ASEAN Integration, business ownership, and taxes
ASEAN integration is just a corner away literally. This coming 2015, members of the ASEAN will formally be acting as one economic zone/community just like that of the EU and other regional groups in the world.
As you are aware, one of the adjustments the Philippines will have to do is to adjust school days from June to August just like the rest of the ASEAN and of the world. Lots of businesses have fears of the upcoming integration noting that the Philippines might not be ready and that small business in here might suffer against other member state businesses that has better capacity in expanding across the region. But like wise such opening should have a good impact in the Philippine economy. More business especially foreign business or brands will lead to investments flowing into the country. Also our homegrown companies and brands will have exposure to wider market thus competition will kick in. Our local business and companies must keep at par with our neighboring countries to compete and enjoy the benefits of a wider and international open market.
With such, we Filipinos will also have a wider choice of investments. We can now invest in other companies in other ASEAN member nations. One of the projects that have been postponed for the Philippines was the ASEAN Exchange. Such is a new avenue for us Pinoys for investment opportunities. Our stock market maybe one of the first in Asia but compared to our neighbors the Philippine stock market still has a lot to grow. Right now we only have equities/stocks, mutual fund, and ETF unlike our neighbors like that of Hong Kong, Singapore, and Malaysia who has commodities, REIT, and other investment instruments.
The other day as well, I had a quick chat with Allan Ngo of Money in Mandarin and Truly Rich Club Blog. One topic we talk about is the hardships face by would be business owners in registering their business. A big part of the Philippine population relies on employment as their source of income. That is why the buying power of the Filipino is limited to his salary. One way to increase or augment it is by starting a business. But lots of Pinoys who has great business ideas always get discourage due to the nitty gritty processing of business registration and the long time of processing. One has to go to so many government agencies just to secure one document in order to secure another in another office. Also the funny thing is still so many are done manually thus the long lines keep everybody waiting when electronic registration is so much possible and more convenient. I remember a friend who has seen why corruption is so rampant in government because the people in government as well detest computerization of registration process because it cuts red tape and the chance of desk officers to get under the table, unreceipted, or what others call “expediting fee” will be stop. The bad thing is even most head of such department are the one asking kickbacks and the hierarchy of kickbacks starts from the front man up to the highest boss of that office as they say everybody gets a cut and everybody is happy.
Such issue is one of the problems why lots of foreign businesses at times avoid setting up business in the Philippines. If only this could be taken out and only if some people in the government truly do their job and not be blinded by money, Philippines will truly be Asia’s next investment capital.
A few days as well issue on tax reduction for employees has been raised. As per the news report, the Philippine middle/working class is way over taxed than our ASEAN counterparts. The highest tax imposed could be as high as 32% for individual taxpayer while corporations are taxed at 30% and if such company is able to avail of tax break, they might not even pay a single centavo for the next 3 to 5 years. The BIR commissioner argued that it could not be done because the government will not have source of revenues to fund the projects it needs to keep our nation going. Which I believe is also correct.
But I guess the really problem is that due to the lack of financial literacy of Filipinos it is easier to complain rather than do something about it. It would be good if taxes are lowered to enable the purchasing power of the people thus spurring business growth but at the same time Filipinos should invest in the local companies to enable these companies to serve better and be able to pay taxes to the government. Unfortunately most Pinoys does not even save up for the future or even have the idea of setting aside a few pesos to be allocated for investment for their future. Just like my co-worker who suddenly ask me how much will be his tax and other deductions. He will have a raise and he was concern how he would budget his money.
I told him to save the extra that he will have rather than splurge it today so that in the future it wouldn’t be an issue if he wants to reward himself with something. We are becoming a nation of “get it now” because of the boom we are suddenly having.
Another issue that connects to tax is that with the economic growth how come there are so many Pinoys still under the poverty line?
This is a very sad situation. Sad in a way that most people, especially those under the poverty line, blame their being poor to the government. You see many people complaining and rallying saying they are poor but the real question is what have they done so that they won’t be in that situation? Such mentality really drags them down more to poverty. Each and every human being is endowed by God with talents which we must cultivate to provide for ourselves and if we are able to generate more from it share such blessings. One is poor because you chose to be poor and not do something about your situation.
Do something about your situation. Come 2015 our economic situation will surely be tighter and if you want to survive get up and do something about it.