Retail lib to kill SMEs

by Malaya Business Insight, October 31, 2017

 

The further opening up of the retail industry would kill local small and medium enterprises (SMEs) in the country, according to Samie Lim, chairman emeritus of the Philippine Retailers Association .

Lim said entry of more foreign retailers under a lower capitalization —  $200,000 as proposed from the present $2.5 million — would also have an impact on franchising since a lower investment would make it easy for international brands to come on their own without local partners.

Lim said government should protect local SMEs since retail is one, if not the easiest, way for them to set up businesses.

Lim also laments the fact that when government opened retail in 1995, the industry failed to see any of the foreign retailers fulfill their promises to source 30 percent of the goods they sell in their stores from local manufacturers or to divest ownership after a certain number of years.

Lim said the retail industry has been open the past 20 years and there are various modes of entry: joint venture, franchising and licensing.

He said the plan comes at a time when local businesses in Europe and in Japan are themselves in bad shape.

He said the proposal would pave the way for the entry of SMEs of other countries which cannot be comparable to the country’s SMEs

“We’re saying franchising will be one of the better alternatives,” said Lim, as this mode still leaves a big part of the business to local partners.

“There are at least 40 industries and more sub-industries/sectors that are closed or open to limited (ownership to) foreign investments. I don’t know why they are in a rush to open up retailing,” Lim said,

Before the retail trade liberalization act in 1995, the capital requirement for foreigners was $7.5 million then lowered to $5 million and eventually to the present level of $2.5 million.

“That’s supposedly the last straw.

Now they want (capital requirement) further (decreased),” he said.

At a time when the country is in need of foreign direct investments, Lim sees it fit to target industries that attract bigger amounts of investments in the millions and billions of dollars rather than investors which would only have to bring in  $200,000.

 

 

This article is copied from the article published by Malaya Business Insight, October 31, 2017 and i available online at http://malaya.com.ph/business-news/business/retail-lib-kill-smes



Tags: PFA news, retail trade liberization, ,
Date: November 2, 2017