Microenterprise Law Implementation Strengths and Weaknesses: A Multi-Stakeholders Perspective
Dr. Vergel S. Manipol, CPA
Associate Professor II
Department Head, Accounting Information System
State University of Northern Negros
Barangay Rizal, Sagay City,
Negros Occidental, Philippines, 6122
https://orcid.org/0000-0001-8834-6601
Abstract: Determining opposing strengths and weaknesses in implementing microenterprises law can help in culling both significant advantages “tagged as best practices” and its disturbing weaknesses to be identified for better implementation and quality services to microenterprises. This qualitative study using the FGD approach determines the strengths and weaknesses of implementing a microenterprise law in the Philippines for over two decades. Using the purposive sampling technique, 40 law stakeholders, categorized into five groups: microenterprises, employees, suppliers, consumers, and law implementers, participated in a series of group discussions using a structured interview guide. Findings revealed implementation strengths; enhanced net income, maximized goods accessibility, higher sales, job sustainability, and stronger business linkages while culling weaknesses; low law awareness and understandability, inadequate salaries and wages, and insufficiency of provisions and implementing guidelines The findings revealed law’s favorable contribution to the overall economic situation of microenterprise owners but with areas needing improvement and law revisitation considerations.
Keywords: Microenterprises, BMBE Law, Strengths & Weaknesses, Qualitative, Philippines
JEL Classification: K00; K2; M00; D
Introduction
Poverty is continuously felt by Filipinos and the rest of the world; thus, alternative ways of securing finances and varied livelihood strategies like engaging microenterprises remain steadfast through time. Many people think that by giving or increasing the impoverished's access to financial leverage and opportunities, the financial industry's growth can directly aid in the fight against poverty (Zhuang et al., 2009). Moreover, with the limited resources powered by microenterprises (Angeles et al., 2019), producing quality and setting competitive pricing for its products is undoubtedly at stake, acquiring the burden of accelerated, gradual business growth. Most microenterprises find it challenging to compete on price or quality because of the competition from bigger-scale business and industrial organizations (Prasad & Tata, 2009). The vast majority of small and medium-sized businesses are composed of micro-businesses. However, they remained relatively understudied (Gherhes et al., 2016). Microenterprises, being part of the minority classification in the business industry (Bowen et al., 2009), were less heard, rarely considered, and certainly lacked substantial attention for development and sustainability. Microenterprises are considerably small firms, typically with just the proprietor working for them or with one employee played by the business owner (Schreiner&Woller,2003). Because of its accessibility to business formation, micro-enterprising remained the core and founded baseline for a livelihood by most surviving citizens living on or below the poverty line.
For some impoverished and deprived citizens, microenterprises can be a powerful option, although the most common ways out of poverty are still wage jobs, quality education, and job training (Bhatt&Tang, 1998). When analyzing the global microenterprise landscape and point of view, it is imperative to consider regional disparities and the influence of macroeconomic variables on their operational efficacy. Further, microenterprises’ operational activities are limited and scarcely controlled because of their technology impairment and resource shortcomings. Research has indicated that microenterprises operating on an African geographical scale and setting encounter distinct obstacles concerning infrastructure and technological accessibility, including marketing considerations and perspective. (McCormick et al., 1997). With the desire to attain an improved quality of life and eradicate drastic poverty, undeniably, these minorities in the business sector “microenterprises “ignore the continuous struggle and continual disturbance by varied economic factors, leaving microenterprises’ growth slow-paced while, in most cases, no progress at all. Microenterprises can be very helpful in alleviating the quality of life and lifestyle of humankind while reducing poverty (Suprabha, 2013).
An existing microenterprise law can significantly guide the holistic operation of every single microenterprise existing to survive financially. Government interventions and programs enacted into law are significant factors in micro business development (Alera et al., 2022). Through its lawmaking body, the Philippines implemented a microenterprise law that relatively embarked milestones and impacted microenterprises to a broader extent. According to Manipol (2023), the BMBE Law, officially known as Republic Act No. 9178, was enacted under the leadership of Her Excellency Gloria Macapagal-Arroyo, our former president of the Republic of the Philippines (in office from January 20, 2001, to June 30, 2010), the Philippine Congress met on November 13, 2002, during the 12th Congress. The legislation is "a law to promote the Establishment of Barangay Micro Business Enterprises (BMBEs), providing incentives and benefits therefore, and for other purposes." The main advantage of the BMBE law is that, following registration and issuing a Certificate of Authority, which is valid for two years and renewable for a further two years upon each renewal, the enterprise shall be exempted from payment of income tax resulting from its operations. The local government entity may set aside funds to cover the administrative expenses of registering and overseeing the BMBEs, charging a cost that does not exceed P1,000 (Aldeguer, 2015). The next significant benefit is being exempt from the coverage from minimum wage law, provided that all covered employees have the same rights to benefits like the social security system and health insurance, just like regular employees. A BMBE is immediately excluded from the minimum wage law when it registers and receives a Certificate of Authority. Moreover, all other incentives include technology transfer and assistance by the Department of Trade and Industry together with other partner government agencies like the Department of Science and Technology and Cooperative Development Authority, including marketing training and investment promotions.
