Awareness of Small enterprises in Quirino to BMBE Law

CHAPTER I

Rationale

The Republic Act No. 9178 of 2002 also known as the Act to promote THE
ESTABLISHMENT OF BARANGAY MICRO BUSINESS ENTERPRISES (BMBEs). It was
declared with the intention to hasten the country's economic development by encouraging the
formation and growth of barangay micro business enterprises. BMBEs are essential to the
country’s economic development since they effectively serve as seedbeds of Filipino
entrepreneurial talents, and intergranting those in the informal sector with the mainstream
economy, through the rationalization of bureaucratic restrictions, the active granting of
incentives and benefits to generate much-needed employment and alleviate poverty (Entrep.ph,
2018). Any business entity or enterprise engaged in the production, processing or manufacturing
of products or commodities, including agro-processing, trading and services, who has total assets
of not more than Three Million Pesos (P3,000,000.00), including those arising from loans but
exclusive of the land on which the particular business entity's office, plant and equipment are
situated, may apply for the registration as BMBE (DTI, 2009). Strengthening BMBEs would
mean more jobs and livelihood, and a better quality of life for Filipinos.

The law provides incentives and benefits to registered BMBE’s. An example is the tax
exemption to income arising from their operations, and another is the exemption 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. The Act primarily aims to develop a micro business to evolve into a small or
medium business enterprise and consequently into a large business enterprise for continuous
economic growth and development. In connection, this study focuses mainly on evaluating small
enterprises’ awareness on the existing law directing to Barangay Micro Business Enterprises.

The rationale behind the Awareness of Small Enterprise in Quirino to Barangay Micro Business
Enterpise is can be formed from the following.
i. Through BMBE, small businesses can wide up their knowledge in running a business and
by the help of this law, business persons can easily determine the things they have to do.
ii. Since unemployment rate in the Philippines is a big issue, even though the statistics
report of PSA on unemployment rate was reduced, there are still millions of Filipinos
with no jobs. Thus, the BMBE law can have a big contribution to the unemployed
Filipino’s for it provides livelihood and a better quality of life.
iii. Many Filipinos venture into small businesses to gain income for a living, thus the study
aims to understand how BMBE law may provide assistance or support for these
businesses to improve the quality of life and the successful growth of the economy.
 Thus, this study will encompass an assessment on the awareness of the BMBE Law
implementation across the Municipality of Quirino. The study should answer the questions, are
they registered as BMBEs, if so, were they able to avail the benefits accompanied by the said
law, and did they successfully drive the local government’s economy better with the help of the
benefits given to them and the obstacles faced by the Micro Enterprises in Availing the
Incentives and Benefits of the BMBE Act.

Statement of the Problem

This study aims to determine on how the resident of Saguday, Qurino who has a small
enterprise is aware in the Barangay Micro Business Enterprise Law.
Specifically, it intended to answer the following:
1. What knowledge did they know about the Barangay Micro Business Enterprise
Law?
2. What are the process and procedure that they do to have a business like small
enterprise?
3. What are the advantage and disadvantages of those small enterprises will get
when they are under BMBE law?
4. How aware are people in terms of knowing the BMBE law?

Significance of the Study

The result of the study will merit the following:
Small Enterprises. The results of the study will be of great benefit to the registered small
enterprises provided by the Barangay Micro Business Enterprises (BMBE). This study will foster
knowledge about the BMBE Law. The data given will provide the small enterprises with
information on how the BMBE Law benefits them and help them to grow and succeed.
Future Researchers. This study will serve as a basis for further investigation in the area
of BMBE Law related issues. This study also serves as a guide and reference when conducting
researches which has relevance to the study.
Future Business Owners. As for future business owners, they can benefit on the study
as means as it provides meaningful information about BMBE Law.
Scope and Delimitation of the Study
The focus of this study is mainly on evaluating small enterprises’ awareness on the
existing law directing to Barangay Micro Business Enterprises (BMBE Law). The targets of this
study are the selected owners of small enterprises in the municipality of Saguday, Quirino. Thus,
this study will encompass small businesses and help to widen up their knowledge in running
their business and by the help of this law, business persons can easily determine the things they
have to do.
Although the research reached its aims, there are some limitations that can occur. First,
the topic is specific and can be used only for small businesses that have total assets of not more
than Three Million Pesos (₱3,000,000,000.00) and second, the law provides incentives and
benefits only for those who are registered BMBE’s.

