Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL No.__ 1222

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
SETTING THE MINIMUM PAID UP CAPITAL AND LOCALLY PRODUCED
STOCK INVENTORY REQUIREMENTS FOR FOREIGN RETAIL BUSINESS
ENTERPRISES AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8762,
OTHERWISE KNOWN AS THE RETAIL TRADE LIBERALIZATION ACT

EXPLANATORY NOTE

The Retail Trade Liberalization Law or Republic Act No. 8762 was enacted with
the avowed objective to “promote consumer welfare in attracting promoting and
welcoming productive investment that will bring down price for the Filipino consumer,
create more jobs, promote tourism, assist small manufacturers, stimulate economic
growth and enable Philippine goods and services to become globally competitive
through the liberalization of the retail trade sector.”

R.A. 8762, enacted in March 07, 2000, liberalized investment in retail trade
through certain provisions that bring down restrictive and delimiting barriers such as
allowing natural born citizen who lost his citizenship to engage in retail trade while
enjoying rights granted to Filipino citizens. The law also allows a foreign investor, with
a minimum equity participation equivalent in Philippine Pesos of two million five
hundred thousand US dollar (US$2,500,000.00), to fully own a retail establishment,
thereby repealing Republic Act No. 1180, enacted in 1954, which prohibited a foreigner
from engaging directly or indirectly in the retail business.

Sadly, despite the passage of R.A, 8762 almost two decades ago, the country’s
retail trade investments and job creation capability in this sector remain in the doldrums.
By comparison, the country lags behind its ASEAN neighbors in terms of investment
growth in this sector, Needless to say, R.A. 8762 has failed to accomplish its objectives.


In order to boost the entry of foreign investments in the retail trade sector to
make it a more robust contributor to the national economy, there is a need to revisit
R.A. 8762. To achieve the original objective of RA 8762, the amendatory bill proposes
to set the minimum paid up capital and locally produced stock inventory requirements
for foreign retail- business enterprises. With this liberalizing measure, it is envisaged
that foreign participation in retail trade business will increase considerably to create
more jobs and better quality products at cheaper prices for Filipino consumers.

It is for these foregoing premises that the approval of this bill is earnestly sought.

CEDA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL No:__ 1222

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
SETTING THE MINIMUM PAID UP CAPITAL AND LOCALLY PRODUCED
STOCK INVENTORY REQUIREMENTS FOR FOREIGN RETAIL BUSINESS
ENTERPRISES AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8762,
OTHERWISE KNOWN AS THE RETAIL TRADE LIBERALIZATION ACT

Be it enacted by the Senate and 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:

“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 WITH A MINIMUM PAID-UP CAPITAL OF
THE EQUIVALENT IN PHILIPPINE PESO OF TWO HUNDRED
THOUSAND US DOLLARS (USS 200,000.00). |, subject to the following
categories:

[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
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 (US$
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 (US$250,000.00) 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
PARAGRAPH, 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 verify or confirm inward
remittance of ITS [the minimum required] 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:

“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) 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 word unless such retailer has at least one (1) store capitalized at a
minimum of Twenty-five million US dollars (US$25,000,000.00),

(c) 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
under the 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 (10%)
[(30%)] of the aggregate cost of the stock inventory of foreign retailers
[falling under Categories B and C and ten percent (10%) for category D] shall
be made in the Philippines.

SEC. 6. Separability Clause. — If any provision of this Act is held invalid or
‘unconstitutional, the remaining parts or provisions not affected shall remain in full force and

effect.
SEC. 7. Repealing Clause. — All laws, decrees, executive orders and proclamations,
tules and regulations or parts thereof inconsistent with this Act, are hereby amended or

modified accordingly.

SEC. 8. Effectivity. — This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation.

Approved,