For more than two decades of the law's existence in the Philippines, it is imperative to consult its implementation journey to the registered micro enterprises in the country. Following the results delved by Garambas and Pinos-an (2021), the study revealed that a small number of entrepreneurs and barangay leaders were aware of the presence of the BMBE law. This undermines the government's aim to lend support to tiny enterprises. Despite its unfavored level of awareness, some scholars were able to cull the moderate implementation effectiveness of the law, leaving the government's program to the microenterprises' unexhaustive exploration. With a weighted mean of 4.1769, the BMBE Law was generally effective for microenterprises. This indicates that the law has proven beneficial to the beneficiaries, rendering its two incentives (out of 5) highly effective (Manipol, 2023). Based on the results as revealed by Manipol, other law incentives and mechanisms were moderately effective to less effective, particularly on incentives like technology assistance and transfer, marketing assistance, and promotion. These areas should be keenly assessed and evaluated as these items were considered and quantified less. Evidently, by assisting microenterprises and other business sectors in thinking through the supply of facilities for the product market, including any area in the form of marketing outlets, the government shall take a more consistent role in making it easier for people to enter the formal market (Rahman, 2016). Assessing the strengths and weaknesses of government programs is undeniably vital in the holistic analysis of a statutory program or law as it mainly resolves and addresses common management issues and concerns that are critical factors in the sustainable development of any economic enterprise. Several findings indicated that a government's program for a specific group of business sectors has produced favored results on "supply side interventions," such as giving new and established businesses access to financial information, credit, mentoring, and training for business growth (Peters & Naicker, 2013).
As revealed by Suh & Emtage (2005), the identification of strengths, weaknesses including any identified opportunities and threats, was aimed at culling the lived realities and both favorable or unfavorable experiences of the beneficiaries that, in turn, provide insights and assess possible areas for improvement and revisitation for better future results. Hence, gathering and analyzing descriptive data about the strengths and weaknesses experienced by microenterprises in the implementation of BMBE Law plays a very vital role in shaping and making microenterprises in the Philippines that are future-proof and shall alleviate their status from a mere minute to higher business classification. This revelation, therefore, prompts the researcher for a truthful determination of the varied strengths and weaknesses in the implementation of BMBE Law as perceived by the registered microenterprises to ultimately draw conclusions and assess emerging implications as a basis for crafting suggestive interventions and coping provisions for a better and more improved microenterprise law implementation in the country.
Methodology
The study made use of the focus group discussion - qualitative research method to gain a deep understanding and analysis of the strengths and weaknesses to be identified in the implementation of microenterprise law while culling the lived experiences of the microenterprises’ stakeholders and, in turn, formulate insights as a basis in crafting intervention programs for a better implementation of the law. Focus group discussions are a standard qualitative research method used to analyze while deeply understanding and analyzing a particular unsettling topic. The technique seeks to collect data from a deliberately purposive sample of participants instead of a statistically representative sample of the general population (Nyumba et al., 2017). With the favored permission following the keen adherence to ethical standards and guidelines in assuring participants’ right to safety and respect, the suggestive figure of 40 microenterprise law stakeholders composed of ten registered microenterprise owners, seven random consumers, seven random suppliers, and seven random microenterprise employees and nine concerned law/government implementers from Iloilo province in the Philippines in which all, logically, hurdled the study’s selection criteria, were invited to be part of the focus group discussion which were done by a group of participants, making it five series of group discussions intended for micro-enterprise owners, law implementers, the consumers, the suppliers, and the microenterprise employees. The chosen participants confirmed their participation through written consent following the purposive sampling technique. Discussion mechanics, session flow, and questions were explicitly explained and presented, emphasizing that participation shall be voluntary and any motion for non-participation shall be respected and understood. Participants were purposively chosen as they strategically represent the five-microenterprise law-affected stakeholders: the BMBEs/microenterprises owners, the government/law implementers like the Department of Trade and Industry, and the Bureau of Internal Revenue, the consumers, the suppliers of microenterprises and their employees.
