec. 5. Section 9 of Republic Act No. 8762 is hereby amended to read as follows:

“Sec. 9. Promotion of Locally Manufactured Products. ~ [For ten (10)
year after the effectivity of this Act, at] AT least [thirty] TEN percent ((30%)]
(10%) of the aggregate cost of the stock inventory of foreign retailers [falling
under Categories B and C and ten percent (10%) for category DJ shall be
made in the Philippines.”


Oakon

350 @N

Sec. 6. Repealing Clause. ~ Republic Act No. 8762, and all laws, decrees, orders,
rules and regulations or other issuances or parts thereof inconsistent with the provisions of
this Act are hereby repealed or modified accordingly.

Sec. 7. Separability Clause. - If any portion or provision of this Act is declared
unconstitutional, the remainder of this Act or any provisions not affected thereby shall remain
in force and effect.

Sec. 8. Effectivity. — This Act shall take effect fifteen (15) days after publication in
‘two (2) newspapers of general circulation in the Philippines.

Approved,

aa TS