The legacy of liberalizing foreign retail trade
The new law also imposes regulations and sanctions against foreign retailers who fail to maintain their paid-up capital, making them liable for penalties or restrictions on any future retail trade and business activities in the Philippines
Published in Daily Tribune on February 10, 2022
by: Juan Romulo R. Taleon
With the upcoming 2022 national elections, a change of administration is looming on the horizon. No matter who the next president may be, he or she stands to inherit billions of dollars in national debt, unrealized infrastructure projects, and a nation struggling with the adverse effects of a global pandemic and the ravages of a recent natural disaster.
Before this administration officially steps down, it is quite timely that a new retail trade policy was enacted and signed into law by President Duterte last 10 December 2021. This is RA 11595, otherwise known as “An Act amending Republic Act 8762 or the Retail Trade Liberalization Act of 2000 (RTLA).”
With the upcoming 2022 national elections, a change of administration is looming on the horizon. No matter who the next president may be, he or she stands to inherit billions of dollars in national debt, unrealized infrastructure projects, and a nation struggling with the adverse effects of a global pandemic and the ravages of a recent natural disaster.
Before this administration officially steps down, it is quite timely that a new retail trade policy was enacted and signed into law by President Duterte last 10 December 2021. This is RA 11595, otherwise known as “An Act amending Republic Act 8762 or the Retail Trade Liberalization Act of 2000 (RTLA).”
Prior to this enactment, foreign retailers were divided into four categories and were required to have a higher paid-up capital ranging from $250,000 up to $7 million. Under Section 2 of the new law, however, foreign retailers are only required to have P25,000,000 as their maintained paid-up capital. Additionally, RA 11595 also adjusted the investments of foreign retailers engaged in retail trade through more than one physical store — setting their minimum investment to only Ten million pesos (P10,000,000) per store.
The new law also imposes regulations and sanctions against foreign retailers who fail to maintain their paid-up capital, making them liable for penalties or restrictions on any future retail trade and business activities in the Philippines. Another notable amendment of the law is Section 3, which introduces a provision directing the Department of Trade and Industry, Securities and Exchange Commission, and National Economic and Development Authority to review the required minimum paid-up capital every 3 years, with a duty to submit periodic reports to Congress.
Additionally, the law establishes new provisions which are imposed to promote Philippine products and local employment, despite giving incentives to foreign retailers. For instance, Section 4 requires foreign retailers employing foreign nationals to comply with applicable provisions of the Labor Code in determining the non-availability of competent, able, and willing Filipino citizens before engaging the services of a foreign national. Section 8 was also inserted as a new amendment, requiring foreign retailers to have a stock inventory of products that are solely made in the Philippines.
Finally with respect to penal provisions, Section 9 amended Section 12 of the old law, thereby changing the criminal liability of violators to imprisonment ranging from four years to six years and a fine of not less than P1 million but not more than P5 million pesos.
Before the reign of the Duterte administration officially ends this year, it is fair to say that it has effectively paved the way for an investor-friendly business environment that will encourage foreign retail trade companies to set up their businesses in the country. This refreshing change is poised to re-energize the Philippine economy by being a revenue-generating and livelihood-producing law. It has the potential of placing the Philippines at the forefront of international trade and commerce.
Let us all pray that the Filipino people will be able to choose a new leader who can capitalize on the opportunities brought about by this new law. We should therefore choose someone who can encourage foreign retailers to invest and bring about real and tangible economic progress for our ailing country.