As the research progressed, the researcher imperatively considered the need to craft interview guide questions as a guide and discussion flow for both the discussants and the researcher. Moreover, the questions crafted were substantially open-ended as these prevented the limited amount of data from being gathered; it further allowed participants to discuss freely and let their inner selves be expressed with less reservation, thereby generating richer and more accurate responses. The use of open-ended questions varies depending on the researcher's goals and might have varying outcomes as the study continues (Popping, 2015). Generally, the findings indicate that targeted responses and topics from a qualitative approach in doing research are reflected in an open-ended platform, indicating that participants might want to include more of these topics in their public opinion surveys and interviews (Geer, 1991). Consequently, the qualitative data collected and gathered were analyzed using thematic analysis to cull a firm and richer stand and understanding, especially on the disparities and distinction between the strengths and weaknesses in implementing the law. This kind of analysis aimed to develop a deep and more decadent knowledge of the underlying sequences, meanings, and patterns found in a set of data identified (Braun & Clarke, 2006).
In addressing specific ethical issues and concerns, the study undertaken implemented a detailed and structured series of ethical protocols, to wit;
Informed Consent
Initially, the researcher favorably secured approval from the Department of Trade and Industry (DTI) through a formal letter to gain access to the list of registered/listed microenterprises, including any affiliated list of suppliers in the province of Iloilo, Philippines, locally called "Barangay Micro business Enterprises / BMBEs." The gained access included the business name, the owners, business location, contact number, and e-mail address for verification and ease of collecting data. Before DTI approved the request to the requesting researcher, the government agency contacted and asked first the listed BMBEs for their permission to share their contact number, location, and willingness to participate in the study. Consequently, upon reaching the consented participants, including BMBE employees and random consumers, the research objectives, possible risks, any motion to retract from the study, and the benefits of contributing something new to the body of knowledge were discussed in detail. Further, the participants were made aware of the precautions to be considered from data gathered by the researcher, giving both parties information on the accuracy and agreement of the collected data approved to be released and used in the study. Then, the data gathered by the researcher was encoded in an Excel file, encrypted, and kept confidential.
Confidentiality Measures
The researcher of the study took comprehensive responsibility, precautions, and due measures to safeguard the anonymity of the participants. All information gathered was decoded, and everything that would have allowed participants to be identified was taken out. Furthermore, the raw data was only accessible to the researcher and the institution. After publishing, the data would be preserved for at least three years. The data should be erased after that particular period; the raw data, both digital and paper, shall be permanently deleted.
Results and Discussion
This section discusses processes including repetition in the readings of data collected and written on the transcripts of the discussions and interviews, as theme analysis emphasized. Afterward, locating, classifying, coding, and completing the original transcripts were conducted. Quotes were provided under pseudonyms to ensure participant confidentiality. Initially, local verbatim was gathered as participants were much more comfortable using their native language (Hiligaynon) than speaking in English. However, other parts of the conversation were initially stated in English. Despite the use of the native language, such were all translated accurately and meticulously into English for more precise understanding and further analysis. Subsequently, open coding and axial coding were the steps that were mainly followed.
In contrast, some selective coding was also considered to find any terms or phrases consistent with the study topics in the statements. The coded themes were the most critical elements that matched the study's objectives and goals. The quotes that best complemented the themes and their meaning were the ones that were considered.Based on the culled results, the strengths in implementing the microenterprise law generated five primary themes most frequently occurring based on the participants' narratives: enhanced net income, maximized goods accessibility, higher sales, job sustainability, and stronger business linkages.
Enhanced Net Income
Initially, when BMBE owners were asked about the perceived strengths they have experienced in implementing the law, tax exemption, being the first incentive to be enjoyed by BMBEs, played a vital force in helping BMBEs earn enhanced take-home pay for their families. As stated by one of the participants,
"It's a big help for us that we are not paying tax anymore; with our minimal income, it's like we will be forced to stop doing business and be left with no more livelihood if we still have to pay tax (P2, Excerpt 2, x6/10).”
This incentive began being a deal-breaker, especially for those who have just started owning and managing a micro business since these business owners considered paying taxes as the deciding factor whether a business should continue to exist or stop its operations when a significant portion of gross income shall be used to pay taxes and other regulatory fees and dues that are too costly for a starter business. Relatively, generating a much-enhanced income is realizable because of the law's other incentive of allowing microenterprise owners to remunerate their employees below the applicable minimum wage. This is evident in the statement of one of the participants,
"For me, to our staff, for us starters in this time of COVID/Pandemic, it is a big help for us to just pay salary to our employees based on our profit. Through this, our employees cannot demand higher salaries from us and cannot demand on their own. Because of this, we can give them a sustainable income/livelihood so they can receive a stable salary (P1, Excerpt 1, x8/10)."
