Philippines eases foreign investment rules with new retail entry law

Published On - 4 février, 2022

Albert Hui Philippines

President Rodrigo Duterte has signed into law a measure that would further open up the Philippine retail sector to more foreign retail businesses by lowering their required paid-up capital.

Republic Act (RA 11595), which amends the Retail Liberalization Act of 2000 (RA 8762) was signed by President Duterte on Dec. 10, 2021, and was published on Jan. 6, 2022. This new law is part of efforts to encourage the entry of more investors and further boost economic recovery amid the Covid-19 pandemic.

The Philippines ranks highest in Asia in the Organization for Economic Cooperation and Development (OECD)’s foreign direct investment regulatory restrictiveness index, and its retail sector is symbolic of that reputation. Along with Ikea and Uniqlo, only about 20 foreign retailers, including Swedish clothing company H&M, French sporting goods seller Decathlon and Japanese convenience store chain FamilyMart, have been prequalified to do business under the 2000 rules, according to Department of Trade and Industry data.

Under the current legislation, a foreign retailer shall have a minimum paid-up capital of USD2.5 million or PHP119.67 million, the new law sets the required capital at PHP25 million. Other entry barriers such as required net worth, number of branches and track record conditions were also removed.

In the case of foreign retailers engaged in retail trade through more than one physical store, the minimum investment per store must be at least PHP10 million.

The Department of Trade and Industry, Securities and Exchange Commission, and the National Economic and Development Authority shall review the required minimum paid-up capital every three years and their recommendations should be submitted to Congress.

This new law’s lower capital requirement allows players, big and small, to test the Philippine market with minimal exposure. Please do not hesitate to contact our team at contact@orbis-alliance.com so we can discuss the business opportunities in the Philippines. We will get back to you very shortly.