Consumer Goods and Retail

  

The Philippines has a thriving retail sector with a total income of PHP 3.8 trillion and more than 7% average growth in 2000-2011 compared to the GDP average increase of 5% . Despite this, there are only 22 approved foreign retailers in the country, of which 7 are European, namely: Adidas, Decathlon, Estee Lauder, H&M, Louis Vuitton, L’oreal, and Marionnaud .

The EU has the largest share in approved FDI in retail trade with more than PHP 500 million pesos . However the combined total of the largest foreign investments in retail trade (PHP 620 million) remains small when compared to the total income generated by the retail and wholesale sector as a whole (PHP 3.8 trillion).

Foreign ownership restrictions, minimum capital requirements along with other discriminatory practices are a substantial barrer for foreign investors in the in the Philippines. Due to these restrictions, the Philippines attracts only 0.54% of all foreign direct investments in retail trade for ASEAN. Given this premise, the EU-Philippines Business Network strongly encourages the Philippine government to amend the Retail Trade Liberalization Act to facilitate market access for foreign retail companies and improve competition.

The Retail Trade Liberalization Act (R.A. 8762) was passed in 2000 with the purpose of encouraging a competitive retail trade sector. Ironically, it also limits foreign ownership in retail trade by instituting a capital requirement of 2.5 Million USD, which is one of the highest capital requirements in ASEAN. Apart from this, other discriminatory restrictions are a public offering requirement and supply requirements6 . Moreover, foreigners are also barred from engaging in retail activities outside their accredited stores and barred from owning land . Liberalization in RA 8762 is conditional, with foreign-owned enterprises subject to conditions under four categories.

 

PARTNER CHAMBERS IN THE PHILIPPINES