THE chairman of the Senate Committees on Trade and Commerce and Economic Affairs is inclined to endorse the passage of pending bills that would relax retail trade barriers to attract more foreign investors in the country.
Sen. Manuel Villar told the BusinessMirror that based on their assessment, the entry of foreign retail giants would no longer threaten entrenched Filipino chains such as the SM, Robinsons and Ayala malls.
Villar said the two committees will likely endorse amendments to Republic Act 8762, or the Retail Trade Liberalization Law, which require 100-percent local ownership only for retail businesses with less than $2.5-million capitalization.
But the senator noted that even with the passage of RA 8762 about 11 years ago, foreign direct investments in the retail-trade sector remained below the 3-percent mark between 2000 and 2010, “so there must be something wrong.”
In the last Senate hearing on the measure, representatives of the Joint Foreign Chambers of Commerce (JFCC) informed Villar they do not believe the law achieved its primary objective of liberalizing foreign ownership in the retail-trade sector.
The JFCC officers noted that only 12 retail corporations with foreign investments have been established since the passage of RA 8762, owing to existing retail-trade ownership restrictions.
“We have identified very few similar restrictions in other economies in Asia with which the Philippines competes,” the JFCC told the committee. The restrictions put the Philippines in “a serious competitive disadvantage in seeking foreign investments in the retail sector,” which usually start small and medium-size businesses, they said.
They also issued a warning that this was not only unfortunate for foreign investors but also for Filipinos as small and medium enterprises are essential to the economy and for employment generation.
To correct the situation and improve the growth of the retail sector and create more jobs, the JFCC asked Villar’s committee to endorse the early passage of remedial legislation to “reduce the threshold in which foreign investment in retail sector is allowed.”
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By: Butch Fernandez
Source: Business Mirror, Dec. 11, 2011
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