DTI wants to keep foreign equity limit on retail trade

By Kris Crismundo

October 4, 2017, 5:35 pm

MANILA -- The Department of Trade and Industry (DTI) “may agree” to lower the USD2.5-million minimum paid-up capital for foreign investors to participate in retail trade activities in the country, but the agency would still want to keep foreign equity restrictions in the sector.

DTI Secretary Ramon Lopez said in a text message that keeping foreign equity restrictions in retail trade aims to protect the local micro and small enterprises.

“What we have to protect are the local MSMEs (micro, small, and medium enterprises), which will be affected if we liberalize the entry of foreign enterprises in the domestic market,” Lopez said.

“This is the activity that should keep status quo because it will impact the vulnerable sectors especially of the micro and small enterprises which are about 97 percent of all enterprises,” he added.

Although, the trade chief is confident that mid-size and big retailers in the country can survive the competition once the Philippines attracts more foreign brands to participate in the local retail trade activities.

“If they liberalize, foreign MSMEs will crowd out millions of struggling Filipino micro and small entrepreneurs,” Lopez noted.

“This is the group that the President through DTI and various agencies are trying to assist and level-up. Will we support foreign or Filipino MSMEs?” Lopez added.

Early this week, Socioeconomic Planning Secretary Ernesto Pernia said economic managers are looking at lowering the minimum paid-up capital for foreign players in retail trade from USD2.5 million to USD200,000.

Pernia said this policy would be part of the 11th foreign investment negative list (FINL) that is expected from the Duterte administration to be released within the year.

The country’s chief economist said that retail trade and construction industries are among the activities that economic managers aim to further open for foreign investors.

Data from the Philippine Statistics Authority showed that investment approvals from foreign sources in wholesale and retail trade and repair of motor vehicles and motorcycles in the first semester of the year dropped 87 percent compared to the same period in 2016.

Approved foreign investments in the sector fell to PHP335.5 million in H1 2017 from PHP2.6 billion in H1 2016.

Likewise, foreign investment pledges in construction sector declined by 67 percent to PHP21.6 billion in H1 2017 from PHP65 billion in H1 2016. (PNA)