On 10 December 2021, President Rodrigo R. Duterte signed into law Republic Act No. 11595 ("Amended RTLA"), amending Republic Act No. 8762 or the Retail Trade Liberalization Act of 2000. The Amended RTLA substantially lowers the paid-up capital requirements for foreign retail enterprises to do business in the Philippines.
The Amended RTLA removes the categories for pre-qualification under the old law and lowers from US$ 2.5 million to, and sets a single minimum paid-up capital of, at least PhP25 million (approximately US$463,000) for all foreign-owned retail enterprises. The Amended RTLA standardises the minimum paid-up capital to at least PhP10 million (approximately US$185,000) for foreign retailers engaged in retail trade through more than one physical store.
The required minimum paid-up capital is subject to the review and recommendation of the Department of Trade and Industry ("DTI"), the Securities and Exchange Commission ("SEC"), and the National Economic and Development Authority, which are to be submitted to the Congress every three years. The monitoring and regulation of foreign retailers is also now primarily within the purview of SEC, except for sole proprietors which remain under the regulation of DTI.
Under the Amended RTLA, retail enterprises with foreign ownership of more than 80% are no longer required to offer a minimum of 30% of their equity to the public through any stock exchange in the Philippines within eight years from the start of operations.
The Amended RTLA has likewise removed the requirement of obtaining a Certificate of Prequalification from the Board of Investments. It has eliminated the former thresholds for locally-manufactured products and now simply requires a stock inventory of locally- manufactured products which may be maintained through the designation of a store space as a Filipino section, use of locally-made packaging materials, utilisation of locally-sourced raw materials in the production of the goods, or other arrangements that will promote locally- manufactured products.
Despite the lowering and removal of several requirements in the old law, the Implementing Rules and Regulations of the Amended RTLA nonetheless identify specific additional documents to be submitted to SEC (e.g. a Certificate of Inward Remittance of Foreign Exchange and a Certificate of Reciprocity). The Amended RTLA is also wider in scope since the minimum paid-up capital and other registration requirements are made expressly applicable to foreign retailers engaging in retail trade through purely online channels.
These notwithstanding, the Amended RTLA incorporates the policy of giving preference to Philippine nationals, particularly in terms of labour. It requires foreign retailers to first determine that there are no competent, able and willing Filipino citizens available to join the workforce, before they can engage the services of foreign nationals.
