Foreign Equity Participation Categories in Retail Trade
- Foreign-owned enterprises may invest or engage in retail trade subject to minimum paid-up capital and ownership restrictions.
- Category A: Paid-up capital under $2.5 million - exclusive to Filipino citizens or wholly Filipino-owned corporations.
- Category B: Paid-up capital of at least $2.5 million - may be wholly foreign-owned after 2 years; initially foreign ownership limited to 60%.
- Category C: Paid-up capital of at least $7.5 million - may be wholly foreign-owned.
- Category D: Enterprises specializing in high-end or luxury products with a $250,000 paid-up capital per store may be wholly foreign-owned.
- Minimum investment for establishing a store in Categories B and C is at least $830,000.
- Foreign investors must maintain the prescribed minimum capital in the Philippines unless they notify authorities of repatriation.
- SEC monitors the use of inwardly remitted capital.
- Certification from BSP and DTI is required for future stores verifying remittance of minimum capital.
Acquisition of Shares by Foreign Investors
- Foreign investors acquiring shares in local retail stores with net worth over $2.5 million can initially purchase up to 60% equity within the first two years.
- After two years, foreign investors may acquire more shares consistent with allowed foreign participation.
Public Offering Requirements
- Retail trade enterprises under Categories B and C with foreign ownership exceeding 80% must offer at least 30% of their equity to the public through a Philippine stock exchange within 8 years from operation start.
Qualification Requirements for Foreign Retailers
- Parent corporations must have a minimum net worth of $200 million for Categories B and C, and $50 million for Category D.
- Must operate at least 5 retail branches or franchises worldwide, or have one store capitalized at a minimum of $25 million.
- Must have a 5-year track record in retailing.
- Only nationals or judicial entities from countries allowing Filipino retailers are permitted.
- The Department of Trade and Industry (DTI) pre-qualifies foreign retailers before they are allowed to conduct business.
Penalties for Violation
- Individuals found guilty of violating the law face imprisonment from six years and one day up to eight years.
- Monetary fines range from One Million Pesos up to Twenty Million Pesos.
- Penalties for associations, partnerships, or corporations are imposed on responsible officers.
- Non-citizen offenders shall be deported immediately after serving their sentence.
Enforcement and Bureau of Immigration's Role
- The Bureau of Immigration strictly enforces the law, arresting, charging, and deporting foreign nationals engaged in retail trade in violation of the law.
- A stern warning is issued to alien residents engaged in retailing.
- Enforcement adheres to relevant provisions of Republic Act 6785 and Section 37(a)(7) of the Philippine Immigration Act of 1940 as amended.
- The Bureau will continue to pursue cases against violators to uphold the law's mandate.