THE passage of the Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill and the full implementation of the “Build, Build, Build” (BBB) program will boost the growth of small and medium enterprises in various regions, according to government officials.
On the sidelines of a data dissemination forum of the Philippine Statistics Authority (PSA), Trade and Industry Assistant Secretary Rafaelita Aldaba told the BusinessMirror that the Trabaho bill can even help firms do business outside of Metro Manila because of dedicated tax incentives.
Aldaba said longer-term incentives are granted to firms that are either willing to relocate from Metro Manila or will be starting up in various provinces nationwide. The same incentives are granted to firms that will focus on sectors such as agribusiness.
“In fact, if you will invest in agribusiness and resource-based [sectors], as well as invest in the region, the period of incentives is actually longer than the normal. So in that aspect, the Trabaho bill can help. And if companies in NCR [National Capital Region], for example, will relocate in other parts [of the country] that are less developed, there are additional incentives. Normally, incentives last for five years but in this case, firms can be granted an additional two years of incentives,” Aldaba said.
Apart from the Trabaho bill, the BBB will also play a part in not only boosting SME growth but also in spreading development to provinces and regions, according to Director Bien A. Ganapin, officer in charge of the National Economic and Development Authority’s (Neda) Trade, Services and Industry Staff.
Ganapin said the BBB will pave the way for economic growth to reach far-flung and less-developed areas of the country. This will improve the business climate in these regions and provinces, and bring economic growth and development to a larger number of Filipinos.
He said this will make it possible for growth and incomes to be more distributed nationwide. Currently, Metro Manila is a magnet for investments and employment because it is one part of the country where the amenities and services, including those offered by the government, are complete.
“[Based on] the principle of agglomeration economics, they [firms] are attracted to places where there is a lot of economic activity. So you need to create businesses, upstream and downstream businesses along the way,” Ganapin said.
“One of the drivers of agglomeration is you develop a Metro Manila in Mindanao or in other regions in the Visayas, that kind of scale of development. Infrastructure is really one of the drivers of growth,” he added.
Aldaba said data from the 2016 Annual Survey of Philippine Business and Industry (ASPBI) indicated that most of the firms and employees are concentrated in NCR or Metro Manila, Calabarzon and Central Luzon.
Across regions, there were a total of 35,835 establishments nationwide in 2016, a 1.7-percent growth from the 35,238 recorded in 2015.
40% of establishments in NCR
However, around 40.2 percent or 14,414 establishments with total employment of 20 and over were located in NCR, which is the least poor region nationwide.
Calabarzon ranked second with 5,116 or a 14.3-percent share, while Central Luzon placed third with 3,311 establishments or 9.2 percent.
Unfortunately, areas like the Autonomous Region in Muslim Mindanao (ARMM), the poorest region nationwide, recorded the least count of 103 establishments or 0.3 percent.
“It is understandable why these firms choose to locate in these areas. These locations offer the amenities that will make it easier for them to do business,” Aldaba said.
“This is why our strategy is focused on the regions. The current situation is not sustainable where [wealth] is highly concentrated in three regions,” she added.
However, changing the situation for the better will not come easy, nor will it come in the next survey rounds of the ASPBI, according to Ganapin. He said it is likely that the situation in 2016 will be the same in 2018.
Digital economy
Nonetheless, National Statistician Lisa Grace Bersales told the BusinessMirror that the PSA will be working hard to push for better data. She said better results may be seen particularly in e-commerce transactions nationwide.
Bersales said the PSA welcomed suggestions of Aldaba and Ganapin as well as Jasmin B. Eleazar of the Department of Information and Communications Technology to measure the size and breadth of the digital economy.
The wish list of these experts when it comes to measuring the digital economy includes making data collection for e-commerce a separate activity. This will enable the PSA to come up with detailed information on the number of firms, employment, value added and other important details of the digital economy.
Aldaba said there is also a need to review industry activities/classification to take into account and reflect developments such as Industry 4.0, artificial intelligence, Internet of Things, robotics, cloud computing, 3D printing, AR, and VR, among others.
She also said the DTI is proposing a memorandum of understanding with the PSA to collaborate on monitoring e-commerce and logistics statistics, creative industry, IT-BPM and electronics.
This will include other industry priorities such as those activities that firms are undertaking to move toward applying disruptive technologies.