Further opening of PH retail trade backed

The Philippine Competition Commission (PCC) is supportive of the move to further open retail trade to foreign companies.

However, PCC commissioner Johannes Bernabe said on Friday that lawmakers should provide a transitory period that would give local micro, small and medium-sized enterprises (MSMEs) some time to adjust to increased foreign competition.

He said this during one of the Special Reform Legislation Discussion Series hosted by the American Chamber of Commerce of the Philippines (AmCham), which talked about amendments to the retail trade law.

Under the Retail Trade Liberalization Act passed more than two decades ago, foreign retailers can only enter the Philippine market if their paid-up capital investment is at least $2.5 million, leaving an exclusive space for Filipino retailers in MSMEs.

That space, however, might get smaller as lawmakers sought to lower the threshold to either $300,000 or $200,000, depending on which version of the bill would be passed. Local business leaders feared this might come at the expense of local MSMEs.

Since there is still no consensus on the new threshold, Bernabe suggested lowering it to $300,000 for some time, before further lowering it again to $200,000 or about P10 million.

“That might be a more suitable way of addressing the concerns about [the] actual figure being agreed upon, and also provide some degree of grace period for local MSMEs to adjust,” he said during the conference.

Although the law itself was meant to liberalize the retail trade sector while balancing it with the interests of local MSMEs, supporters of the amendments argue that the current restrictions brought little to no benefits over the past two decades.

Supporters of the amendments argue that more competition in the retail trade sector could translate to more affordable prices and more options for consumers. Businesses, over time, would also benefit from the competition since they too would have to innovate.

Other countries don’t have as much restrictions as the Philippines. Vietnam, for example, has a minimum paid-up capital of $10,000, according to Rep. Stella Quimbo, a former PCC commissioner, who was also part of the AmCham discussion series.

In 2017, the Association of Southeast Asian Nations had received $38.9 billion in investments in the wholesale and retail trade sector, which was much more than the foreign direct investments that went into the manufacturing industry, Quimbo said, citing data from the Department of Trade and Industry.

However, the Philippines received only 0.2 percent or $83 million of this amount.