This privilege of remunerating employees' salaries and wages below minimum wage is of great advantage. With the law’s existence, employees are barred from demanding minimum or even heightened salaries and wages, but this improves the likelihood of BMBE owners being able to retain employment among its employees. The decreased human resource finances paved a more relaxed and thriving overall net income for business owners as expressed by one of the participants,
“Before, we found it very hard always to follow the mandates of DOLE as our employees are privileged to receive at least minimum wage and salaries; now, we are a bit relaxed without human resource finances (P7, Excerpt 7, x5/10).”
Maximized Goods Accessibility
As randomly chosen consumers were asked about the perceived strengths they have experienced as avid buyers of BMBEs, the law created convenience and established buying opportunities, leaving buyers with more accessible buying stores or convenience shops offering a greater variety of saleable products and services. As expressed by one of the participants,
''For me, there are only a few buyers who knew about the existence of that law, that is why I cannot say something much about it, especially about the strengths it possesses, but what I have observed lately is they are now having more items being sold that is why I do not have any hard time looking for any other available store to buy (P12, Excerpt 25, x6/7).”
In effect, it makes consumers save their supposed finances from spending on transportation expenses to purchase desired goods and items. BMBE owners helped its frequent and repetitive buyers maximize their limited financial resources by existing as the prime providers of frequently bought goods and items of a typical operational household. Emphasizing the cost-savings brought by the said incentive, one of the participants emphasized that;
“Before, we used to travel from this municipality of Iloilo City proper to buy reselling items and products for our small stores. Since we are retailing merchandise goods, we have limited stocks, unlike now; it is getting better, and we can save fare cost and buy it instead of some other goods for resell (P14, Excerpt 23, x5/7).”
Besides, with the leniency of these BMBEs, being minute in nature congruent to the capacity of its buyer to buy reasonably-priced items, credit policy was relaxed, allowing them to buy more goods "on account," thereby making buyers more accessible to goods and maximizing their finances. As one of the participants stated,
“They become more lenient to us customers; credit policy became a bit relaxed and limiting credit purchase restrictions, letting us acquire and lend more goods to be paid later (P16, Excerpt 24, x4/7).”
Higher Sales
Suppliers are vital stakeholders in the operation of BMBEs, and this was significantly justified by asking them about the perceived strengths they have observed from their BMBE buyers of goods for restocking and retailing. Significantly, BMBE suppliers’ sales level began to rise higher, as BMBEs frequently purchased goods for restocking from these suppliers that, in turn, were also reciprocally capable of buying more goods and being made available to reach more customers and interested BMBEs visit their stores and purchase goods. As voiced by one of the supplier-participant,
“Here in us, though we are just like them managing a small business, we are delighted with what privileges they have been receiving and enjoying from the government authorities, and because of these reasons, they never failed in helping us back by buying our products as well. This, in turn, means we earn an increasing monthly profit (P21, Excerpt 40, x5/7).”
Consequently, with the constant business relationship, this results in promising business growth for both parties - the BMBEs and the suppliers, to wit;
“As we observed, we can sustain our business and operations since constant purchases were observed from these registered BMBEs keeping us alive; we are hoping for much-growing sales (P23, Excerpt 39, x3/7).”
Aside from goods/product-based offerings, data gathered shows a favorable impact for suppliers leveraging BMBEs with an increased buying capacity making them favorably impacted at the same time that resulted from suppliers with a higher net income due to a higher buying capacity. This was expressed evidently by one of the participants, to wit;
“Their non-payment of taxes might have resulted in a more increased net income and a higher buying capacity (P18, Excerpt 37, x4/7).”
Job Sustainability
Employees are certainly the most critical resources and assets in any given business. They are undoubtedly valuable, and their contribution to income generation is irreplaceable. Employees are the main elements affected by implementing the law since their financial reward for a given workload is heavily affected. Even though the law's incentive favorably regards BMBE owners, exemption from minimum wage law can be an advantage for one party while prejudicing the other. This was made fact as one of the employee participants confessed that;
''It is unfortunate at first if we cannot try to request or demand the level of salary we think we deserve from our employers, even just for the supposed effort of reaching the minimum wage. Despite that, we are still beyond grateful to our boss because although we are paid low salaries, at least we can see their efforts that at the end of the day, they still find ways to grow their business and at the same time keep jobs sustained for us, for our families (P26, Excerpt 52, x5/7).”
Despite this reciprocity effect, employees are still grateful and appreciative of the specific provisions provided by the law relative to employment financial liabilities. As added by another employee participant,
“I chose to be happy with this job rather than hunting for somewhere else that still guarantees no stable job (P28, Excerpt 54, x4/7).”
