CONTEMPORARY

ECONOMIC ISSUES OF
THE FILIPINO
ENTREPRENEUR
CONTENT STANDARD
The learner demonstrates an understanding of the law of demand and
supply and the factors affecting the economic situation.

PERFORMANCE STANDARD
The learners shall be able to conduct a survey of current economic
situations within the vicinity.

LEARNING OUTCOMES
Cite the different challenges of a Filipino Entrepreneur through a
comical skit/poster.
• What do you think is the moral of the story?
• In the financial aspect, what have you learned during
covid-19 pandemic.
• Why should you save and invest?
 Entrepreneur
• What exactly does the entrepreneur do? Entrepreneurs operate within the
market. They devise ways to increase trade. In other words, entrepreneurs
are those who promote trade. Since May of 2019, there are 1.42 million
registered businesses from 900, 000 in 2017 in the Philippines and
99.56% are MSMEs (Micro, Small and Medium Enterprises).
• Based on the data, what sustains the economy last year is because of the
MSMEs. In this time of pandemic, most of those MSMEs collapsed
because entrepreneurs live with some degree of uncertainties. No one
knows what the future holds. In a competitive market, the landscape is
littered with entrepreneurs who have tried, succeeded and failed.
How can an entrepreneur increase trade?

1. To produce a good or service that satisfies unmet demand.

Example: Steve Jobs, the co-founder of Apple Inc., was
instrumental in the development of such products such as
IPads, IPhones and IPods.
2. To reduce the transaction costs of making trades.
Example: Online buying and selling
Economic Issues of Filipino Entrepreneur

1. INVESTMENT
2. TAXATION
3. WAGE
4. RENT
 I. INVESTMENT
• In Economics, investment is an economic activity that forgoes
consumption today with an eye to increasing output in the future.
In finance terms, investment is denoting a purchase of a security
such as stocks or bonds.
Classification of investment:
• 1. Long term
• 2. Short term
 Long Term Investments
• Long term investments are investments that a firm is willing to
hold for a long period of more than a year or 30 years at most.
Being in a long term investment, investors are willing to accept
the risk in the pursuit of higher rewards.
• Examples are Stocks ,Bonds, Real estate, Tax Sheltered
Retirement Plans, Annuities
 Long Term Investments
• Stocks –these are paper investment, which means it’s not like a
property to manage. Investing in stocks is investing in the
economy.
• Categories of stocks:
• Growth stocks – often pay no dividends at all, primarily
reinvest profits in growth
• High dividend stocks – have the prospect of capital
appreciation
 Long Term Investments

• Bonds – are interest bearing certificates with terms greater

than 10, 20 or 30 years. Not only provide interest income
but also capital appreciation
• Note: mutual funds and exchange traded funds are function
as portfolios of large number of different stocks and bonds
 Long Term Investments
• Real Estate – an alternative to stocks and as the best long term
investment
Two ways to make money investing in rental real estate:
a. Rental income
b. Capital appreciation
 Long Term Investments
• Tax Sheltered Retirement Plans – aren’t actual investments but get
important tax benefits
• Annuities – are solid investments and more of an investment contract
 10 Best Philippine Stocks for Long Term Investment

1. Ayala Corp
2. Ayala Land Inc.
3. Aboitiz Power Corp.
4. Banco de Oro
5. Bank of the Philippine Islands
 10 Best Philippine Stocks for Long Term Investment

