EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES —_)
First Regular Session )

HOUSE OF REPRESENTATIVES

House Bill No, 99

Introduced by Representative VICTOR A. YAP

EXPLANATORY NOTE

Republic Act No. 8762 or the Retail Trade Liberalization Act was passed in 2000 to promote
productive investment that will bring down price for Filipino consumers, create more jobs, assist small
manufacturers, and stimulate economic growth.

Under the current law, enterprises with paid-up capital of less than US$2.5 million "shall be
reserved exclusively for Filipino citizens and corporations wholly owned by Filipino citizens." As such,
only enterprises with a minimum capitalization of $2.5 million or more may be owned fully by
foreigners. This requirement is among the highest in ASEAN, and has been deemed restrictive by
foreign investors.

To relax barriers to entry of foreign investment in retail trade, this bill aims to lower the
required minimum capital for foreign retail investors to US$200,000. The measure likewise reduces the
required locally manufactured products carried by foreign retailers from 30 percent to 10 percent of the
aggregate cost of their stock inventory.

‘These amendments would open up the Philippine retail industry which would result in greater
variety of products, more competitive local players, inflow of new technology, and more importantly,
more jobs for Filipinos.

In view of the foregoing, the immediate passage of this bill is earnestly sought.

VIGTOR A. YAP
Representative, 2nd District of Tarlac


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EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES —_ )
First Regular Session

HOUSE OF REPRESENTATIVES
59
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House Bill

Introduced by Representative VICTOR A. YAP

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 OF 2000”

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
(DTD, 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 THE PHILIPPINE PESOS OF TWO HUNDRED
THOUSAND US DOLLARS (USS200,000,00)

[Category A — Enterprises with paid-up capital of the equivalent in the 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 the
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 the 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 less than the equivalent in Philippine Pesos of
Bight hundred thirty thousand US dollars (US$830,000.00).J

[Category D — Enterprises specializing in high-end or luxury products with a paid-up
capital of the equivalent in the Philippine Pesos of Two hundred fifty thousand US dollars
(US$250,000.00) per store may be wholly owned by foreigners.

“The foreign investors 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.


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ilure 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 investors to penalties or restrictions on any
g 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.”

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 [Qualifications of Foreign Retailers] USE OF FOREIGN RETAILERS OF

HIGH-END GOODS. ~ {No foreign retailer shall be allowed to engage in retail trade in the
Philippines unless all the following qualifications are met:]

“{(a) A minimum of Two hundred million US dollars (US$200,000.00) net worth in its
parent corporation for Categories B and C, and Fifty million US dollars (US$50,000,000.00) net
worth in its parent corporation for Category D:]

“[(b) Five (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 dotiars (US$25,000,000.00),}

“{(c) Five (5)-year track record in retailing; and]
“(d)| Only nationals from [,] or juridical entities formed or incorporated in countries

which allow the entry of Filipino retailers shall be allowed to engaged in retail trade in the
Philippines

he 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 Philippines. {It shall ensure that the 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 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) years 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 D] shall be made in the Philippines.”

SEC. 6. Separability Clause. — If any portion or provision of this Act is declared

unconstitutional, the remainder of this Act or any provision not affected thereby shall remain in force
and effect.


SEC. 7. 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. 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,