PC

Contemporary Economic Issues Facing the Filipino Entrepreneur

Contemporary Economic Issues Facing the Filipino Entrepreneur

Objective

  • Understand economics as an applied science.

  • Analyze contemporary economic issues affecting Filipino entrepreneurs.

  • Evaluate socioeconomic impacts of business on various sectors:

    • Consumers

    • Suppliers

    • Investors

    • Government

    • Households

    • International trade

Logo Quiz

  • Identify organizations represented by logos:

    • DFA: Department of Foreign Affairs, manages international relations and impacts on trade.

    • DOE: Department of Energy, influences energy sectors vital for businesses.

    • DOLE: Department of Labor and Employment, regulates labor forces affecting business operations.

    • Senate: Legislative body that drafts laws impacting economic policies and business regulations.

Exploring Economic Data

Currency Exchange Rates (as of Feb 08, 2021)

  • PHP to USD: 48.06

  • PHP to Euro: 57.88

  • Comparison of Philippine Peso against various currencies highlights market performance.

Understanding Entrepreneurship

Definition of Entrepreneurship

  • Entrepreneurship involves starting a business and assuming risks.

  • Entrepreneurs are innovators who exploit gaps in the market.

    • Characteristics:

      • Visionary

      • Risk-taker

Role of Entrepreneurs

  • Ideas often lead to new products/services, dramatically influencing societal interactions, e.g., social media.

  • The uncertainty surrounding new ideas positions entrepreneurs as significant risk-takers compared to standard business owners.

Innovation Strategies of Entrepreneurs

  • Creation of new products/services responding to consumer needs; e.g., power banks for mobile users.

  • Improvement of existing products to align with consumer preferences; enhancing current market offerings.

  • Process improvement for efficiency; e.g., car wash services in strategic locations.

The Filipino Entrepreneur

  • Filipinos demonstrate strong enterprise.

  • Successful entrepreneurs often start from humble beginnings, displaying resilience and risk-taking.

  • Hard work and perseverance lead to eventual success.

Governance Support for Entrepreneurs

Department of Trade and Industry (DTI)

  • Governs business registrations and trade policies.

  • Hosts educational programs fostering entrepreneurship.

Youth Entrepreneurship Act (Republic Act No. 10679)

  • Passed in July 2015 to support young individuals (18-30 years).

  • Integrates financial literacy and entrepreneurship in education.

Philippine Center for Entrepreneurship (PCE)

  • Non-profit advocating for entrepreneurship, notably through the "GoNegosyo" program.

Types of Business Structures

Sole Proprietorship

  • Single owner; profits are personal income.

Partnership

  • Two or more owners; profits divided among partners.

Corporation

  • Separate legal entity; ownership via stockholders.

  • Conglomerates involve multiple corporations under one ownership.

New Business Registration in the Philippines

  • Registration timelines vary by business structure:

    • Sole Proprietorship: Shorter process (8 steps).

    • Corporation: More complex (15 steps).

Steps for Business Registration

  1. DTI: Register business name.

  2. Barangay: Obtain clearance.

  3. Municipality: Get a business permit.

  4. Bureau of Internal Revenue (BIR): Apply for TIN.

  5. Social Security System (SSS): Register as self-employed.

Economic Issues and Challenges

Financing

  • Interest rates impact financing decisions for consumers and businesses:

    • High rates discourage borrowing, reduce spending.

    • Low rates encourage investment.

  • Funding options:

    • Personal financing: Savings, loans from family, etc.

    • External financing: Investments from third parties, including crowdsourcing.

Cost of Rent

  • Physical store rent significantly impacts operating income.

  • Factors influencing rent: real estate prices, location, foot traffic.

Labor Costs

  • Minimum wage laws increase operational expenses.

  • Reviewed by the National Wages and Productivity Commission (NWPC).

Taxes

  • Common taxes for entrepreneurs:

    • Percentage Tax: varies by industry and sales limit.

    • VAT: 12% on goods and services.

    • Capital Gains Tax: 5%-10% for selling assets.

    • Income Tax: Ranges from 5%-32% based on income level.

Labor Migration and Unemployment

Labor Migration

  • Driven by high domestic unemployment (currently at 6.4%).

  • OFWs seek better opportunities abroad, contributing to national GDP.

Unemployment Effects

  • Business cycles lead to job losses; reduction in production affects national income.

  • Reduced government funds limit public projects; potential borrowing from abroad.

Inflation

  • Rising prices do not affect all goods equally but represent economic instability.

  • Fixed-income earners suffer; less disposable income leads to decreased demand, further impacting jobs.

Questions for Discussion

  • Effects of tax collection shortfall on society.

  • Explore five public goods and services funded by taxes.

  • Discuss the value of public goods versus tax contributions.

Evaluation

  • Multiple Choice questions in Learning Kit.