NEWLY LIBERALIZED AREAS FOR FOREIGN INVESTORS

• RETAIL TRADE
• POWER SECTOR
• E-COMMERCE

Retail Trade. RA 8762, or the Retail Trade Liberalization Act of 2000, aims to encourage efficient and competitive retail trade among Filipino and foreign investors, with the goal of empowering the Filipino consumer by making available to them quality goods, better services and wider choices at lower prices. Retail trade involves routinely engaging in the sale of goods or commodities for consumption of the general public.

How does a foreigner qualify to establish a retail trade business?
There are three categories by which foreign nationals may qualify:

1. Category B- enterprises with a minimum paid-up capital of US$2.5M but less than US$7.5 M where you may opt to own up to 60% for the first two years after March 25, 2000.
2. Category C- enterprises with a paid-up capital of US$7.5M or more may be wholly owned by foreigners
3. Category D- enterprises specializing in high end or luxury products with a paid-up capital of $250,000 per store may be wholly owned by foreigners

Note: Category A- is for enterprises which are wholly owned by Filipino citizens

What enterprises are required to maintain an investment per store
requirement of US$830,000?

- New retail enterprises falling under categories B and C of R.A. 8762
- An existing retail store where a foreign retailer has acquired at least 51% of its outstanding capital stock

Who needs to pre-qualify?

- Foreign retailers who will engage and establish a retail store in the Philippines
- A foreign retailer who will require at least 51% of the outstanding capital stock of an existing retail store.

Power Systems. RA 9136 or the Electric Power Industry Reform Act of 2001, paves the way for foreign participation in the restructuring of the countrys power industry, in the privatization of the government-owned National Power Corporation (NAPOCOR), and opening the sector to private competition.

E-commerce. The Electronic Commerce Law enacted in 2001 provides the legal and regulatory framework governing commercial and non-commercial transactions through the internet. The Philippines is the 6th country in Asia to have an e-commerce law, after Singapore, Malaysia, Thailand, South Korea and India.

What incentives does the government give under this E-Commerce law?

- 4-6-8 years Income Tax Holiday (ITH)
- Special 5% tax rate after the lapse of ITH
- Tax and duty exemption on imported capital equipment
- Unresricted use of consigned equipment
- Additional deduction for labor expense up to 50%
- Deduction for training expenses (labor and management)
- Exemption from wharfage dues
- Employment of foreign nationals
- Permanent resident status for foreign investors and immediate family

Where to set-up an e-commerce or IT-related business?
IT Parks have been set up as ideal locations for the establishment of an IT enterprise. IT Parks offer cutting edge facilities and infrastructure for IT locators on top of added incentives given to investors and locators. The Department of Trade and Industry (DTI) shall supervise and direct the promotion and development of electronic commerce in the Philippines.