Among the ramparts that are currently under siege is the retailing sector, which for 40 years, has been reserved for Filipinos.

According to a Manila Times report of February 8, 1999 leaders of the House of Representatives have vowed to rush the passage of the retail liberalization bill after the Department of Justice announced there were no constitutional barriers to the controversial measure.

Local manufacturers have pleaded with government not to liberalize the retail sector, and warned that this would lead to the death of thousands of small businesses. "Our retail industry will really die," said industrialist Raul Concepcion, president of the Federation of Philippine Industries.

Concepcion said opening up the retail sector to multinationals would flood the local market with cheap imported goods, spelling doom for local industries from sari-sari stores to middle-sized businesses.

"At this point, the timing is wrong. Right now, Philippine industry is suffering from cheap prices," he said. "Why, do we want to inflict more wounds on the local industries when we have a recession?"

The bill is one of President Estrada's top priority measures spelled out in his State of the Nation address last year. Under the proposal, the government will completely open up the retail sector to foreign ownership, amending the Retail Trade Law of 1954. Government argues that the proposal will complete efforts to liberalize local industries and promote global competitiveness.

Albay Rep. Joey Sarte Salceda, senior vice chair of the House Committee on Trade and Industry, said the Department of Justice has released an opinion to the committee that there was no constitutional barrier to liberalizing the retail sector. Reserved for Filipino nationals are public utilities, natural resources and education.

Concepcion told the Times that the move would push over the edge many retailers who are already teetering because of the regional crisis. "Most of us are already in a dilemma, some are winding up their operations," he said. "This will just make it harder for manufacturers." Concepcion added that the measure was ill timed, since the manufacturing sector was left in a very fragile state by the regional crisis.

"Right now, we are in a downward trend," he said. "You have 11 months of negative growth, and a recession. You can see that even the multinationals are rationalizing their operations."

Concepcion however acknowledged that the move would be good for consumers, since it would give them more choices at more competitive prices. "All of a sudden, there will be a flood of foreign goods," he said.

A member of Estrada's Cabinet, who asked not to be identified, also defended the government measure, saying it would strengthen local industries and weed out the weak players.

"In any policy move, there are losers and winners. The winners are consumers, who will have a wider choice, lower prices, and competition," the official said. "Those threatened are the retailers."

Filipino retailers have many options to keep afloat, including entering into partnerships or mergers among themselves, or with foreign partners.

Death to the inefficient?

The official added that the opening up of retail trade ties up with the previous administration's long-term policy of trade liberalization and deregulation. Opening up the economy is consistent with liberalization and deregulation, and the desire to make the efficient survive and inefficient die, so you don't waste resources.

The official stressed that government was determined to remove protection for local industries in the long term, so that the country would stop wasting its resources on weak industries. "The reason why inefficient firms are surviving is because of protection by tariff or quota or by closing the market," the official said. "It is a misuse of resources, and is inefficient."