Taking a glimpse at the brighter side, employees tend to be more appreciative of the continuous availability of their jobs and employment rather than waiting and transferring for any available and vacant job somewhere else to restart in case their current employment cannot be sustained economically due to the inevitable demands for salary hikes and demands. Manifested by one of the employee participants, job security was emphasized, to wit;
“I am okay with my salary right now. Though deficient, our employers assure us of sustained employment (P30, Excerpt 55, x4/7).”
Stronger Business Linkages
The law's implementation was made possible and realizable through its lawmaking body and policy implementer, enforcing the provisions outlined in the law. The Department of Trade and Industry (leading implementer)made and established “Negosyo Centers ” in almost all known cities and municipalities in the country (governmental physical facility) that are primarily tasked to be the one-stop hub and business center for all local entrepreneurs, especially micro entrepreneurs that need further business assistance, technical advice, resolve promotional issues and options, especially to issues and concerns relative to the economic and operational welfare of registered BMBEs. As highlighted by one of the law-implementer participants,
''In fact, our Negosyo Center (Business Center) here is a strong force and advantage made available by the government so that our connection and linkages with our BMBE owners will be tighter, easier, and more convenient for them if they need enlightenment about BMBE Act of 2002/BMBE Law. At the same time, this is our center per municipality wherein help can be extended to them regarding promotion, especially when they need it (P36, Excerpt 71, x6/9).”
As revealed in the study, the hubs established favorably became tools for awareness for other potential registrants, making the officers' tasks and jobs easier when dealing with entrepreneurs and BMBE owners in the municipality. This advantage created stronger linkages and improved the number of micro entrepreneurs visiting and seeking help from the government for their business concerns and those wanting to establish their micro business.
“As strengthened by the provisions of RA No. 9178, we are delighted to note that Negosyo Centers were established in almost all of the municipalities in the country to help our businesses grow, especially those interested individuals who would want to become entrepreneurs (P34, Excerpt 65, x5/9).”
Furthermore, these hubs primarily became prime display areas/sections in all municipalities in the country, wherein BMBE products produced by microenterprises can be displayed, promoted, and sold.
“Through this law, we can provide better services to BMBEs as some of their locally produced goods and products were promoted in this office (Negosyo Centers) (P39, Excerpt 69, x4/9).”
In contrast, based on the revealed results, the weaknesses in implementing the microenterprise law produced three primary themes most frequently appearing based on the participants' narratives: low law awareness and understandability, inadequate salaries and wages, and insufficiency of specific provisions and implementing guidelines.
Low Law Awareness and Understandability
Though evidence has proved that certain privileges in implementing the law favorably dwell with BMBE operations and financial performances, specific incentives in the law still need to be made familiar. This unfamiliarity was emphasized and further defined by one of the consumer-participants;
“The BMBE Law was okay, but it was unfamiliar to other micro-businesses, especially to most rural, remote, and far areas. Further, we lack an understanding of the law, especially on the various incentives and benefits we will receive, including the specific policy and guidelines on how to avail it (P8, Excerpt 14, x8/10).”
They needed more information dissemination and program awareness, especially in remote and far-flung areas. Results showed that BMBE law awareness and understandability are low and relatively unfamiliar, and need to be heard, especially by microenterprises that could have been able to register and avail themselves of coming rural and remote places. These facts were corroborated by the following consumer participants, to wit;
"I could have appreciated it way better if I had just understood their situation as part of the BMBE Law because, you know, being part of the poor community, we buy goods from these BMBEs, and we just let ourselves consume the fact that we can just buy anything from them thru credit and eventually pay at our convenience. We could have helped them and not burden them more if we had known their situation as BMBEs (P13, Excerpt 31, x7/10).”
“We never heard about it, maybe because it is tough for us to know it here in the mountain because of location issues (P1, Excerpt 16, x6/10).”
Moreover, those registered BMBEs still need a more precise understanding and empathetic interpretation, particularly on the monetary or non-monetary benefits they should expect once successful registration can be attained. As validated, a consumer participant explained;
"Based on your statement, sir, about that law, we still need sufficient understanding to re-think and evaluate the situations and activities undertaken by BMBEs. We need help understanding their economic problems and challenges, especially when collecting payments and gathering payments on their debts. We could have exercised leniency and been more considerate of their economic situations if only we knew and better understood their identity as registered BMBEs (P21, Excerpt 45, x6/10).”
The same case is valid for some stakeholders of the law, especially for some identified consumers and suppliers of BMBEs, wherein the existence of the law, particularly its incentives and provisions, was not substantially disseminated, broadcasted, and publicized to the general public. As negatively affirmed, some participants specified that,
“No significant and noticeable effect has been observed regarding our interaction with BMBEs; I cannot say much about the law since I am not fully aware of it (P20, Excerpt 48, x5/10).”
