Press Release
March 11, 2021

Hontiveros warns: Lowering capital investment for foreign investors, a "death knell" for small local businesses

Senator Risa Hontiveros has warned that the proposal to lower the minimum capital investment for foreign investors will blow out the domestic retail market, saying that the impending influx of foreign competition will further press already-struggling local small and medium enterprises against the wall.

"While I support measures that will help the economy bounce back, create jobs and bring prices down for consumers, lowering the minimum paid-up capital investment for foreign investors may further hurt small local businesses still reeling from the pandemic. This sudden drop can mean the difference between life and death for our Filipino retailers," she said.

During the period of interpellation on the proposed amendments to the Retail Trade Liberalization Act, Hontiveros said that reducing the minimum capital requirement for foreign retailers from US$2.5M to US$300,000 or around P15M, would be a 'death knell' for small and medium Filipino entrepreneurs who were hardest-hit by pandemic-related lockdowns.

"Technically, an enterprise worth P15M in asset size is still a small enterprise. Ang head to head competitor ng mga papasok na foreign retail industries ay mga small enterprises natin: small grocery in Cabanatuan na pinundar ng isang OFW mula sa kita niya sa Saudi ng sampung taon, souvenir store in Mandaue, Cebu, rice retailers in Nueva Ecija, mga tindahan sa Baclaran at Quiapo run by our brother and sister Muslim Filipinos," she said.

"These are the stores that according to Asian Development Bank's study have suffered the most from the pandemic - how will they be protected from the sudden competition from small but numerous foreign retailers?," Hontiveros asked.

She also emphasized that given the limited capacity of a small enterprise might end up employing their own citizens and the expected unemployment-reducing effects for Filipinos may actually be smaller than what was hoped for.

"Ilan ba ang kayang i-hire ng isang kumpanya na P15M ang kapital? Ano rin ang kasiguraduhan na para nga sa Pilipino ang trabaho? My bigger fear is that these enterprises would just be the Bangladeshi and Chinese shops in Divisoria -- shops that employ their own nationals living and working illegally in the country. Our MSMEs are decimated, and yet job creation is minimal. Lugi naman tayo dito," she said.

Hontiveros also stated that this measure may create an uneven playing field for local micro, small and medium enterprises (MSMEs) as foreign counterparts are more likely given export assistance by their governments and trade associations.

"Our local MSMEs do not receive the same level of government aid and do not have access to low-cost manufacturing facilities. Imagine, Chinese companies are able to procure goods at a lower price dahil may direct access sila sa manufacturers sa Mainland China," she said.

"The subsidies we give to our small businesses are just enough to "keep the lights on" but not enough for them to gear up and compete against a sudden influx of small foreign retailers. Hahayaan na lang ba nating lamunin ang ating maliliit na negosyante?," Hontiveros asked.

Hontiveros is set to propose an amendment increasing the minimum required paid up capital to an amount that is cognizant of the benefits of foreign investment. "Anumang measure na ating ihahain para palakasin ang ekonomiya, dapat may pagkiling sa ating local SMEs. Hindi dapat sila ang ibabala. We cannot leave our SMEs flailing in the ocean. Especially not at this time," she concluded.

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