6. DMCI Holdings Inc.

7. First Metro Philippine Equity
8. GT Capital Holdings
9. International Container Terminal Services
10. Jollibee Foods Corp.
 Short Term Investments
• Short term investments are highly liquid, and by liquid would
mean easy to turn asset into cash. Tend to be lower risk, meaning
sacrificing a potentially higher return for the safety of having
money.
Examples: Savings Account, Corporate Bond Funds, Corporate
Bond Funds, Government Bond Funds,
Money Market Accounts, Certificates of Deposit
 Short Term Investments
1. Savings Account – are highly liquid, you can add money to the
account and it is insured under the PDIC or Philippine Deposit
Insurance Corporation
2. Corporate Bond Funds – typically considered safe and pay
interest. However, it is not insured by the government so it can lose
money.
3. Government Bond Funds – just like corporate bonds except
that it is issued by the government. It is not insured under PDIC but
it promises to repay money
 Short Term Investments
4. Money Market Accounts – another kind of bank deposit and
usually pay a higher interest rate than savings account. It is
protected by PDIC. It is highly liquid.
5. Certificates of Deposit – it is referred as the time deposit
 II. TAXATION
• The Philippine tax law system was based on the 1987 Philippine.
Constitution and sets its limitations on the exercise of the power to
tax in the following articles:
• Article 6, sections 28-29
• Article 16, section 4
 II. TAXATION
• Article 6, sections 28-29
• 1. Requirement of uniformity and equity in taxation (Article VI,
section 28, Legislative Department)
• 2. Prohibition against taxation of religious, charitable and
educational entities(Religious and charitable institutions
exempt from property taxes) (Article VI, section 28, Legislative
Department)
• 3. Prohibition against taxation appropriation for religious
purposes (Article VI, section 28, Legislative Department)
 II. TAXATION
• Article 16, section 4
• Prohibition against taxation of non-stock , non-profit
educational institutions and proprietary educational institutions
(exempt from property and income taxes as well as customs
duties except income derived from business activity not related
to its educational purpose)
 II. TAXATION
• The latest revision of the tax law is the National Internal Revenue
Code of 1997.
• Taxes are the lifeblood of government. These are used to finance
the basic services such as health care and education as well as
infrastructure.
• In 2017 Doing Business Report of World Bank, the Philippines
ranked 99 th out of 190 economies in terms of filing of taxes. It
takes 185.6 hours or 28 times each year to file taxes.
 II. TAXATION
• The latest revision of the tax law is the National Internal Revenue
Code of 1997.
• Taxes are the lifeblood of government. These are used to finance
the basic services such as health care and education as well as
infrastructure.
• In 2017 Doing Business Report of World Bank, the Philippines
ranked 99 th out of 190 economies in terms of filing of taxes. It
takes 185.6 hours or 28 times each year to file taxes.
 II. TAXATION
• Classification of Taxes:
• By tax base
• Indirect/direct tax
• Unit/ad valorem
• Distribution of the tax burden
• Progressive taxes
• Proportional taxes
• Regressive taxes
 II. TAXATION
• Classification of Taxes:
1. By tax base – is a convenient classification for economic
analysis, for example, in examining who exactly bears the burden
of a tax known as incidence of taxation. Examples: taxes on
cigarettes paid by consumer, taxes on coffee paid by
manufacturer
2. 2. Indirect/direct – a direct tax is one levied directly on the
person who is intended to pay the tax whereas the indirect tax is
borne by a person other than the one from whom the tax is
collected. Examples of Direct Tax; Individual Income Tax,
Corporate Income Tax, Capital Gains Tax, Estate Tax,
 II. TAXATION
• Classification of Taxes:
• Examples of Indirect Tax: Sales Taxes. Excise Taxes. Value-
Added Taxes (VAT), Gross Receipts Tax.
3. Unit/ad valorem – a unit or specific tax is levied on the volume
of what is being taxed whereas an ad valorem tax is levied on the
value of the tax base.
The most common ad valorem tax examples include property taxes
on real estate, sales tax on consumer goods, and VAT on the value
added to a final product or service. Higher tax on expensive goods.
• Classification of Taxes:
• 4. Distribution of the tax burden – the way in which burden of
tax is distributed among the taxpaying community
• a. Progressive taxes take an increasing portion as the value of
the tax base rises and depends on the marginal rate of tax
• b. Proportional taxes take a constant portion of the value of the
tax base and depends on the marginal and average rates of tax
being equal
• c. Regressive taxes take a declining portion as the value of the
tax base rises and depends on the average rate of tax being greater
than the marginal rate of tax
• *Levied means impose
• *Marginal means extra or additional or increment
 TAXATION

