IF there is one wish Australia has for President Duterte this year, it is that he liberalizes retail-trade enterprises to allow foreign investors to enter the restricted industry.
According to Australia’s Senior Trade Commissioner for Manila Elodie Journet, Canberra is looking forward to the further liberalization of certain investment areas in the country.
Manila is keen on relaxing, if not eliminating, restrictions on foreign participation in a number of investment areas to raise the country’s competitiveness level and accelerate Southeast Asia’s economic growth.
“It is very positive [development],” Journet said in an interview with the BusinessMirror. “When you are an investor, you look at many countries. You don’t just focus on one country, so then you start to compare the conditions for investment in each country.”
Journet said there are more than 200 Australian firms that are present in the Philippine market. This number, she argued, will greatly increase if Manila pushes through with its plan to relax restrictions on foreign ownership.
Sought what industry Australia wishes the country liberalizes, she pointed to retail-trade enterprises. “We are hoping retail. We are hoping that retail in terms of the paid-up capital requirements for foreign institutes that we can actually have [ownership],” the Australian trade official said.
Under Executive Order (EO) 184, Series of 2015, or the 10th Regular Foreign Investment Negative List (RFINL), foreign investors are not allowed to own retail-trade enterprises with paid-up capital of less than $2.5 million.
Full foreign ownership, as stipulated in Section 5 of Republic Act 8762, or the Retail Trade Liberalization Act of 2000, is only permitted for retail-trade enterprises with paid-up capital of more than $2.5 million provided the cost of establishing a store is more than $830,000; and enterprises specializing in high-end or luxury products with a paid-up capital of more than $250,000.
This is why Australian firms got “excited” when they heard the President is planning to further liberalize the retail industry, Journet said.
She added this will beef up Australia’s investment in the Philippines, which was valued at A$9.3 billion in 2016.
Australia was one of the top prospective investing countries in the third quarter of last year. It committed P2.8 billion to the country in that quarter, just behind Japan and Taiwan, which pledged P21.4 billion and P8.9 billion, respectively.
As a whole, Journet said Australia is impressed with the Duterte administration’s efforts to attract more foreign investors in the country. She added this is crucial in sustaining the country’s fast-growing economy and maintaining healthy relations with trading partners.
Duterte’s economic team is in the process of crafting a new RFINL that will liberalize eight investment areas identified by the Chief Executive.
The President last November directed the National Economic and Development Authority (Neda) Board and its member-agencies to “take immediate steps to lift or ease existing restrictions on foreign participation” in certain industries.
Aside from retail-trade enterprises, Duterte wants to relax restrictions on private recruitment in both local and overseas employment; practice of particular professions, where the entry of foreign players will benefit the public; contracts for the construction and repair of locally funded public works; and public services, except activities and systems that are recognized as public utilities. The President also intends to ease restrictions on culture, production, milling, processing and trading, except retailing, of rice and corn; teaching at higher education levels; and domestic market enterprises.
For its part, the Neda Board is tasked to advise the President on restrictions that may already be lifted or eased through an executive order. Duterte intends to repeal EO 184, Series of 2015, and issue a new RFINL soon.