By Ernie Reyes
MANILA — Senate Minority Leader Franklin M. Drilon said the newly-signed Republic Act (RA) 11595, of which he is the principal author, will set the stage for the country’s economic recovery.
“I laud its timely enactment. It is a game-changer law that the country needs today to speed up our economic recovery. I am confident that our amendments to the Retail Trade Liberalization Act of 2000 will give the needed boost in our foreign direct investments. It will address a number of foreign investment roadblocks,” Drilon said in a statement on Monday.
Drilon said the timely enactment of the measure will boost the country’s chance to return to the pre-pandemic economic growth level.
The country’s economy has become among the weakest in Southeast Asia due to the pandemic, he noted.
The newly-signed RA 11595 lowers the paid-up capital requirement in retail trade to P25 million from its previous limit of $2.5 million or roughly P125 million, he explained.
The law also relaxes the restrictions in foreign investments by removing investment categories and setting an across-the-board minimum paid-up capital investment equivalent to P25 million.
The threshold is designed to protect small and medium enterprises in the country, Drilon explained.
“It will strike a balance between encouraging foreign investments and stimulating the development of the local retail sector,” he added.
Drilon emphasized that 22 years after the passage of RA 8762, the Philippines still has a very poor retail trade investments portfolio. As of 2021, there are only 46 foreign retail corporations registered with DTI, or a growth of 2 retailers per year since 2000, he noted.
Since the enactment of the law, the share of wholesale and retail trade to total net foreign direct investments indicates that net investments inflows to the Philippines have been very minimal with an average annual growth of only 5%.
Over a five-year period from 2012 to 2016, Southeast Asian nations received an average of US$17 billion in foreign retail sector investment. The share of the Philippine total during the same period averaged $107 million or 0.006%, according to Drilon.
Drilon had previously cited that in 2016 alone, the Philippines received only US$101 million in foreign retail sector investment, while Thailand had $3.2 billion, Malaysia got $2.5 billion, Indonesia secured $2 billion, and Vietnam received $2 billion.
Singapore received over $8 billion, almost more than all other ASEAN economies combined. Singapore has no restrictions on foreign investment in retail and enjoys a per capita income of US$88,000, he added. (ai/mtvn)