More roads lead to foreign investment in the Philippines.
On December 10, 2021, President Rodrigo Duterte signed into law Republic Act (RA) No. 11595, a Department of Finance (DOF)-backed measure expected to provide the boost needed by the economy to create a lot more jobs for Filipinos. RA 11595 was published in the Official Gazette on 6 January 2022 and took effect fifteen (15) days after its publication or on January 21, 2022.
The new Republic Act which amends the Retail Trade Liberalization Act (RTLA), is one of several investor-friendly measures endorsed by the President’s economic team to simplify and ease restrictions for foreign retailers wishing to set up businesses in the Philippines. It does so by significantly reducing the equity requirements for foreign retailers to engage in retail business in the Philippines.
Lauding the president’s move, Finance Secretary Carlos Dominguez III says the DOF is confident “this will also enhance competition among enterprises, which will be beneficial to our consumers by providing more choices at lower and more competitive prices.”
The Finance Secretary thanked Congress for writing the law and ensuring its benefits to the country and its constituents. He added that “the president’s advisors welcomed these changes from the previous rule that disproportionately favored already-large enterprises.”
Good News for Foreign-Owned Businesses
RA 11595 provides a more accessible framework for foreign-owned retail businesses to enter the country. Critical changes to RA 11595 include removing the requirement for foreign retailers to obtain a certificate or prequalification. It lowers the paid-up capital requirement for foreign corporations to P25 million and simplifies qualification requirements.
RA 11595 removes the requirement for a Certificate of Prequalification and compliance with the prequalification requirements above. Under RA 11595, foreign-owned corporations, partnerships, and sole proprietorships may invest in or engage in a retail business, subject to the following:
- The foreign retailer shall have a minimum paid-up capital of PhP 25 million;
- The foreign retailer’s country of origin does not prohibit the entry of Filipino retailers; and
- In the case of foreign retailers engaged in retail trade through more than one (1) physical store, the minimum investment per store must be at least PhP 10 million.
The requirement under #3 above does not apply to foreign investors and foreign retailers who are legitimately engaged in retail trade and were not required to comply with the minimum investment per store at the time of the effectivity of RA 11595.
Once the RA 11595 is in effect, retail activities in the Philippines will likely become more competitive. The president’s economic advisors project that doing away with the requirement of net worth and a long track record in retailing will lead to lower prices and more significant consumer benefits.
On Tax Rates, Philippine-made products & Other Pro-Investor Initiatives
A bare-foot business is not allowed to sell its products in other countries. Furthermore, RA 11595 makes it mandatory for foreign retailers to stock Philippine-made products. Foreign retailers must also ensure that their country of origin does not prohibit Filipino retailers from entering their country.
Other measures endorsed by the Chief Executive’s economic team include a mandatory bill to the Public Services Act (PSA) and the Foreign Investment Act (FIA). The Senate and House have passed their respective versions of the bill amending the PSA, but they still have to go through the bicameral committee (bicam) proceedings before being ratified by both chambers and then submitted to the president for his approval.
More Help for Foreign Investors is Available
Triple i Consulting Inc. welcomes these Philippine economic liberalization bills. We support this timely approval expected to liberalize our economy further and are prepared to support collective legislative and executive efforts with our pre-arranged visa processing services for foreign nationals.
Triple i Consulting’s pre-approved visa processing service assists foreign nationals working on their documents while still in their home countries, even before they arrive in the Philippines. We can do so for 9G Working Visas or Pre-Arranged Employee Visas for foreign nationals seeking employment in the Philippines. We also facilitate pre-arranged visa processing of Special Investor’s Resident Visas (SIRV), which permits multiple-entry privileges, so long as the investments subsist in the country.
Triple i’s business consulting team can also guide companies through business registration procedures and preparation of documentary requirements, including the placement of capitalization with a local bank, and investment registration with the Central Bank of the Philippines (Bangko Sentral ng Pilipinas).
Those interested in obtaining more info on incorporating a business in the Philippines or interested in our pre-arranged visa processing services may contact us [here], call us at +63 (02) 8540-9623, or email us at: info@tripleiconsulting.com.
