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What has happened to the BMBE law? |
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By Rene E. Ofreneo
The Manila Times, Wednesday, 21/04/2004 WITH a lot of hype, Congress enacted in 2002 the Barangay Micro Business Enterprises (BMBEs) Act with the following grand objectives: “to hasten the country’s economic development by encouraging the formation and growth of barangay micro business enterprises, which effectively serve as seedbeds of Filipino entrepreneurial talents, and integrating those in the informal sector with the mainstream economy, through the rationalization of bureaucratic restrictions, the active intervention of the government especially in the local level, and the granting of incentives and benefits to generate much-needed employment and alleviate poverty.” Like its unlamented predecessor—the Kalakalan 20 law enacted during the Aquino Administration, the BMBE law seeks to legalize or give formal business cover for the numerous unregistered micro enterprises that serve as the ‘catch basin’ for workers who can not find jobs in the limited formal sector of the economy. By being registered, these micro enterprises can access much-needed credit from the formal sector and enjoy other incentives promised by the BMBE law— technical assistance, exemption from the minimum wage law and tax incentives. Alas, today, there is very little that the government can report on the achievements of the BMBE law. Most of the unregistered micro enterprises, defined as those with a capitalization of less than P3 million, remain unregistered. Why? First, the various agencies in charge of implementing the BMBE law, mainly the DTI, DOF, DOLE and DLGI, cannot get their act together. They have different interpretations of the law. As a result, they cannot agree on the system of registration of accreditation that has to be adopted by the local government units or LGUs. The Department of Finance and many LGUs are also hesitant to implement the law because of fear losing tax revenues. The DOF itself warned that the government stands to lose as much as P200 billion a year if the law is implemented. How the DOF arrived at this figure is unclear. In the first place, how could government lose tax revenues from entities which are not registered and which have not been paying taxes all these years? Of course, the danger is that some well-organized ‘micro’ firms such as consulting firms, law offices, dental clinics and so on will take advantage of the law’s clauses on exemption from taxes and minimum wage. One way of addressing this problem is by sorting out or distinguishing the truly informal enterprises from the more formal ones (although unregistered) in terms of products or services, organization and background or profile of the micro entrepreneurs. For example, a home-based espasol maker delivering espasol to school canteens is not in the same league as that of an IT consultant servicing big schools. The barangay is in a great position to make such a distinction. On the other hand, one should be not blind to the fact that ‘informality’ is considered by many micro enterprises as a competitive advantage. Not only because of the tax issue. By being informal, micro enterprises are able to make business transactions cheaply. Even the lack or absence of an official receipt is considered an advantage since many business institutions do away with receipts and go into informal business transactions to avoid paying the VAT. Another area of contention is the exemption of the BMBE enterprises from the coverage of the minimum wage and other labor standards. The Department of Labor and Employment, through DO 45-03, issued a clarificatory opinion that such exemption “should be in harmony with the Constitution and the Labor Code which mandates the State to regulate relations between workers and employers and to protect workers from possible exploitation.” Which means DOLE is not about to give blanket approval for the exemption clause. However, the labor issue can also be resolved without raising the hackles of organized labor. For instance, why not prioritize the registration of micro enterprises using either the labor of the entrepreneur himself/herself or his/her immediate family? A family enterprise using family labor cannot be charged of underpaying its own family members. In fact, the colossal failure of the original Kalakalan 20 is that it tried to cover relatively well-organized small and micro enterprises, employing as much as 20 employees. Had K 20 been made Kalakalang Pampamilya, things would have been different. And come to think of it. What this country really needs is a nationwide entrepreneurial revolution spearheaded by the individual families. This is one reason for the success of our neighboring Confucian societies. So why not Kalakalang Pampamilya as the basis for making the BMBE law work? |
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