• In the Philippines, the government adopted the progressive

taxation scheme in the collection of income tax in order to
allocate the burden of tax fairly between members of the
community. Under the progressive taxation, the rate of tax
would increase as the level of income increased. This
implies that the system should be used to correct income
inequalities.
 TAXATION
• The following are the arguments in favor of progressive taxation:
• a. Vertical equity – tax rates should be progressive in order to
promote equality of sacrifice like the loss of a one peso of a rich
person is less a burden compared to the loss of a one peso to a
poor person.
• b. Redistribution of income – socially aware governments
seeking reduce poverty and promote social welfare can use
progressive taxation to achieve a greater degree of redistribution
 TAXATION
• The following are the arguments in favor of progressive taxation:
• c. Benefit theory – may be justified on the grounds that wealthier
individuals receive more benefit from public services such as
defense and law and order as they have more to lose than poorer
individuals with few possessions
• d. Achieve equity in the tax system as a whole – can
compensate for regressive taxes in the tax system so that the total
burden of taxation from all taxes is proportional
 TAXATION
• The following are arguments against a progressive taxation
• a. Simplicity – it is argued that steeply progressive rates of
income tax make it more complicated increasing the incentive to
avoid and evade the tax
• b. Political objection – the fact that a government is voted in by
the majority of the electorate but the highest progressive rates of
tax would only apply to a minority may be politically
unacceptable, as in effect the majority would be allowed to
determine rates of tax that would fall exclusively on the minority
 TAXATION
• The following are arguments against a progressive taxation
• C. Economic efficiency – highly progressive rates of income
tax are likely to reduce savings and the creation of capital
making society as a whole worse off
• Ambisyon Natin 2040 paved the way of passing the major laws.
The Tax Reform for Acceleration and Inclusion or the well-
known TRAIN bill, tax amnesty legislation and Republic Act No.
11032 of 2018 which aims to fast track measures of cutting red
tape and make the process of setting up and maintaining a
business easier and efficient.
• The Tax Reform for Attracting Better and High-Quality
Opportunities or the TRABAHO bill is the second component of
the tax reform package which is to make corporate tax rates in the
Philippines competitive with those of its regional neighbors and
to enhance fiscal incentives regime.
 Ambisyon Natin 2040
• 1. TRAIN bill was implemented in January 2018 to increase
government earnings to fund higher public expenditure which are
better infrastructure, health, education, jobs and social protection.
14 A simplified income tax system was also developed for small
businesses introducing the possibility of being taxed at a flat rate
of their gross sales on receipts provided that this does not exceed
an annual threshold of 3 million.
 Ambisyon Natin 2040
• 2. TRABAHO bill proposes an income tax holiday incentive be
granted for a period not exceeding three years and other
incentives for businesses.
• 3. Green Jobs Act of 2016 referring to employment that
contributes to the preservation and restoration of the environment
• 4. Tax Amnesty Act of 2018 or RA 11213 with taxpayers
benefitting from two types of tax amnesties:
• a. Estate Tax Amnesty
• b. Tax Amnesty on Delinquencies
• Ease of Doing Business Act
• Republic Act No. 11032 of 2018 or otherwise known as the Ease
of Doing Business and Efficient Government Service Delivery
Act provides for an adoption of simplified requirements and
procedures that will reduce bureaucratic requirements and
expedite both business and non-business related transactions with
the government.
• Ease of Doing Business Act
• The law provides a zero contact policy wherein government
employees are prohibited from having any contact of any type
with any transacting applicant except on the following cases:
a. During preliminary assessment of the request
b. While evaluating the sufficiency of submitted requirements
The present administration took the initiative so that
entrepreneurs can do business at ease.
 II. Wage
Ease of Doing Business Act Republic Act No. 11032 of 2018 or
otherwise known as the Ease of Doing Business and Efficient
Government Service Delivery Act provides for an adoption of
simplified requirements and procedures that will reduce bureaucratic
requirements and expedite both business and non-business related
transactions with the government.
 II. Wage
The law provides a zero contact policy wherein government
employees are prohibited from having any contact of any type with
any transacting applicant except on the following cases:
• a. During preliminary assessment of the request
• b. While evaluating the sufficiency of submitted requirements
The present administration took the initiative so that entrepreneurs
can do business at ease.
 II. Wage
• Wage rate in the Philippines is at 13, 487.30 pesos since 2018
compared to the 12, 646 pesos in 2017.
• For small businesses to acquire and convince individuals to offer
their skills, expertise and time is to make compensation 15 be
competitive in the labor market.
• Attractive benefits and other perks entice a skilled individual to be
part of your growing business.
 II. Wage
• The minimum wage law is determined by the regional wage
boards every year.
• The determination is based on the following factors:
• 1. Needs of workers and their families
• 2. Capacity to pay
• 3. Comparable wages and incomes
• 4. Requirements of economic and social development
• The data from the Philippine Statistics Authority and from the National
Economic Development Authority will be used in determining each
factor
 IV. RENT
• In the Philippines, a law intended to protect millions of Filipino
renters across the country which took effect in 2009, the Rent
Control Act of 2009.
• In 2018, the Philippine Statistics Office recorded at least 1.5
million renters and 97% of these renters are renting with rates
costing 10, 000 pesos per month.
• For entrepreneurs and owning a business in the Philippines, one
major concern is the property.
• It is important for business owners or entrepreneurs to be
knowledgeable about the property law.
SHORT QUIZ
 AGREEMENT

• Summative Test Next Meeting

• Performance Task 2- Cite the different challenges of a
Filipino Entrepreneur through a comical skit/poster.
• Reporting Assignments
 Agreement

• Top 1, 2, 3,4 Module 7

• Top 5 & 6 Module 8-9
• Top 7-10 Module 10