Microbusiness in the Philippines

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http://www.sunstar.com.ph/cagayan-de-oro/business/2012/11/27/soriano-barangay-micro-business-enterprises-act-2002-255390 By Prof. Enrique M. Soriano
Tuesday, November 27, 2012
"LET us work in partnerships between rich and poor to improve the opportunities of all human beings to build better lives." -- Kofi Annan Most family businesses are categorized as micro, small and medium enterprises or MSMEs. These firms contribute to the creation of wealth, employment, and income generation, both in rural and urban areas, thus, ensuring a more equitable income distribution. They are vital in dispersing new industries to the countryside and stimulating gainful employment. A country like the Philippines where labor is abundant has much to gain from entrepreneurial activities. SMEs are more likely to be labor-intensive. Thus, they generate jobs in the locality where they are situated. In this sense, they bring about a more balanced economic growth and equity in income distribution. In the last five years, the MSME sector accounted for about 99.6 percent of the registered businesses in the country by which 63 percent of the labor force earn a living. Around 35.7 percent of the total sales and value added in the manufacturing come from MSMEs as well. The constraints that MSMEs often face can generally be categorized as: (1) non-financial barriers (cost of getting electricity, heavy regulation, high tax rates, and corruption); and (2) financial barriers (access to finance). Based on the World Bank’s indicators on the ease of doing business, the Philippines lags behind its neighboring countries in reducing the number of start-up procedures, cost to start a business (measured in terms of percent of gross national income per capita or GNI pc), and number of tax payments per year. These non-financial barriers to MSME development translates to high cost of doing business or poor business environment, and discourages the formation of new MSMEs or the entry of existing MSMEs into...
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