SIXTEEN CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
) 
SENATE 
S.B. No. 
2121 
Introduced by Senator Sergio Osmeiia III 
'14 
FEB 12 P 3 :01 
AN ACT AMENDING REPUBLIC ACT NO. 8762, OTHERWISE KNOWN AS 
THE RETAIL TRADE LIBERALIZATION ACT, AND FOR OTHER PURPOSES 
EXPLANATORY NOTE 
In March 2000, the Philippines passed the Retail Trade Liberalization law. to 
allow the entry of foreign investment in the retail sector with a view toward stimulating 
economic growth, creating more jobs and providing the Filipino consumer with better 
choices and higher quality goods at lower prices. 
Sadly, in the 14-year period since the passage of the law, the benefits of 
liberalization have yet to be achieved. From 2000 to 2009, foreign direct investment in 
the retail and wholesale sector combined was only one percent (1 %) of total FDI inflow. 
Our unemployment rate is at 6.9 %, and while a robust retail trade industry could have 
been a vehicle for job creation, without such investments, the opportunity for 
employment is lessened. 
Currently, the law has a minimum US$2,500,OOO capital requirement before a 
foreign entity may own 100% of a retail establishment. 
On the other hand, countries like Indonesia and Singapore allow foreign 
investments in the retail trade sector without any minimum capital requirement and 
without limits on foreign equity participation. India is set to relax its own restrictions to 
increase allowable foreign equity in the retail sector beyond the current 51 % investment 
cap. 
These requirements, together with other barriers, have resulted in the Philippines 
ranking dead last in terms of having a regulatory regime favorable to foreign investment, 
in contrast to Singapore, Vietnam, Malaysia, Thailand, and Indonesia. 
These issues need to be addressed by revisiting the Retail Trade Liberalization 
Law in order to make the Philippines truly competitive on the world stage. 
Considering that the entry of more market players will mean more job 
opportunities for the Filipino, and that market competition will lead to higher quality 
goods and services being delivered to the Filipino public at lower costs, this bill 
therefore proposes to do away with these barriers to foreign investment by removing the 
equity and capitalization requirements in the Retail Trade Liberalization law in the 
country. 
I.e 
' 
_ ~ 
I/L-
ERGIO OSMENA III 
Senator 


i<)"Vltl' 
SIXTEEN CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
) 
, a}I\\;f): 11111 ;rp\f1'br~ 
·14 
FEB! 2. 
P 3 :01 
SENATE 
2121 
S.B. No. __ _ 
----------._---------_._---
Introduced by Senator Sergio Osmena 11/ 
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: 
1 
SECTION 1. Section 5 of Republic Act No. 8762 is hereby amended to read as 
2 
follows: 
3 
"Sec. 
5. 
Foreign 
Equity 
Participation 
Foreign-owned 
4 
partnerships, associations and corporations formed and organized under 
5 
the laws of the Philippines may, upon registration with the Securities and 
6 
Exchange Commission (SEC) and the Department of Trade and Industry 
7 
(OTI), or in case of foreign owned single proprietorships, with the OTI, 
8 
engage or invest in the retail trade business. [, subject to the following 
9 
categories:] 
10 
[Category A -Enterprises with paid-up capital of the equivalent in 
11 
Philippine Pesos of less than Two million five hundred thousand US 
12 
dollars (US $2,500,000.00) shall be 
re~erved exclusively for Filipino 
13 
citizens and corporations wholly owned by Filipino citizens.] 
14 
[Category B - Enterprises with a minimum paid-up capital of the 
15 
equivalent in Philippine pesos of Two million five hundred thousand US 
16 
dollars (US$2,5000,000.00) but less than Seven million five hundred 
17 
thousand US dollars (US$7,500,000.00) may be wholly owned by 
18 
foreigners [except for the first two (2) years after the effectivity of this Act 
19 
wherein foreign participation shall be limited to not more than sixty percent 
20 
(60%) of total equity.] 
1 


