Metro Manila (CNN Philippines, February 5) — Micro, small, and medium enterprises or MSMEs in the country will “indirectly” benefit from the recently ratified Corporate Recovery and Tax Incentives for Enterprises or CREATE Bill, a lawmaker said on Friday.
Marikina Second District Rep. Stella Quimbo explained many huge corporations are partnering with MSMEs in the provision of their services, thus the small businesses will also experience gains from the CREATE Bill.
“We have to understand that MSMEs are part of the ecosystem of large corporations. Many of our large corporations outsource services from small ones,” Quimbo told CNN Philippines’ The Final Word.
Quimbo’s remark was in response to economic think tank IBON Foundation executive director Sonny Africa, who on Thursday said only large companies will benefit from the CREATE Bill.
“It’s much better to put the same ₱130-billion in people’s pockets that’s going to be spent and make more small businesses feel that it’s worthwhile to stay open. There will be a much bigger multiplier effect here than improving the balance sheets of large corporations,” Africa said.
RELATED: Economic think tank: PH gov’t policies not enough to keep economy afloat
Among the CREATE Bill’s salient features include lowering corporate income tax from 30% to 25% for large corporations, 20% for small and medium corporations (with net taxable income below ₱5 million and total assets below ₱10 million), up to 17 years of incentives for exporters, and four to seven years income tax holiday and ten years of special corporate income tax for “critical domestic enterprises.”
Quimbo, a noted economist, emphasized the CREATE Bill is an important tool for the Philippine economy’s recovery amid the COVID-19 pandemic since the measure’s provision on rationalizing fiscal incentives will encourage more foreign direct investments in the country.
“But exactly how many (jobs), that will be quite difficult to estimate for now. Some would say an additional two million jobs and I’ve seen some estimates way over that. As a result of more generous incentives, we should be expecting more foreign direct investments,” she said.
The Marikina lawmaker added amending the economic provisions of the Constitution, specifically on easing foreign ownership restrictions in selected business sectors in the country, will also aid the country’s economic recovery amid the global health crisis.
The House Committee on Constitutional Amendments has adopted a resolution proposing to amend the economic provisions of the Constitution. Plenary debates on the amendments are expected to start next week.
As of October, the Philippines has an unemployment rate of 8.7% or around 3.8 million Filipinos, according to the Philippine Statistics Authority. The National Economic and Development Authority on Thursday said the country’s unemployment rate may temporarily rise in 2022 due to the influx of K-12 graduates.
The Philippine economy shrank by another 8.3% in the last three months of 2020 as the COVID-19 pandemic continues to cripple consumer spending and business activity. This brought the overall economic performance for the entire year to -9.5%, the sharpest since the PSA started collecting data on annual growth rates in 1946.
RELATED: PH economy plunges by record -9.5% in 2020 as Q4 GDP maintains slump