A gap was also found concerning the existence of specifics and procedures, including any structured policies and guidelines in availing each stated provision and incentive in the law. As stipulated by some participants,
“My interpretation and expectation about the law may not be the same as my co-BMBEs; my knowledge about the law is not that rich (P9, Excerpt 19, x5/10).”
Inadequate Salaries and Wages
Based on the participants' narratives about the perceived weaknesses felt by BMBE employees, employees fairly stated their requests for more decent salaries and wages despite the BMBE owners' adherence to various law provisions.
"We do not appreciate that part of the law's incentives because we are not receiving the right and just salaries and wages, to even at least receive the minimum wage we deserve. Additionally, we cannot demand a salary increase since we are not well-informed about the detailed content of the incentives and the specific benefits that we shall receive from every incentive of the law (P27, Excerpt 63, x7/10).”
The results showed that employees are significantly disadvantaged by the law's provisions of exempting BMBE owners from following the minimum wage law in compensating employees. Though they initiated vocal statements or requests to at least fight salary insufficiency and inflation, they cannot pull such voices into legal forces since those demands and needs will be dropped to waste knowing that BMBE owners can make contentions that they are being protected by the provisions set forth by the BMBE Law and cannot be compelled on paying salaries and wages to at least the minimum wage.
“I’m a bit saddened with the passage of the law since it enables us to earn even lower income for our family; before, I used to at least reach the minimum wage, but now, almost half of my previously earned salary was lost (P25, Excerpt 61, x6/10).”
Moreover, some results even culled negating actions from the employee participants expressing thoughts of hopelessness with employment as allegedly disadvantaged by the law's provisions of exempting BMBE owners from following the minimum wage law, to wit;
“I am contemplating whether I should stop working for a while because most of the stores I've been to were BMBEs, and the salary level they offer is too low, maybe because I am still not a college graduate. (P30, Excerpt 59, x4/10).
Insufficiency of Specific Provisions and Implementing Guidelines
As the eventual implementers of the law, the government authorities responsible for the effective and efficient implementation of BMBE Law also encountered inevitable circumstances that barred the smooth and ideal implementation, especially on the procedural requirements and clear mandates of the law, as expressed by some participants;
"We wanted to harmonize the process every time they visit here for BMBE registration, including the relevancy and appropriateness of varied documentary requirements asked from them to remove unnecessary requirements, but we find it hard just to follow what we want because we do not want to implement policies and procedures which we are not mandated and authorized to do unless there is an explicit special provision authorizing us to do so. Now, we have smaller BMBE registrants for tax exemption because, as we've heard, they feel tired and too excessive to comply with another set of documentary requirements (P37, Excerpt 83, x6/10).”
The congruent statements of the government body representatives revealed that specific weaknesses had been identified, particularly in the sufficiency of implementing guidelines and provisions as to the specific implementing rules and regulations in the implementation of the law. As attested by some participants,
"Honestly speaking, all of us here in the Negosyo Center find it very hard to give the exact and soundest response to our BMBE owners whenever they raise issues or problems since, admittedly, the provisions of BMBE Law are not very specific and detailed, which should be the basis to be understood by all of the concerned stakeholders (P35, Excerpt 79, x5/10)."
In this way, BMBEs could have been guided well and been provided with sufficient and accurate actions relative to their concerns and issues but in contrast, authorities were not mandated to deviate from any existing mandates and provisions and simply follow their interpretation and discretionary actions, as emphasized;
“We are barred from initiating our ways and means to make some operations provided to BMBEs better since this office does not want to execute initiatives which were not mandated for us to do, or expressly stated for us to perform (P32, Excerpt 81, x5/10).”
As the results showed, there is a strong association between the identified strengths in the implementation of the law as perceived by the stakeholders, which generally proved that the government’s program of helping marginalized business sectors in the industry is working and the identified weaknesses as it served as the bargaining factors existing to recall that development and success will always be work-in-progress as certain flaws and gaps were inevitably found and should be dealt accordingly. The law’s incentive of exempting BMBEs from paying income tax and other fees remained the most observable and favored incentive directly felt by BMBE owners. In contrast, admittedly,a relative number of BMBEs still needed to be made aware of the incentive, keeping them paying taxes and fees and depleting their small earnings even lower. This could mean that if only tax exceptions were availed, avoiding paying high taxes because of growing income could also be available. Prior findings emphasized that progressive taxation is a common feature of tax systems, wherein individuals with optimized income or businesses also pay maximized taxes. rates. This suggests that the percentage of income paid in taxes heightens relative to the level of net income (Piketty et al., 2014). Adversely, despite the favorable perception of the law by most of the registered microenterprises, extensive awareness and the existence of the law needed to be established as it may require intensified modality of awareness programs or through a series of orientations, thereby increasing microenterprise esteem and performance. There has yet to be much research on the elements influencing microenterprise performance, although the literature on entrepreneurship scholarly outputs improved the understanding of factors affecting business performance in general (Thapa, 2015).
