Trade and Industry Secretary Ramon Lopez is supporting the plan to further liberalize the retail trade industry in favor of foreign investors, setting aside the appeals of local business groups who warned this would harm local micro, small and medium-sized enterprises (MSMEs).
Lopez told reporters that a more open retail trade industry would lead to a larger market for MSME products as he expressed confidence in the competence of local companies.
This puts Lopez on the same side as that of foreign business groups, which praised the government announcement to lower the current minimum paid-up capital for the retail industry to $200,000 from the current $2.5 million threshold.
Local business groups, including the Philippine Chamber of Commerce and Industry (PCCI), did not welcome the announcement. They called it not only unnecessary, but even harmful to local MSMEs that were already struggling with restrictive business conditions such as in their access to loans.
“I think that’s OK,” Lopez said, when asked for comment on a lower investment threshold. “More retail stores mean a larger market for MSME products if these would be sourcing from local producers, including MSMEs,” he explained.
In the Retail Trade Liberalization Act of 2000, such threshold was set to provide an exclusive space for Filipino MSMEs to grow in. Foreign players, on the other hand, are allowed to enter if their capital exceeded $2.5 million.
The proposal to liberalize the retail market would be part of the 11th foreign investment negative list (FINL) to be approved within the year. The FINL, which is updated every other year, outlines the industries where foreign companies would have limited participation.
Lopez said that he hoped local business groups would “see the light” and agree with the plan. Nevertheless, he added that there would still be time for debate since this would require revising the nearly two-decade-old law.
Asked why it was necessary to lower the threshold when foreign companies still entered even under present conditions, Lopez said that those who came here were “brought in as a franchise by a Filipino company like SM (Retail Inc.).”
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