Rocking a small boat

Written on Tuesday, June 17th, 2008 at 11:04 am | by benign0

It cannot be — and has never been — said that the Philippines is lacking in resources. Abundance has always been a primary aspect of the irony that is the Philippines.

Ben Kritz’s latest article “Busy-ness Does not Equal Business: The Fatal Flaw in the Philippines’ Small Business Initiatives” explores the bureaucratic challenges that face the small Filipino entrepreneur. Recognising that the informal business sector props up a sizable chunk of the economies of the Third World, Kritz cites “prohibitively high transaction and formalisation costs” as a key factor of the inability of small businesses to incorporate themselves into the “formal” economic system. This limits their ability to grow into more sustainable entities — the kinds that build Owner’s Equity.

As long as small businesses remain small, marginalised, and mired in extralegality, it remains outside of any legal system that guarantees and secures business assets. A vast bureaucratic minefield stands in the way of that crucial transition from the mom-and-pop sari-sari store or barbecue stand into a business operation that is backed by a secure foundation upon which capital can be accumulated and owner’s equity built. Whilst there is much said about the “ingenuity” of the Pinoy in meeting his day-to-day subsistence, there is less said about his ability to build sustainable systems. The ability to do so is what sets apart societies that go on to achieve capital-intensive economic power from those like the Philippines forever imprisoned in labour-intensive hell.

Because the Philippines is a small boat, even the smallest waves make it rock. A large ship elegantly slices through rough waters — casting aside those waves that would otherwise throw a smaller vessel off course (or at least make its captain struggle to keep it on course). Minds work in a similar way. Depending on the size and maturity of a mind, distractions and noise have an effect on how focused one can stay on achieving an objective. Small minds are easily swamped by the din of trivial propaganda, news snippets, advertising, and marketing gimmicks whilst larger minds are able to focus on what is important in the long haul.

Let’s not be distracted by noise and stay the course. Let’s keep our eyes on the ball and not be pushed off course by the those traditional wave-makers — the Media, the Church, and our mediocre “revolutionaries” and “heroes”.

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About The Author: benign0 is the Webmaster of GetRealPhilippines.COM and has once been described as "one of the most enthusiastic hecklers of the politically-passionate" by a respected journalist.

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10 Responses to “Rocking a small boat”

  1. Jon Limjap on June 17th, 2008 2:34 pm

    Amen, benign0. Amen.

    Right now as a part-owner of a small business, I could at least say that there’s the BMBE law (Barangay Micro Business Enterprise) that protects small businesses like ours from horrendous corporate taxes while we’re starting out.

    But beyond that, there must be a way to shorten all that creepy red tape and lower (as in very very low) the barriers to creating legal businesses. The way things are, the government is just really encouraging underground businesses with all the hoopla on expensive city business permits and spurious Fire and Saftey standards. Then there’s the very long process of obtaining a VAT/TIN number, which you need to be able to print on your receipts, without which you can legally do business.

    The list of barriers is very long, and it can be very frustrating for entrepreneurs who don’t have an accountant to do it for them.

  2. Mikey_Liling on June 17th, 2008 4:02 pm

    I dunno.

    Being small also has its own advantage. In an economic downturn, large corporations often resort to downsizing in order to stay afloat. Small enterprises can lick their wounds and diversify.

    In the advent of a global recession, a small company will have it easy to refocus, re-invent and adjust according to need of the current market. Large corporations have no choice but to weather the storm.

    Mobility of a small boat in steering clear of bobbing icebergs is preferable compared to the elegant slicing of the Titanic.

    Having said that, I fully agree, it wouldn’t hurt if the government helps in shortening the red tape. My friend, who recently opened a spa, took him weeks to register his business that they even went to the barrangay chairman for a permit.

  3. Jon Limjap on June 17th, 2008 4:46 pm

    Mikey,

    The business world is dog eat dog. If a large company crashes down, there’s another company that will usually by it out (most of the time, the competition). So in the end everyone will end up with millions of bucks, even those who owned the company that folded up. And then they start again.

    Granted that if your fishball cart is destroyed by the next MMDA sidewalk clearing op, you can easily make a new one, would you really want to sell fishballs all your life?

  4. mabini on June 17th, 2008 5:43 pm

    Your right benignO. Almost all businesses, be it big or small,encounters the labirynth of bureaucratic redtape. You will be lucky enough if your intended business is not within the radar screen of those wielding influence or in the positions. But when you are reaping the fruits from your business, road blocks that you have not anticipated earlier will just pop-up anywhere.
    Sometimes foreign businessmen are luckier as breeze through the red tapes.

  5. Jon Limjap on June 17th, 2008 6:29 pm

    mabini,

    What businesses have you tried?

  6. benign0 on June 17th, 2008 7:32 pm

    Domestic and indigenous capital creation is the only thing that will rescue us from our pathetic dependence on all things foreign (including foreign remittances).

    The irony in all these “express” lanes made available to foreign investors is that it disadvantages local investment. Double whammy: big MNC’s with deep pockets na nga, may express lane pa sila.

  7. Mikey_Liling on June 17th, 2008 10:21 pm

    Jon, if it is still a profitable business, why not? You normally don’t enter a business unless you intend to profit.

  8. mabini on June 18th, 2008 9:44 am

    JL, im in agribusiness. Even in simple contract growing, there’s a lot of requirements and red tapes. The same with aquaculture.

  9. Jon Limjap on June 19th, 2008 3:22 pm

    mabini,

    Oh, I know what you mean. Diyahe nga, to think that we have food crises and all.

  10. Jon Limjap on June 19th, 2008 3:26 pm

    Mikey_Liling,

    But of course we’re talking about margins and scale. As noble and profitable fishball sales are, they won’t make you a millionaire.

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