Conclusion
Barangay Micro Business Enterprises (BMBE) implementation favorably contributed to the overall economic situation of microenterprise owners but with areas needing improvement. The incentives of the law contributed significant enhancements to the overall condition of BMBE stakeholders and substantially improved the entire implementation of the law. Consequently, with the expressed weaknesses in the understandability and clarity of the law's implementation, revisitation and re-evaluation of the implemented law might be considered by the government in authority for a better law enactment and program implementation for microenterprises.
Recommendations
As uncovered from the study results, particularly in the areas for improvement as emphasized by the law's weaknesses, it can be recommended that the need for sequential investigation into the gaps in implementing the law should be delved further. Reasonably, such coherence may pose an intervening factor like consideration of varied economic variables and potentialities as research can examine the more general economic effects of poor implementation of a given program, including how it affects the creation of jobs, generation of higher revenue, and contributions to local economies (Foster &Pushak, 2011). Consequently, future researchers may consider investigation measures that will focus and emphasize registered microenterprises and deeply determine their multi-faced financial and economic struggles to finally diagnose their coping mechanisms in minimizing operational problems traveled by microenterprises. A similar study indicated that the microenterprises' primary issues and limitations are the challenges in securing financial assistance, red tape, small acts of corruption, a dearth of loan options, and an unfavorable business climate. Other significant issues include unpredictable regulatory changes, an unwelcoming business environment, insufficient government support, and a lack of training (ZamberiAhmad, 2012). Ultimately, the findings of this study implied the necessity to conduct further investigatory research to resolve and determine the practical, realist underpinning and supplemental guidelines for a more precise understanding and more pervasive implementation of the law needed for a sounder economic regulatory decision for BMBE law implementers. Investigational research is often motivated by real-world issues or difficulties that need to be resolved; this research quest is a valuable tool for solving practical problems and guiding economic decision-making (Afful-Broni., 2012).
References
Afful-Broni, A. (2012). Relationship between Motivation and Job Performance at the University of Mines and Technology, Tarkwa, Ghana: Leadership Lessons. Creative Education, 3, 309-314. doi: 10.4236/ce.2012.33049.
Aldeguer, C. C. (2015). Extensive Implementation of the BMBE Law: An Assessment Across Metro Manila Cities. International Journal of Management and Economics Invention ISSN 2395-7220. https://doi.org/10.2139/ssrn.2627071
Alera, A., Evangelista, J., Cipriano, J. (2022). Impact of RA Micro Business Enterprise Act on the Growth and Development of Micro-Entrepreneurs in the Province of Bataan, Philippines. International Journal Of Applied Research In Tourism And Hospitality, 1(1), 1. https://doi.org/10.52352/jarthy.v1i1.808
Angeles, I., Calara, M. S. P., & de Guzman, A. (2019). The Mediating Effect of Microfinancing on Access to Finance and Growth of Microenterprises: Evidence from the Philippines. Journal of Global Entrepreneurship Research, 9(1). 2 https://doi.org/10.1186/s40497-019-0150-x
Bhatt, N., & Tang, S. (1998). The problem of transaction costs in group-based microlending: An institutional perspective. World Development, 26(4), 623-637. https://doi.org/10.1016/S0305-750X(98)00007-2
Bowen, M., Morara, M., &Mureithi, M. (2009). Management of business challenges among small and micro enterprises in Nairobi-Kenya. KCA Journal of Business Management, 2(1). https://doi.org/10.4314/kjbm.v2i1.44408
Braun, V., & Clarke, V. (2006). Using Thematic Analysis in Psychology. Qualitative Research in Psychology, 3(2), 77–101. https://doi.org/10.1191/1478088706qp063oa
Foster, V., &Pushak, N. (2011). Nigeria's Infrastructure: A Continental Perspective. Policy Research Working Paper; 1 (1), 5686. http://hdl.handle.net/10986/3450
