DESPITE the gloom brought about by the prolonged Covid-19 pandemic, investors remained optimistic about Cagayan de Oro City’s path toward development.
“Renewed businesses or new traders coming in the city are now optimistic,” said Cagayan De Oro City administrator Roy Raagas reflecting a contrasting perspective amid the never-ending problem of skyrocketing consumer prices.
Even amid high inflation that has been pestering the economy in the past years, stakeholders are anticipating a good year for Micro, Small, and Medium Enterprises (MSMEs), according to Raagas.
He even said 1,387 new businesses in Cagayan de Oro have applied for their business permits this year.
The city now has according to Raagas become ripe for many types of investments, following the influx of new traders and businesses renewals posted 28 percent more than as compared in 2022.
“A total of 22,633 businesses in the city have renewed their business permits from January 3 to March 1, 2023,” said Raagas beating last year’s renewals which is only 17,537.
It also exceeded the expected number of business permits renewed by the end of the renewal period (20,000), the Business Permits and Licensing Office (BPLO) reported.
Data presented by BPLO, according to Raagas, of the total number of renewed businesses, 1,108 also opted to do their business permit renewal transaction online.
“Most of the businesses that have filed for the renewal of their permit were retailers, which is at 4,822,” Raagas said.
This is followed by establishments providing services, at 3,257; sari-sari stores, at 2,884; and lessors, at 1,325.
Raagas said with the government’s easing of restrictions for all kinds of local businesses will help now sustain the city's economic growth.
“The resumption of in-person classes and in-office work will have a huge impact on the city’s economic recovery,” said Raagas.
Meanwhile, former city treasurer and now one of the City Hall economic consultants Glenn Bañez said with the increased data presented on the renewals of business permits and new traders coming in would add more economic activities in the city.
“It's likely an investors confidence,” said Bañez adding there will be more opportunities for the business sector that makes up the majority of businesses coming into the city.
Bañez also noted with the tax incentives and relief programs initiated by the city government will likely help continue its growth momentum that began last year after pandemic curbs were lifted.
Bañez, also a taxation expert said MSMEs play a crucial role in the city’s economy.
Aside from contributing 45 percent to the gross domestic product, MSMEs also employ 85 percent of the country’s workforce.
“MSMEs during the pandemic help a lot in the economy. These are the backbone of the economy," said Bañez adding that will continue to do better after the post-pandemic.
In an earlier report, Go Negosyo, the advocacy arm of the Philippine Center for Entrepreneurship, has scheduled five ‘3M on Wheels’ events this quarter for MSMEs. The ‘3M on Wheels’ is a mentoring program that helped more than 3,700 MSMEs and aspiring entrepreneurs from all over the country in 2022.
Meanwhile, the Small Business Corp. (SB Corp.), the Department of Trade and Industry’s financing institution, has approved more than 5,200 loan applications for MSMEs under the Rise Up Multi-Purpose Loan since last year.
Hailing MSMEs, City Council's Trade and Commerce chair City Councilor George Goking earlier said the city government has vowed to breathe new life into the sector that was nearly crippled by the pandemic, so it can be more resilient and continue to grow.
Goking explained that even President Ferdinand Marcos Jr. assured the revitalization of the MSMEs as among the administration’s top priorities.
He said the President himself disclosed this during the MSME Summit 2022 organized by Go Negosyo at Manila Hotel.
Goking even recognized MSMEs’ critical role in “economic regeneration, job creation, and poverty reduction.”
Like Raagas and Goking, Bañez reiterated the city government’s full commitment to work hand in hand with all stakeholders to make certain that businesses in the city are protected and provided with ample opportunities not only to recover from the pandemic but to grow and thrive in the post-pandemic.
Bañez also bared the Corporate Recovery and Tax Incentives for Enterprises (Create) that have the potential of increasing local revenue.
He said ‘Create Law’ was signed into law by former President Rodrigo Duterte on March 18, 2021, that introduced reforms to the corporate income tax and incentives systems to attract more investments and maintain fiscal prudence and stability.
He added that Create was crafted right in the middle of a pandemic, a hurting economy. It is a fiscal response, the most direct and cost-efficient stimulus to revive the country’s economy.
Create is well-crafted and targeted to address Covid-19 priorities by first giving relief to small businesses or MSMEs, lowering outright their tax rate from 30 percent to 20 percent, an equivalent subsidy of 10 percent of net income effective July 2020 and every year onward.
He added these savings could be used to retain employees or to cope with the required facilities of working under a new normal.
In an earlier development, the MSMEs entitled to this relief are those with taxable net income not exceeding P5 million and total assets (excluding land) not exceeding P100 million.
“Create also provides immediate relief to MSMEs to recover quickly,” Bañez explained.
He added that a provisional reduction in taxes for a period of three years from July 2020 up to June 2023 was granted.
Accordingly, the three percent business tax collected on every peso of sales was reduced from three percent to one percent, and the Minimum Corporate Income Tax from two percent to one percent.
Both these taxes are not net-income based, hence are paid regardless of income. Both are based on gross — one on gross sales, the other on gross profit.
Bañez also explained that Create Law also provides private enterprises with more than one trillion pesos worth of tax relief over the next 10 years.
MSMEs will be the biggest beneficiaries of Create Law through the grant of the largest ever corporate income tax rate reduction, from 30 percent to 20 percent, according to Bañez.
“Large corporations also enjoy an immediate reduction in the corporate income tax rate from 30 to 25 percent,” he explained.
Create also provides other forms of tax relief which are part of a package of economic recovery measures implemented by the city government.
He said this to address the varying needs and concerns of the business sector brought about by the Covid-19 pandemic.
