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Retail trade liberalization to propel FDI surge to greater heights

CAMALIG, ALBAY, Philippines – An enterprising mother tends her small “sari-sari store” to augment her family’s livelihood in Albay, 16 Feb 2018. Senate Committee on Economic Affairs chair Senator Win Gatchalian said the government should harness foreign investors in the domestic retail trade market by liberalizing the retail sector. Photo by Mark Cayabyab/OS WIN GATCHALIAN

Encouraged by the country’s record-setting foreign direct investment (FDI) inflows in 2017, Senator Win Gatchalian on Tuesday stressed anew the need to remove legal restrictions that continue to hamper foreign investors seeking to pump money into the Philippine retail trade industry.

“While the record-setting FDI numbers from 2017 are impressive, they pale in comparison to what we can achieve once we remove barriers to entry that discourage foreign players from investing more in the retail trade sector,” said Gatchalian, the chairman of the Senate Committee on Economic Affairs.

Yesterday, the Bangko Sentral ng Pilipinas reported a record-high $10 billion in FDI inflows during 2017, up 21.4 percent from the previous year. According to the data, one of the industries that drew significant investments was the retail trade sector.

“This indicates a keen interest on the part of foreign investors in the domestic retail trade market. We need to take advantage of this bullish outlook by fostering a more competitive investment environment in this critical sector,” the senator added.

In line with this, Gatchalian said he would continue to champion the passage of Senate Bill No. 1639, which seeks to remove the existing equity and capitalization requirements provided by the Retail Trade Liberalization Law of 2000 (RA 8762). Currently, a 100-percent foreign-owned retail business can only operate in the country if it meets the minimum paid-up capital requirement of $2.5 million.

To highlight the negative impact of this strict requirement on FDI growth, he pointed out that only 25 foreign retail firms have invested in the country’s retail sector during the 18 years since the passage of RA 8762.

“The harsh restrictions provided by the Retail Trade Liberalization Law have kept the Philippine retail trade sector from reaching its full potential in driving inclusive economic growth and stimulating job creation. That’s why we need to pass Senate Bill 1639 – it will propel the country’s FDI surge to greater heights and kick Philippine economic development into the next gear,” Gatchalian said.