Despite a promising economy growth of 8.3% in January 2022, many small-to-medium enterprises (SMEs) continue to suffer from pandemic repercussions.
Business owners are dealing with climbing costs of supplies and fuel, increasing the need for business loans as cash flow gaps and inadequate government support threaten their operations. These are just some of the challenges awaiting president-elect Ferdinand Marcos Jr. as he takes office on June 30.
The good news is that Marcos Jr. has emphasized the importance of MSMEs in past interviews, saying that they must go beyond making money and be about social transformation. However, as of writing, Marcos Jr. has not yet announced more concrete economic policies.
Thus, business owners can only count on the 5 major promises he made during his election campaign:
Digital infrastructure development
On his Youtube channel, Marcos Jr. pledged to implement a digital infrastructure development program. This is to fuel a digital shift across trade and commerce, education, and agriculture.
To encourage MSMEs to shift to an online business model, he plans to modernize the operations of the Philippine Postal Corporation (PHLPost). His vision is to make PHLPost the ideal delivery partner for MSMEs using e-commerce platforms.
Marcos Jr. also intends to continue outgoing President Rodrigo Duterte’s Build Build Build Program, with more focus on digital and power infrastructure. In a statement about enhancing the ease of doing business, Marcos Jr. mentioned the price of electricity, available water and land, and lengthy processing of business permits as costs that affect an entrepreneur’s decision to operate a business. He vowed to set legislative and policy reforms to foster an encouraging environment for new businesses.
Allocation of MSME funds from LGUs’ Internal Revenue Allotments (IRA)
Internal Revenue Allotment (IRA) is the annual share of national internal revenue taxes provided to local government units (LGUs). It is used to provide basic goods and services and finance other development activities.
In an interview with Go Negosyo, Marcos Jr. proposed the allocation of portions of LGU IRAs to fund budding MSMEs. He mentioned that MSMEs, in addition to individuals, should also have ayuda (aid), paired with business plan assessments from organizations like Go Negosyo. He believes trainings in product improvement, innovations and skills will also help make MSME products more competitive.
Rationalization of taxes and other tax breaks for MSMEs
In the same interview with Go Negosyo, Marcos Jr. supports granting a tax amnesty for MSMEs in debt due to the pandemic.
In addition, Marcos Jr. believes that the taxation structure for small businesses must be changed. This is to encourage MSMEs to comply with tax requirements and build their credit rating. To help MSMEs succeed, Marcos said, they should have lower taxes; their goods must also be non-VATable, especially for cooperatives earning P10 million or less.
Empowerment of the agriculture industry
Marcos Jr. believes that the country must move past becoming a rice importer and have its own strategic supply of rice. To support agricultural productivity, he said farmers must be assisted in research and development, securing loans, and accessing agricultural products such as fertilizers and pesticides. He mentioned increased mechanization in agricultural processes to lower production costs, and setting up more cooperatives to help small farms achieve scale.
He added that other aspects of agriculture must be improved, such as developing resilient crop varieties and high-value crops, livestock and fishery. In a press release last January, he mentioned a recovery roadmap for local hog raisers that will provide direct technical assistance and provision of loans.
Development of the local transport system
Marcos Jr. intends to develop our transport system to support MSMEs and the local logistics sector. He said that the pandemic has exposed a supply line weakness in the country, as shown by the challenges experienced in moving goods and vaccines. He believes this medium- to-long-term solution will ease MSMEs and farmers’ processing and transporting of products to market.
In another press release before the Ukraine-Russia conflict, Marcos Jr. called for the suspension of oil excise tax to negate the impact of runaway fuel prices. His intention to lower fuel prices was mentioned again in a Saksi interview related to his election, alongside fair wages and solutions for education, information technology, healthcare, and telecommunication industries.
Marcos Jr. has yet to release more detailed policies for MSMEs over the next few weeks. Still, these campaign promises can help entrepreneurs make decisions on business expansion and operational updates. Whether or not these plans convert into actual policies, First Circle will always be here to help SME owners find opportunities for business growth.
If you need financing for cash flow gaps, digital adoption, and other initiatives to prepare your company for new opportunities, First Circle’s financing options are here to support you. Send us an email at firstname.lastname@example.org to find out more.