1 
[Category C- Enterprises with a paid-up capital of the equivalent 
2 
in Philippine Pesos of Seven million five hundred thousand US dollars 
3 
(US$ 7,500,000.00) or more may be wholly owned by foreigners 
4 
Provided, 
however, That in 
no case shall the investments for 
5 
establishing a store in Categories Band C be less than the equivalent in 
6 
Philippine 
Pesos 
of 
Eight 
hundred 
thirty 
thousand 
US 
dollars 
7 
(US$830,000.OO)) 
8 
[Category 0-
Enterprises specializing in high-end or luxury 
9 
products with a paid-up capital of the equivalent in Philippine Pesos of 
10 
Two hundred fifty thousand US dollars (US$250,OOO.00) per store may be 
11 
wholly owned by foreigners.) 
12 
The foreign investor shall be required to maintain in the Philippines 
13 
the full amount of ITS [the prescribed minimum] capital, OR, IN CASE 
14 
ANY PART OF THE CAPITAL IS SOLD TO A CITIZEN OF THE 
15 
PHILIPPINES, 
OR 
TO 
A 
PARTNERSHIP, 
ASSOCIATION 
OR 
16 
CORPORATION OWNED AND CONTROLLED BY CITIZENS OF THE 
17 
PHILIPPINES, THE UNSOLD AMOUNT OF ITS CAPITAL, unless the 
18 
foreign investor has notified the SEC and the DTI of its intention to 
19 
repatriate its capital and cease operations in the Philippines. The actual 
20 
use in Philippine operations of the inwardly remitted [minimum] capital 
21 
[requirement] shall be monitored by the SEC. 
22 
Failure to maintain the [full] amount of [the prescribed minimum] 
23 
capital REQUIRED IN THE IMMEDIATELY PRECEDING PARAGRAPH, 
24 
prior to notification of the SEC and the DTI, shall subject the foreign 
25 
investor to penalties or restrictions on any future trading activities/business 
26 
in the Philippines AS DETERMINED BY THE Dn 
27 
Foreign retail stores shall secure a certification from the Bangko 
28 
Sentral ng Pilipinas (BSP) and the DTI, which will verify or confirm inward 
29 
remittance of ITS [the minimum required] capital investment. 
30 
Sec. 2. Section 6 of Republic Act No. 8762 is hereby deleted. 
31 
Sec. 3. Section 7 of Republic Act No. 8762 is hereby deleted. 
2 


1 
Sec. 4. Section 8 of the Republic Act No. 8762 is hereby amended to read 
2 
as follows: 
3 
"Sec. 8.· Qualification of Foreign Retailers. -
[No foreign retailer 
4 
shall be allowed to engage in trail trade in the Philippine unless all the 
s 
following qualifications are met: 
6 
(a) 
A 
minimum 
of 
Two 
hundred 
million 
US 
dollar 
7 
US$200,OOO,OOO.OO) 
net worth in its parent corporation for Categories B 
8 
and C, and Fifty million US dollar (US$50,OOO,OOO.OO) net worth in its 
9 
parent corporation for category D; 
10 
(b) (5) retailing branches or franchises in operation anywhere 
11 
around the word unless such retailer has at least one (1) store capitalized 
12 
at a minimum of Twenty-five million US dollars (US$25,OOO,OOO.OO); 
13 
(c) Five (5)-year track record in retailing; and 
14 
(d)] Only nationals from, or juridical entities formed or incorporated 
15 
in countries which allow the entry of Filipino retailers shall be allowed to 
16 
engage in retail trade in the Philippines. 
17 
The DTI is hereby authorized to pre-quality all foreign retailers, 
18 
subject to the provisions of this Act, before they are allowed to conduct 
19 
business in the Philippines. 
20 
The DTI shall keep a record of qualified foreign retailers who 
21 
may, upon compliance with law, establish retail stores in the Philippines. 
22 
[It shall ensure that parent retail trading company of the foreign investor 
23 
complies. with the qualifications on capitalization and track record 
24 
prescribed in this section.] 
2S 
The Inter-Agency Committee on Tariff and Related Matters 
26 
Authority (NEDA) Board shall formulate and regularly update a list of 
21 
foreign retailers of high-end or luxury goods and render an annual report 
28 
on the same to Congress. 
3 


1 
Sec. 5. Section 9 of Republic Act No. 8762 is hereby amended to read as follows: 
2 
Sec. 9. Promotion of Locally Manufactured Products. -
[For ten 
3 
(10) years after the effectivity of this Act,] at least [thirty] TEN percent 
4 
(10%) [30%] of the aggregate cost of the stock inventory of foreign 
5 
retailers [falling under Categories Band C and ten percent (10%) for 
6 
category 0] shall be made in the Philippines. 
7 
Sec. 6. Repealing Clause. -
Republic Act No. 8762, and all laws, decrees, 
8 
orders, rules and regulations or other issuances or parts thereof inconsistent with the 
9 
provisions of this Act are hereby repealed or modified accordingly. 
10 
Sec. 7. Separability Clause- If any portion or provision of this Act is declared 
11 
unconstitutional, the remainder of this Act or any provisions not affected thereby shall 
12 
remain in force and effect. 
13 
Sec. 8. Effectivity.- This Act shall take effect fifteen (15) days after publication in 
14 
two (2) newspapers of general circulation in the Philippines. 
15 
Approved, 
4