Retail Trade
Posted on August 3rd, 2009
Retail Trade is defined as “any act, occupation or calling of habitually selling direct to general public merchandise, commodities or goods for consumption subject to certain exceptions.†On March 26, 2000, Republic Act No. 8762 entitled Retail Trade Liberalization Act took effect which allowed foreign investors to engage in the retail trade in the Philippines if the participants meet the capitalization, net worth and other requirements which the act had set.
Ownership of foreigners on retail enterprise is categorized into four.
Category A- Retail venture which has paid- up capital of less than US$2, 500, 000 on its equivalent in peso. Owner of this type of enterprise is limited to Filipinos.
Category B- a retail enterprise with paid-up capital amounting between US$250 million and US$750 million. In this category, foreign investors are allowed to fully own the enterprise.
Category C and D- a retail enterprise which has paid-up capital greater than US$750 million. This is also open for full ownership to foreign investors.
To qualify as foreign retailers in the Philippines, a foreign entity must have at least US$200 million net worth for categories B and C and at least US$50 million net worth for category D, the foreign entity must own at least 5 retail stores of franchise in other countries or at least a branch that has a capitalization of not less than US$25 million, the foreign retailer must also have a five-year track record in retailing and the country of its origin should offer the same benefits to Filipinos.
A foreign participant must secure a certification of which confirms the inward remittance of its minimum capital investment. The said certification should be obtained from Bangko Sentral ng Pilipinas (BSP) and Department of Trade and Industry (DTI). Unless notification has been made to SEC and DTI, the foreign investor is required to maintain the minimum capital amount.
A foreign retailer must also observe that in accordance to the Retail Trade Liberalization Act which is effective up to March 2010, a product made in the Philippines must make up of at least 30% of the total inventory cost of foreign retailers if classified under Category B or C and under Category D, the figure is 10%; foreign retailers trade are limited only to its accredited store; and 30% of the share of Category B or C establishments with at least 80% foreign- ownership are required to be shared to the public within eight years after the launch of operation.
