5 Important Changes to the Retail Trade Liberalization Act
With diverse portfolio of opportunities and pro-active efforts from the government, the Philippines has emerged to being the rising tiger of Asia. Continuous economic growth and the influx of foreign investors have opened multitude of opportunities for both local and foreign enterprises.
With that, the government has proactively worked on making the Philippines more attractive to investors. On December 10, 2021, a law was passed amending the Retail Trade Liberalization Act (RTLA) to increase foreign equity participation in an effort to provide easier access to local opportunities.
There are five things that you must know about the RTLA.
- Foreign Equity Participation
The minimum paid-up capital required of Foreign-owned partnerships, associations, and corporations to engage into retail trade has been lowered to PhP25 Million from USD2.5 Million. This is a giant leap forward to make investment opportunities more accessible for foreign investors.
- Minimum Investment per store
The minimum investment per store has been lowered to at least PhP10 Million from USD800,000.000.
‘Minimum investment per store’ shall include the value of all the assets including but not limited to buildings, leaseholds, furniture, equipment, inventory, and common use investments and facilities such as administrative offices, warehouses, preparation or storage facilities, as reflected in the financial statements following the accounting standards adopted by the Securities and Exchange Commission (SEC) or the Department of Trade and Industry (DTI), whichever is applicable, shall be pro-rated among the number of stores being served.
This requirement shall not apply to foreign investors and foreign retailers who are legitimately engaged in retail trade and were not required to comply with the minimum investment per store as of January 1, 2022.
The DTI, SEC, and the National Economic and Development Authority (NEDA) shall review the required minimum paid-up capital every three (3) years.
- Labor Policy
Foreign Investors may employ foreign nationals so long as they determine that competent, able, and willing Filipino Citizens are not available for the position.
- Promotion of Locally Manufactured Products.
Foreign retailers are encouraged to have a stock inventory of products which are made in the Philippines.
- Public Offering Requirement Deleted
Foreign retail enterprises with more than 80% of foreign ownership used to be required to publicly offer 30% of their share in the Philippines. This provision has been deleted under the amendment.
With all that said, this is the perfect time to invest in the Philippines. Jumping into the spectrum while the Philippines is on its way to soaring progress will open up boundless opportunities. With the government’s policies on macroeconomic fundamentals, foreign investors are accorded greater protection while catching on investment opportunities.