Conceptual Framework
Title
“Awareness of Small Enterprise in Saguday, Quirino to Barangay Micro Business
Enterprise Law”

Thesis statement
Barangay Micro Business Enterprise Law aims to integrate micro-enterprises in
the informal sector into the mainstream of the economy – by giving them several
benefits, such as Income Tax Exemption, Exemption from the coverage of the
Minimum Wage Law, and Priority to a special credit window set up.
Identify the concepts
Barangay Micro Business Enterprise Law
Income Tax Exemption
Exemption form the coverage of the Minimum Wage Law
Priority to a special credit window set up
Small Enterprise in Saguday, Quirino.
Relate the concepts
Barangay Micro Business Enterprise Law ➞ Income Tax Exemption, Exemption
form the coverage of the Minimum Wage Law, and Priority to a special credit
window set up ➞ Small Enterprise in Saguday, Quirino.
Definition of Terms
Barangay Micro Business Enterprise
- refers to any business entity or enterprise engaged in the production, processing or
manufacturing of products or commodities, including agro-processing, trading and services,
whose total assets including those arising from loans but exclusive of the land on which the
particular business entity’s office, plant and equipment are situated, shall not be more than Three
Million Pesos (P3,000,000).
Small Enterprises
- is defined as a privately owned corporation, partnership, or sole proprietorship that has
fewer employees and less annual revenue than a corporation or regular-sized business.
Awareness
- is the state of being conscious of something. More specifically, is the ability to directly
know and perceive, to feel, or to be cognizant of events. Another definition describes it as a state
wherein a subject is aware of some information when that information is directly available to
bring to bear in the direction of a wide range of behavioral actions.
CHAPTER II
REVIEW OF RELATED LITERATURE AND STUDIES
This chapter represent a review of related literature and studies relating to the awareness of small
enterprises to Baranggay Micro Business Enterprises (BMBE) Act of 2002, it's history ,
significance and benefits to small businesses in the Philippines. This chapter also includes
relevant studies regarding to tax incentives and benefits for every small enterprises that covered
by this BMBE law.

Related Literature and Studies

Micro Business is essential to the growth of Philippine economy. It provides an array for new
job, opportunities of employment and a way of alleviation from poverty. This leads to the
creation of Baranggay Micro Business Enterprises Act of 2002 that was signed by former
president Gloria Macapagal- Arroyo on November 13, 2002. (dti.gov.ph). According to the law,
the BMBE law implementation is a critical to economic development because it serves as the
foundation to the development of enterprenuerial talent of Filipino's. It aims to give opportunities
to every informal sector to establish business through BMBE law that grants specific incentives
therefore giving them a chance to be part of the mainstream of the economy.To help
microenterprises in their financial hurdle during the early years of their business operations.
Although considered a pro-poor law, it is suspected that not too many cities, in the National
Capital Region (NCR) in particular, are implementing it. The Law (since 2002) is not being
promoted, nor is it extensively implemented (Aldeguer, 2015). Although the cases of micro
enterprises managed to avail the discount provided by the local government regarding its taxes,
fees, and charges as well as their right on exemption from the minimum wage law, the most
attractive provision of the act which is the income tax exemption is not successfully availed. The
financing area through a special credit window was not explored and one major obstacle is the
lack of understanding of the Act and the bureaucratic red tape in the government (Figueroa,
2018).
According to Bolido (2020), big businesses may get all the attention but based on government
statistics, the real backbone of the Philippine economy are almost a million enterprises ranging
from the SME sector in which the Small Enterprises belonged. They make up 99.6 percent of all
registered businesses in the Philippines and employ over 70 percent of the working population.
However, they face a host of growth challenges—including lack of technical capacity, difficulty
in accessing regional markets in Asean and, notably, a lack of access to finance (Fong, 2018).
The Philippines Government regards these business sector, which includes the small enterprises,
as the driving force behind economic and social development increasingly (Vahlhaus and
Macaranas, 2005).
The Government then introduced an aggressive decentralization program focused on the local
government unit (LGU) whose role is to promote local, social and economic development, and
one of which is the BMBE Act. It stipulates that LGUs ‘are encouraged to reduce the amount of
local taxes, fees and charges imposed or to exempt the BMBEs from local taxes, fees and
charges’. It also suggests that LGUs will provide one-stop business registration centers that will
offer speedy registration and processing of licenses and permits (Vahlhaus and Macaranas,
2005).
According to Villegias, et.al (Vol.6,Issue-6,June2020) on their study,"Awareness of Micro,
Small and Medium Enterprises on the Salient Features of Magna Carta for MSMEs, Baranggay
Micro Business Enterprises Act, and Go Negosyo Act in the Philippines", the results on their
closed ended survey questionnaire founf that majority of the respondent belong to micro
enterprises based on the classification under RA 9501 and majority are belong to service
industry. It also reveals that MSMEs are already aware on the many important provisions under
the three laws. They are already aware that they are Negosyo Centers in many municipalities in
the Province and gives services such as business name registration. However, they are not aware
on the other services of the center such as trainings and technical assistance.

