Press Release
February 24, 2014

Senate passes bill to boost job creation

A bill that seeks to boost job creation by promoting the development of small business enterprises was approved by the Senate today.

Senator Paolo Benigno "Bam" Aquino IV, chair of the Senate Committee on Trade, Commerce and Entrepreneurship and sponsor of Senate Bill No. 2046, also known as the Go Negosyo Act of 2013, said the proposed legislation seeks to create more jobs around the country by boosting support for micro, small and medium enterprises (MSMEs).

"At least 66 percent of all jobs in the labor force are created by the SME sector. The numbers show that boosting the MSME sector will help us create more decent, sustainable jobs that can lift many Filipinos out of poverty," explained Aquino, former head of the award-winning social enterprise The Hapinoy Program.

"For us to be able to create more jobs, we need to help micro enterprises grow and enter the formal economy. Our goal should be to help the micro 'graduate' into small, and the small graduate to medium, so that they grow and generate revenue and jobs for our communities," he added.

Senate President Franklin Drilon commended the passage of the bill, saying "that it is a welcome and timely development, and will be vital in expanding inclusive growth across socioeconomic classes.

"While we at Congress are striving for policies that focus on long-term macroeconomic gains, there must be an even stronger effort to uplift depressed sectors, and to uphold the financial interests of the everyday Filipino. This bill is one of the most effective steps towards that goal," he explained.

Under the proposed measure, Aquino said, Negosyo Centers shall be established in all cities and municipalities to be supervised by the Department of Trade and Industry (DTI). The centers will assist entrepreneurs on how to set up and manage their businesses, and also facilitate business registrations, he said.

In addition, Aquino said, the centers will also help prospective and current entrepreneurs look for different forms of financing. It will also provide courses and development programs, training, give advice on business conceptualization and feasibility, financing, management, capability building, human resources, marketing and other services to support the needs of the MSMEs.

"At the heart of the Go Negosyo Bill is infrastructure and support for MSMEs at the city and municipal level so that each local government is able to boost MSME growth and provide jobs and livelihood for their constituents," Aquino said.

"Entrepreneurs of all sizes will know they have a partner in starting and growing their businesses and getting access to the right kind of training, mentoring and value chain linkages," he added.

Senate President Pro-Tempore Ralph Recto, who introduced amendments to the bill, said the government will play a more active role in the development of the MSME sector. For instance, he said, under the proposed legislation all micro enterprises shall be exempted from paying income tax with respect to income received from the operations of the enterprises.

Recto said all micro enterprises shall be exempted from the coverage of the minimum wage law, provided that their employees will be covered by social security, Pag-ibig and health care benefits.

He said registered small and medium enterprises which shall hire additional employees subsequent to its registration under the Act, shall be allowed a deduction of P40,000 from its gross income for each employee hired in a given taxable year, provided that the maximum allowable deduction from the gross income shall not exceed P80,000.

To avail of the tax exemption benefit, Recto explained, the entrepreneurs should employ its worker for at least a year. The incentive, he further said, can only be availed for five years from the effectivity of the Act.

Recto said the MSME shall also be exempted from the Value-Added Tax (VAT) and other percentage tax as long as their gross annual sales shall not exceed P3 million.

He said Local Government Units are also encouraged either to reduce the amount of applicable local taxes, fees and charges imposed or to exempt the MSMEs from the payment of local taxes, fees and charges.

He said several other incentives in loan financing shall be made available to the MSME sector to encourage them to set up their businesses and to ensure that they are successful in their endeavor.

Aside from Aquino and Recto, other authors of the Go Negosyo bill include Senators Sergio Osmeña III, Miriam Defensor Santiago, Jinggoy Ejercito Estrada, Loren Legarda, Grace Poe, and Cynthia Villar. (YVONNE ALMIRAÑEZ)

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