Garambas, C., & Pinos-an, J. (2021). Awareness and Perceived Implementation of Barangay Micro-Business Enterprise Act of 2002 (Republic Act 9178) in La Trinidad, Benguet, Philippines. Mountain Journal of Science and Interdisciplinary Research, 86 (1), 7. http://portal.bsu.edu.ph:8083/index.php/BRJ/article/view/278/352
Geer, J. (1991). Do Open-Ended Questions Measure “Salient” Issues? Public Opinion Quarterly, Volume 55, Issue 3, pp. 360–370, https://doi.org/10.1086/269268
Gherhes, C., Williams, N., Vorley, T. and Vasconcelos, A.C. (2016). Distinguishing micro-businesses from SMEs: a systematic review of growth constraints". Journal of Small Business and Enterprise Development, Vol. 23 No. 4, pp. 939-963. https://doi.org/10.1108/JSBED-05-2016-0075
Manipol, V. (2023). Perceived Impact in Implementing Microenterprise Law: A Qualitative Study in the Philippines. International Journal of Professional Business Review, 8(7), e02781. https://doi.org/10.26668/businessreview/2023.v8i7.2781
Manipol, V. (2023). Effectiveness of Microenterprise Law to Registered Microenterprises: Quantitative Assessment in The Philippines. International Journal of Multidisciplinary: Applied Business and Education Research, 4(4), 1299–1309. https://doi.org/10.11594/ijmaber.04.04.25
McCormick, D., Kinyanjui, M. N., &Ongile, G. (1997). Growth and barriers to growth among Nairobi's small and medium-sized garment producers. World Development, 25(7), 1095–1110. https://doi.org/10.1016/S0305-750X(97)00015-6
Nyumba, T., Wilson, K., Derrick, C., & Mukherjee, N. (2017). The Use of Focus Group Discussion Methodology: Insights from two decades of application in conservation. Methods in Ecology and Evolution, 9(1), 20–32. https://doi.org/10.1111/2041-210X.12860
Prasad, S., & Tata, J. (2009). Micro‐enterprise Quality. International Journal of Quality & Reliability Management, Vol. 26 No. 3, pp. 234–246. https://doi.org/10.1108/02656710910936717
Peters, R., Naicker, R. (2013). Small Medium Micro Enterprise Business Goals and Government Support: A South African Case Study. South African Journal of Business Management, 44 (4), 1. https://journals.co.za/doi/pdf/10.10520/EJC146691
Piketty, T., Saez, E., &Stantcheva, S. (2014). Optimal Taxation of Top Labor Incomes: A Tale
Of Three Elasticities. American Economic Journal: Economic Policy, 6(1), 230-271. doi: 10.1257/pol.6.1.230 https://www.aeaweb.org/articles?id=10.1257/pol.6.1.230
Popping, R. (2015). Analyzing Open-ended Questions using Text Analysis Procedures. Bulletin of Sociological Methodology/Bulletin de MéthodologieSociologique, 128(1), 23-39. https://doi.org/10.1177/0759106315597389
Rahman, Z. (2016). The Difficulties Faced by Micro and Small Enterprises in the Formal Market Access: The Case in Small and Micro Enterprises in Makassar and KabupatenGowa South Sulawesi. Journal of Humanity, Vol. 4, (1), pp. 92–103, 10.14724/.v4i1.60 https://www.neliti.com/publications/92528/the-difficulties-faced-by-micro-and-small-enterprises-in-the-formal-market-acces#cite
Schreiner, M., &Woller, G. (2003). Microenterprise Development Programs in the United States and the Developing World. World Development, 31(9), 1567-1580. https://doi.org/10.1016/S0305-750X(03)00112-8
Suh, J. & Emtage, N. (2005). Identifying Strengths, Weaknesses, Opportunities, and Threats of the Community-Based Forest Management Program. ACIAR Smallholder Forestry Project ASEM, 160. https://tinyurl.com/em9ks6tc
Suprabha, K. (2013). Empowerment of Self-Help Groups (SHGs) towards Microenterprise Development. Procedia Economics and Finance, pp. 11, 412.
https://doi.org/10.1016/S2212-5671(14)00208-1
Thapa, A. (2015). Determinants of Microenterprise Performance in Nepal. Small Bus Econ, 45, pp. 581–594. https://doi.org/10.1007/s11187-015-9654-0
Zamberi Ahmad, S. (2012). "Micro, small and medium‐sized enterprises development in the Kingdom of Saudi Arabia: Problems and constraints," World Journal of Entrepreneurship, Management, and Sustainable Development, Vol. 8 No. 4, pp. 217–232. https://doi.org/10.1108/20425961211276606
Zhuang, J., Gunatilake, H., Niimi, Y., Khan, M., Jiang, Y., Hasan, R., Khor, N., Martin, A., Bracey, P., Huang, B., (2009). Financial Sector Development, Economic Growth, And Poverty Reduction: A Literature Review. ADB Review Working Paper Series, 173.
https://www.adb.org/sites/default/files/publication/28391/economics-wp173.pdf