Synthesis of the Related Literature

Barangay Micro Business Enterprises Act of 2002 is establish to give opportunities to small
enterprises to be part un the mainstream of the economy.(dti.gov.com) The implementation of
BMBE Law is the start of economic development in the Philippines. Although this law do not
extensively implemented to many cities especially in National Capital Region(NCR)
(Aldeguer,2015), for it considered as a pro-poor law. Big businesses may get all the attention but
based on government statistics, the real backbone of the Philippine economy are almost a million
enterprises ranging from the SME sector in which the Small Enterprises belonged.(Bolido,2020)
Many micro enterprises in the local government avail discount in the implementation in the
provinces regarding to taxes, fees and charges as well as exemption to the minimum wage law
(Figueroa,2018). But some cases reveals that some provinces and municipalities that are aware
of this BMBE Law and other kinds of program under Magna Carta lack of understanding and
knowledge on other services of such program to develop their businesses.(Villegias,2020)
CHAPTER III
Research Methodology
The study used descriptive method of research conducted at municipality of Saguday Quirino.
The respondents of the study were the owners or managers of the enterprise totaling to 50
individuals/enterprises. Respondents were selected using quota sampling. Furthermore, the main
instrument of the study is a structure questionnaire. To facilitate the analyzation of the data, the
researcher used frequency distribution, weighted mean, and analysis of variance as the statistical
tools.

References:
Aldeguer, C. (2015) Extensive Implementation of the BMBE Law: An Assessment Across Metro
Manila. Retrieve from: http://www.rajournals.in/index.php/ijmei/article/view/373/370

Bolido, L. (2020) Small Business, Big Economic Impact. Retrieve from:

https://business.inquirer.net/287195/small-businesses-big-economic-impact

Figueroa, D. (2018) Cases of Micro Enterprises on the Incentives and Benefits of the Barangay
Micro Business Enterprises Act of 2002. Retrieve from:
https://www.academia.edu/36973056/Cases_of_Micro_Enterprises_on_the_Incentives_a
nd_Benefits_of_the_Barangay_Micro_Business_Enterprises_Act_of_2002

Fong, B. W. (2018) Realizing the Full Growth Potential of SMEs in PH. Retrieve from:
https://business.inquirer.net/251036/realizing-full-growth-potential-smes-ph

Macaranas, M. and Vahlhaus M. (2005) Improving the Business Environment in the Philippines.
Retrieve from: https://www.enterprise-development.org/wp-
content/uploads/Valhausdoc.pdf
Awareness of Micro, Small, and Medium Enterprises on the Salient Features of Magna Carta for
Msmes, Barangay Micro Business Enterprises Act, and Go Negosyo Act in the
Philippines
( Vol-6,Issue-6,June 2020 )
Author(s): Dr. Marivic N. Villegas, Jorivel N. Villegas, Kristine Joy P. Balite, Andrea CRamos
Retrieve from.: https://www.google.com/url?
sa=t&source=web&rct=j&url=https://ijaems.com/detail/awareness-of-micro-small-and-
medium-enterprises-on-the-salient-features-of-magna-carta-for-msmes-barangay-micro-
business-enterprises-act-and-go-negosyo-act-in-the-
philippines/&ved=2ahUKEwiMp_vqwKXuAhWEad4KHUnvA_gQFjABegQIFBAB&us
g=AOvVaw13IqK3lpkkyoKoD6pZ2Z5m&cshid=1610973868578