There are a few pending bills on the floor from our legislators that have caught our eye for the potentially huge impact on some sectors.
One is the proposed Energy Efficiency Law that stipulates a minimum energy performance standards system, among other things. The required mechanism in the bill and additional business-related administrative procedures have been cited by certain organizations as increasing the cost of doing business for micro, small and medium enterprises. For instance, manufacturers, importers and dealers will be required to display an energy label that will show the energy requirements and consumption efficiency of whatever products they carry. This is fine for the big boys, but micro and small enterprises are not ready to comply with this. They would need special mechanisms to measure their energy consumption and would require more logistics and expert manpower to monitor and undertake energy audits which will then be reported to the ERC. How can small exporters afford these?
The Philippine Exporters Confederation Inc. or PhilExport is the most vocal among those who take exception to this proposed legislation, noting that it will particularly hurt the small exporters. Philexport is instead calling on power distributors such asMeralco and professional organizations like the Institute of Integrated Electrical Engineers, all of whom have a wealth of technical experts, to design simple and affordable energy conservation measures and systems that can be adopted by the MSMEs. Energy conservation is a drive that we can all profit from, but perhaps the stakeholders' inputs must weigh in.
Another bill that merits a good look is the one that seeks to revoke the franchise tax exemption given to the telecommunication companies. This was granted way back when the Philippine telco industry was in its infancy stage so that the government had to boost the industry with perks under the National Internal Revenue Code of 1997. Twenty years later, the local telecommunication companies have enjoyed a duopoly that have entrenched them as among the most stable and progressive companies in the country. The demand for telco services continues to grow and legislators led by Rep. Sharon Garin no longer see the need to continue with the franchise tax exemption. In fact, Rep. Garin is proposing in House Bill 5444 which she authored the imposition of the franchise tax of 8% on the GROSS receipts of telco companies. This is in lieu of the value added tax which is computed on the telcos' earnings.
Separately, Congressman Toby Tobias of Navotas filed a measure to withdraw all tax exemptions given to these telcos, among them the exemption from Customs duties and taxes on the importation of radio and electronic telecommunication equipment.
Let's see how these two bills fare on the floor.
The Philippine Seven Corporation is the original poster boy for franchising in the Philippines with its highly profitable 7-Eleven franchise. Their net income in 2016 was 16.6% higher, and at the end of the year, they reported having a total of 1,995 stores spread out across the country, 410 of which are new stores. In Mindanao, a big area where they used to have only 33 stores, Philippine Seven has boosted this number to 107 stores by the end of 2016. In March of this year, the company celebrated a milestone, opening their 2,000th store. They have also opened more warehouses and distribution centers to cope with their rapid expansion.
In the Philippines, convenience stores are now the fastest growing in the retail sector. Other big players have joined in, notably theFamily Mart and the old reliable Mini Stop, and I understand a few others are set to test the local waters as well. Well, the more the merrier indeed. The competition has pushed these convenience stores to improve their merchandising and their interiors, get higher quality products and offer more than what are displayed on their racks. Now, people can get quick hot meals as well, with a few tables set up inside the store for diners. See what competition can do?
Interviewed by B&L's Biz Watch recently, Philippine Seven Corporation president and CEO Victor Paterno revealed a ramped- up advertising and promotions program, and energy conservation measures in all of their stores which should benefit the 7/11 franchise holders in the long run. The company has remodelled older stores and they have added more shelves too to accommodate more products instead of letting precious space go to waste. That is forward planning and dynamism in a company that has been a market leader in their sector for such a long time. There is no room for complacency in this sector, obviously, and the company aims to hold on to that torch for as long as they can. Even their stock prices fared very well, with earnings per share increasing by 16.4 per cent.
In their aggressive expansion of their franchisees' base, Mr. Paterno said that they are looking not just for people who have money pay the franchise fee and then leave the store to the staff to run. They are looking for people who are hardworking and committed to their retail business. They are looking for dedicated franchisees who can give their time, energy and focus to make their store successful, sustainable and profitable in the long run. This ensures a franchise business' long-staying power.
Mabuhay!!! Be proud to be a Filipino.
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