Being an entrepreneur is
not an easy task. It entails
uncertainty and risk. How are
entrepreneurs affected by
these economic issues
happening in the Philippines,
and how do they cope up?
Business, as they say, is like
a gamble. It takes a brave heart to
invest their resources with no
guarantee that there will be a
return of investments. In this
lesson, let us discuss the
contemporary issues affecting the
Filipino entrepreneurs.
INVESTMENT AND INTEREST RATE
In putting up business, it is
necessary to know the initial
investment of the entrepreneur so
that he able to assess if he needs
additional investment. What is
investment? It is defined as building
up the capital stock for more future
production and consumption.
When the entrepreneur has no
enough investment, he will resort to
borrowings or borrow from financial
institutions like banks. The
borrowings bear interest rates. This
is the amount of interest due per
period, as a proportion of the
amount lent, deposited or borrowed.
Effects to entrepreneur:
Low interest rate attracts
more entrepreneurs to invest,
while high interest rates lessen
the opportunity of the
entrepreneurs to start their
business in the country.
RENTALS
As an investor, what will
you do if you don’t own land or
space to be used for your
business? The answer is rent or
lease a land or space. But, how
does rental affect your business
operations?
Effects to entrepreneur:
In Income Statement, rental
fee is in expense account which means the
bigger the place/space, the higher the cost.
Also consider the location; it is more costly to
rent in urban areas than in rural areas. For
example, the rental fee of 100 square meter of
land in Pasig City is P50,000.00 per month, but
in Pampanga with the same area is only
P25,000 per month. So, the size and location
matters when planning to rent.
MINIMUM WAGE
What is minimum wage and
how it is determined? It refers to the
lowest wage permitted by law below
which if paid by employer will subject him
to penalty from the government. In the
Philippines, the Department of Labor and
Employment (DOLE)issued wage order for
minimum wage earners effective January
1. 2020.
Effects to entrepreneur:
Over and above minimum
wage is the voluntary productivity-
based pay, which encourages workers
and enterprises to become more
competitive and productive by
rewarding employees supplementary
pay based on the quality of their
performance.
TAXES
Tax is the lifeblood of the
economy. It fuels the social
services provided by the
government to its citizen. But
how does tax affect the
entrepreneur?
Effects to entrepreneur:
High taxes tend to lessen
investment because this is considered an
additional cost on the part of the entrepreneur.
Low taxes mean fewer government projects such
as school buildings, roads, bridges and providing
social services to people. How can entrepreneurs
gain from tax? Government gives considerations
to new entrepreneurs with tax holiday up to 6
years and vat exemption for purchase of supplies
of the firm that is going to export 100% of its
product.