Transition from informal to formal economy: Awareness raising on R204 towards designing an integrated policy framework in the Philippines Presenter : ROSALINA S. FUNTANARES Title : Incentives to Business Formalization

Topics: Incentives Barangay Micro-Business Enterprise Act: RA 9178 of 2002 On Procurement: RA 9501 through Sec. 3 amended Sec. 3 of RA 6977 as Amended by RA 8289

“RA 9178: BARANGAY MICRO-BUSINESS ENTERPRISE (BMBE) ACT” Name of Business: EUCA Location : 943 Sto, Cristo St., Tondo, Manila Nature of Business: Delivery of vegetables to Max’s Restaurant Tax Identification No: 201-642-521-000 Start-up capital: P50,000.00 Employees: Unpaid family workers Source of Capital : Borrowing from relatives Experience : Inquiry with City Treasurer’s Office of Manila on how to avail of the incentives of BMBE. This law is an agenda of NAPC-WIS under lack of access to productive resources since founding of NAPC in1999. Convinced that it can help my business, I registered inspite of high cost and tedious process of registration, in the hope that BMBE, can, help sustain my vulnerable micro-enterprise with the incentives, at least, for the first two years. The City Treasurer’s Office said that there is no such being implemented.

Issue : Non-availment of Incentives and Benefits Section 7. Exemption from Taxes and Fees – All BMBEs shall be exempt from tax for income arising from the operations of the enterprise. The LGUs are encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt BMBEs from local taxes, fees and charges. Section 8. Exemption from the Coverage of the Minimum Wage Law – The BMBEs shall be exempt from the coverage of the Minimum Wage Law: Provided, That all employees covered under this Act shall be entitled to the same benefits given to any regular employee such as social security and healthcare benefits. Section 9. Credit Delivery

Challenge: Make BMBE work for the informal sector which is the purpose of the law in its transition to formal Make “Go Negosyo Center” work for the informal sector or the vulnerable micro-enterprise (P150,000.00 and below capital) by addressing the requisite of BIR, the Mayor’s Permit. LGU taxation power and stiff requirements. Such LGU permit requirements is a stumbling block to BIR registration which in turn. Amend BMBE because exemption as to taxation is not being enjoyed even with those capital of above P150 K – P3M, accordingly.

SPECIFIC PROPOSALS “Go Negosyo Law” does not address the pre-requisite to BIR registration which is the Mayor’s Permit. SPECIFIC PROPOSAL: AMEND BOOK 2 OF THE LOCAL GOVERNMENT CODE TO MAKE DISTINCTION FOR THE INFORMAL SECTOR (VULNERABLE MICRO-ENTERPRISE). SPECIFIC PROPOSAL: OPPOSE THE BILL AMENDING THE BMBE BY INCREASING THE ASSET SIZE TO P7M AND MAKE DISTINCTION OF THE INFORMAL SECTOR (VULNERABLE MICRO-ENTERPRISE) FOR PREFERENTIAL TREATMENT TO CREATE ENABLING ENVIRONMENT IN THE TRANSITION TO FORMAL.

On Procurement: RA 8289 Section 4: Elligibility for Government Assistance……… Elligible MSME’s shall be entitled to 10% of total procurement value of goods and services supplied to the Government, its bureaus, offices and agencies annually: Challenge: Rooting the cause of non-availment: a. the LGU permit requirements, b. control of big corporations fielding their affiliates or friendly associations competing with one another in the bidding process c. stiff bidding requirements

On Procurement: RA 8289 PROPOSAL: AMEND THE LOCAL GOVERNMENT CODE (Book II) ON ITS TAXATION POWER TO THE EFFECT OF LOWERING THE REQUIREMENTS FOR THE INFORMAL SECTOR (IS) OR VULNERABLE MICRO-ENTERPRISE (VME) AND AMEND PROCUREMENT LAW MAKING DISTINCTION FOR PREFERENTIAL TREATMENT TO IS OR VME --- COMMISSION ON AUDIT (COA) CIRCULAR RELAXING THE CRITERIA FOR COMMUNITY BASED CONTRACTING FOR THE INFORMAL SECTOR OR VULNERABLE MICRO-ENTERPRISE

Social Security Issues on SSS : Increase of cost of premium in 2019 to P3,600.00 is unaffordable and runs counter to social protection Specific Proposal : a. Customized Cost-Benefit Premium Contribution in the proposed amendment of SSS law b. Integrated approach on Domestic Workers Registration with other duty bearers policy c. use of PSA definitions

Social Health Insurance On Phil Health : Increases of premium contribution, too (Issue) high and without focused benefit in relation to work related illness in the informal economy Specific proposal: a. Bring back to P100.00 monthly premium b. Develop benefits as to work related illness in the informal economy c. Use of PSA definitions d. Income based basis of premium