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PHILIPPINES: Overseas-Owned Retail Businesses Set for Reduced Restrictions

Expectations are high that the minimum paid-up capital required for an overseas company to establish a retail business in the country is to be significantly lowered by the end of the year. The speculation has been sparked by the House of Representatives, the lower house of the country’s parliament, approving House Bill 59 on 11 March. If ultimately implemented, this will lower the minimum capital requirement from US$2.5 million to US$200,000 under a proposed amendment to the country’s Retail Trade Liberalisation Act (2000). It is thought the bill will get formal assent once counterpart legislation is approved by the Senate, the upper house, during the parliament’s May-commencing session.

If adopted, the law will also remove certain other restrictions that currently constrain overseas investors interested in the country’s retail sector. These include a requirement for such investors to have a five-year track record in the retail sector, as well as a stipulation that they own/operate at least five outlets elsewhere in the world. The requirement that overseas-owned retailers should source at least 30% of their stock domestically is also expected to be cut, falling to just 10%.

Opponents of the move have warned that country’s micro and small retail businesses may subsequently find it difficult to compete with overseas operators. It has also been suggested, however, that any such changes would actually benefit local consumers by seeing a wider variety of products on offer, as well as the introduction advanced retail technology. It is also thought it will boost employment levels and make the market more competitive.

Content provided by Picture: HKTDC Research
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