QuestionsQuestions (MEMORANDUM CIRCULAR NO. 2018-008)
To warn and enforce against foreign nationals (including holders of resident and temporary visas) who engage in retail trade in the Philippines in violation of Republic Act No. 8762 (Retail Trade Liberalization Act of 2000), including arrest, charging, and deportation where applicable.
No. The memorandum states that foreign nationals are prohibited from engaging in retail trade except if the requirements and limitations under RA 8762 are met.
It sets categories (A, B, C, D) that limit allowable foreign ownership based on paid-up capital and other conditions, including restrictions during the first two years for Category B.
Enterprises with paid-up capital equivalent to less than US$2,500,000 must be reserved exclusively for Filipino citizens and corporations wholly owned by Filipino citizens.
Foreign participation is limited to not more than 60% of total equity during the first two years.
Category C enterprises with minimum paid-up capital equivalent to at least US$7,500,000 or more may be wholly owned by foreigners, subject to the additional proviso on minimum investment for establishing a store.
No case shall the investments for establishing a store in Categories B and C be less than the equivalent in Philippine pesos of US$830,000.
When it specializes in high-end or luxury products, with a paid-up capital equivalent to Philippine pesos of US$250,000 per store.
The foreign investor must maintain in the Philippines the full amount of the prescribed minimum capital, unless it has notified the SEC and DTI of intent to repatriate and cease operations.
Future retail stores must secure certification from the BSP and DTI verifying or confirming inward remittance of the minimum required capital investment.
Foreign investors may purchase only up to a maximum (stated in the text as 60%) of equity within the first two years from the effectivity of the Act, even if acquiring shares from existing retail stores, subject to later acquisition consistent with allowable foreign participation.
Retail trade enterprises under Categories B and C where foreign ownership exceeds 80% must offer at least 30% of their equity to the public through any stock exchange in the Philippines within eight years from start of operations.
They must meet requirements such as: (1) minimum net worth in the parent corporation depending on category; (2) at least five retailing branches or franchises worldwide, or at least one store capitalized at a minimum amount; (3) a five-year track record; and (4) nationality restrictions tied to countries that allow Filipino retailers entry.
Imprisonment of not less than six (6) years and one (1) day but not more than eight (8) years, and a fine of not less than Php1,000,000 but not more than Php20,000,000.
For associations/partnerships/corporations, the penalty is imposed on partners, presidents, directors, managers, and other responsible officers. If the offender is not a citizen of the Philippines, he shall be deported immediately after service of sentence.
It references violation of Republic Act No. 6785 and Section 37(a)(7) of the Philippine Immigration Act of 1940 (as amended) in relation to foreign nationals caught in retailing.
It indicates that even if foreigners have resident visas, they are still not allowed to engage in retail trade if it violates RA 8762; BI will enforce accordingly through arrest, prosecution, and deportation.