THE Philippine Retailers Association (PRA) is opposing the move to reduce the minimum investment capital of foreign investors wanting to do business in the country, saying this will hurt micro, small and medium enterprises (MSMEs).
In a letter released to its members on Monday, top officials of PRA said they are against the impending release of the 11th Foreign Investment Negative List, which will lower the minimum investment capital of foreign investors from $2.500 million to $200,000 under the Retail Liberalization Law.
While the industry group welcomed the government’s thrust to help MSMEs prosper, they noted that the sudden move of reducing the investment threshold will “reverse the gains of the past years of concentrating income to either the local giant retailers or the global players with deep pockets and government subsidies to eliminate local competition.”
“While learning and competing with global competitors is needed in the age of globalization, reducing investment thresholds without creating and investing in parallel government support to bring MSMEs to a more competitive level and subsidies to help them expand internationally, as most Asean and international governments do, will only help benefit the few international players to the detriment of the thousands of local entrepreneurs,” said the PRA.
“Any changes in the retail investments law should go hand-in-hand with significant progress in the government efforts to address these vital issues, and only then can entrepreneurs locally truly compete on an even playing field with the international players,” the group added.
The Retail Trade Liberalization Act of 2000 reserves the minimum paid up capital below $2.5 million exclusively to Filipino businesses, a form of protection that provides a space for MSMEs to grow in.
Foreign players, on the other hand, are allowed to enter once their minimum paid up capital exceeds that threshold.
Socioeconomic Planning Secretary Ernesto Pernia said that lowering the required capital would allow more foreign players to do business in the country.
The entry of foreign players in the country’s retail scene has long challenged the survival of MSMEs.
To cope with the competition, retailers are urged to innovate and adopt the digital platform to expand market reach. They, however, are lobbying for a level playing field in the midst of an already borderless market.
“The PRA believes that we should create a long-term strategy and timeline that balances the need for foreign investments with proper investments in creating more competitive local players,” the letter said.