CONTEMPORARY

ECONOMIC ISSUES
FACING THE
FILIPINO
ENTREPRENEUR
What is Entrepreneurship?

Entrepreneurship refers to the talent that some

people have for organizing resources of land, labor,
and capital to produce goods, seek new business
opportunities, and develop new ways of doing things.
What is Entrepreneurship?

Entrepreneurship is a way of giving individual

access to better lives not only for themselves but for
their family as a whole.

If the government would like to lessen the issue

of poverty, entrepreneurship can provide the solution
by creating wealth, more job opportunities, and
social empowerment.
What is an Entrepreneur?

An entrepreneur is an individual who creates a

new business bearing most of his risks and enjoying
most of the rewards. The entrepreneur is commonly
seen as an innovator, a source of new ideas, goods,
services, and business procedures.
What is an Entrepreneur?

Entrepreneurs play a key role in any economy,

using the skills and initiative necessary to anticipate
needs and bring good new ideas to market.
Entrepreneurs who prove to be successful in taking
on the risks of a start-up are rewarded with profits,
fame, and continued growth opportunities. Those
who fail, suffer losses and become less prevalent in
the markets.
Economic Issues Facing the Filipino Entrepreneur
1. Investment and interest rates: How do interest
rates affect businesses?
An interest rate is based on the amount of money a
lender, such as a bank, lends to a borrower. In most
instances, the interest rate is calculated as an annual
percentage based on the outstanding loan. If you’re a
business owner, you must understand the major ways
in which interest rates affect and influence how your
business operates.
1. Investment and interest rates: How do interest
rates affect businesses?
Nearly every small business has outstanding
loans, and when interest rates rise, those loans
become more expensive. Typically, these are long-
term debts that are going to take years for you to pay
off, so any increase in the interest rate on those loans
means you’re going to carry the debt longer and pay
more money.
1. Investment and interest rates: How do interest
rates affect businesses?
Entrepreneurs who are new in business or are
not yet earning income from their operations, getting
financial assistance from the government or
obtaining loan from private banks in the country is
very difficult. They need to have collateral (real estate
property), attractive audited financial statement, at
least two years of stay in business and a very
comprehensive feasibility study to get the loan.
1. Investment and interest rates: How do interest
rates affect businesses?
Entrepreneurs shoulder higher rates of interest
on loans. Business of an entrepreneur is considered
small compared to corporations, and small
businesses have a higher risk profile so they have to
pay higher interest rates. Banks see to it that in case
of bank loans default can regain the loss by charging
higher interest rates.
1. Investment and interest rates: How do interest
rates affect businesses?
When interest remains low, business can borrow
more readily. Low -interest loans can fund business
growth and increase profitability because businesses
can earn enough off new ventures to pay for the loan
interest and have money left over profits.
Economic Issues Facing the Filipino Entrepreneur

2. Rentals
The Philippines has a vibrant rental market which
currently is Experiencing a strong demand from both
local and foreign tenants looking for places in pretty
much every range. From budget to mid and high-end
units.
2. Rentals
A study released in 2014 by property listing site
Lamudi found that 69% of Filipinos prefer to rent
than to buy home and majority of renters fall
between the ages 21 to 34 years old. These
individuals are mostly fresh graduates on their first
year or second job, earning just enough for
temporary shelter, rather than a permanent home.
2. Rentals
Entrepreneurs doing business in shopping malls
need to pay higher rental rates that after a year or
two they decide to transfer to other place, offering
lower rental fee, instead of losing money for the
rental fees.
Monthly rental can be based on per square meter
or percentage based rate that is based on actual sales
or minimum monthly gross sales whichever is higher.
2. Rentals
Rental fee usually at Php 400 per square meter
at the higher level and goes higher as you down to
lower level of the mall.
Cart stalls located at the common areas are
charged Php 15,000 per month in the air con area and
Php 9,000 in the open area.
2. Rentals
Other monthly fees include security deposit,
advertising, Construction / renovation deposit,
power/water meter deposit, performance cash bond
(some malls apply these fees, others do not).
Economic Issues Facing the Filipino Entrepreneur

3. Minimum Wage
The underlying concept of the minimum wage is
to set a universal floor for the lowest rate an
employer can legally pay an employee. While a single
national rate is most common, some countries have
different regional, industrial, occupational, or age-
related minimums.
3. Minimum Wage
Some types of workers can also be completely
excluded—agricultural and domestic labor, the self–
employed, and family enterprise workers are
common examples.
Entrepreneurs as employers are forced to
implement the wage order to all minimum wage
earners regardless of their position, job title, and
status of employment and their methods of
payment.
Economic Issues Facing the Filipino Entrepreneur

4. Taxes
At the national level, taxes are imposed and
collected pursuant to the National Internal Revenue
Code, the Tariff and Customs Code, and several
special laws.
4. Taxes
There are four main types of national internal
revenue taxes: income, indirect—value-added and
percentage taxes, all of which are administered by
the Bureau of Internal Revenue or the BIR. At the
local level, governments have some autonomy to
impose taxes on business and ownership of real
property.
4. Taxes
Entrepreneurs are obliged to pay the following
taxes:
a. Percentage Tax. For small business with gross
annual sales and receipts that do not exceed Php
1,919,500.00 are not VAT-registered, percentage tax
is imposed for sold or leased goods, properties or
services. The tax rate varies depending on the nature
of business.
4. Taxes
Entrepreneurs are obliged to pay the following
taxes:
b. Value Added Tax (VAT). VAT is a form of sales tax.
It is tax on consumption levied on the sale, barter,
exchange or lease of goods or properties and services
within the Philippines. It is an indirect tax which may
be shifted or passed on to the buyer, transferee or
lessee of goods, properties or services.
4. Taxes
Entrepreneurs are obliged to pay the following
taxes:
c. Income Tax. An income tax is a government levy
(tax) imposed on individuals or entities (taxpayers)
that varies with the income of profits (taxable
income) of the taxpayers.