Financing SMEs in the Philippines

signatories of the agreement to make doing business easier, its mantra, “tax is the lifeblood of the government” justifies why they will collect taxes by all means, at all costs, even at the expense of MSMEs.

Such was the scenario during the April 15 deadline for filing income tax returns. In its aim to simplify tax compliance, BIR failed to consider the several concerns and technical incapacity of taxpayers in its implementation of the electronic system. Worse, they imposed penalties to those who failed to comply.

But how do we expect them to pay taxes if MSMEs are not making any profit at all? They lack financial resources and most of the time they just discontinue their operations due to cash flow problems. Small Business Corporation, the sole government agency for promoting a strong and thriving MSME Sector.

During the get-together, he shared the challenges in financing MSMEs. He said that there is no shortage of funds. The issue is access. The formal lenders remain reluctant to provide credit to the sector because MSMEs are still seen by traditional bankers as risky, costly, and difficult:

• Because of their lack of resources and access to formal credit, MSMEs are easily susceptible to economic downturns.

• Credit providers are largely uninformed about MSMEs, and MSMEs are not familiar with the rules, standards and requirements for formal credit;

• MSMEs face complex business regulations and red tape;

• The sector also lacks access to technology;

• Because MSMEs are closely tied to the family, their operations are affected by illness, death; domestic conflicts between spouses or relatives who manage the business also have an impact.

Ambassador Tambunting is a certified SME advocate. He is truly deserving to head the government agency whose mandate derives from Republic Act 9501, better known as the Magna Carta for SMEs. by Mrs. Sonia Roco, who is an alumna herself of the Ten Outstanding Students of the Philippines (TOSP).

We listened to 20 stories of outstanding candidates for the TOSPNCR screening. One of them dreams to be the President of the country. Somebody has a vocation to join a religious community, while others are determined to do their share in their respective fields of specialization, all for their family and our country.

But what really struck me is the desire of one candidate who despite the rampant graft and corruption in the government wants to be a government official because he believes that “public service is a public trust.” Have we forgotten this?

Kim won. In a few months, Commissioner Kim Henares will successfully complete her term under the Aquino administration. Many don’t like her, but she couldn’t care less.

Unfortunately, several tax reform agenda are still pending, including the tax reform bills in Congress. Are we giving up already? Do we still have a chance made for genuine tax reform?

We actually did significant progress the last five years. First, tax awareness has improved. Second, entrepreneurs and professionals are now more responsible in handling their tax obligations. Third, the most frequently asked tax questions are already being answered.

There are more things to be done. We at CSR Philippines continue to promote tax awareness to assist entrepreneurs and professionals handle their tax compliance properly. And through our bestselling tax handbook, “Got A Question About Taxes? Ask the Tax Whiz!” we were able to reach the millions of MSMEs who were totally clueless before. The Rappler edition will be available soon in all bookstores nationwide. For bulk orders, call us at (02) 622-7720.

This month we continue our Regional Tax Roadshow. Our next stop will be in Baguio for the 2015 Tax Avoidance Congress on May 23, 2015. As part of our tax roadshow, we conduct round-table discussions with businessmen, entrepreneurs, and professionals on how they can enjoy a tax-free lifestyle via Citizen Tax Planning (CTP) Certification Program. For more information, email us at consult@acg.ph. Mon Abrea is the founding president of the Center for Strategic Reforms of the Philippines (CSR Philippines), a non-profit organization that champions and consolidates initiatives to empower MSMEs. He is also the Chief Strategy Officer of the country’s first social consulting enterprise, the Abrea Consulting Group (ACG), which offers strategic finance and tax advisory services to businesses, professionals and individuals. Feedback is welcome at consult@acg.ph.