Supporting entrepreneurship

The administration reportedly wants to promote micro, small and medium enterprises, with President Duterte portrayed recently as “Kuya Rody,” elder brother to those who want to engage in MSME. If the government is serious in this advocacy, among the most critical reforms needed is the simplification of requirements for starting, operating and closing a business.

Before a small enterprise (minimum capitalization P3 million) can be set up in a mall in Metro Manila, where the proprietor is responsible only for the interiors and the shop front display, these are among the requirements: building permit, signage permit, electrical permit, mechanical permit, certificate of completion, certificate of occupancy, authority to print (receipts), zonal clearance, sanitary permit to operate, Megger Test ( insulation resistance) certificate, load balancing certificate, hydro test certificate and “as built” plans.

These documentary requirements are on top of the regular business permits and clearances that must be obtained from the local government, the Department of Trade and Industry, Bureau of Internal Revenue and fire inspectors (plus fire insurance). Also required are construction permits, with blueprints worth thousands of pesos submitted at almost every step even for flooring and ceilings, barangay clearances plus the corresponding fees.

Businessmen and prospective entrepreneurs can only hope the new hotline to the Office of the President, where people can report anomalies in government offices, can cut red tape and make it easier to do business.

There are proposals to encourage overseas Filipino workers and their relatives to invest their remittances in small businesses. But the current environment can make starting even a micro enterprise so daunting that people will simply give up trying and just find a job or remain employed overseas.

Many of the advanced economies provide attractive incentives for startups, including significant support for research and development. In such societies, budding entrepreneurs are not afraid to pursue their dreams and, equally important, they are not afraid to fail because they know they can count on support services. This mindset promotes innovation and creativity, which are the bedrocks of national competitiveness.

The government is making the right noises about supporting MSMEs. Now it must mean what it says and provide the enabling environment for entrepreneurship.