Chapter 4:

THE GOVERNMENT AND THE DEVELOPMENT OF ENTREPRENEURIAL ECONOMY

OBJECTIVES:
After this lesson, you should be able to:
1. Describe the status of Philippine economy;
2. Explain the importance of investment in the development of new market;
3. Discuss the factors in the development of Tourism in the country;
4. Explain the role of infrastructure in economic development;
5. Discuss the role of investment in production and research;
6. Discuss how the government can effectively help the small and medium industries; and
7. Identify the contributions of the entrepreneur in economic development.

I. THE PHILIPPINE ECONOMIC LANDSCAPE

The Filipinos remain to be poor because they have not totally developed the natural potential of the land and its
people for economic development. According to the latest survey, many are still living below poverty line and that
government has to make dole outs in the amount 36 billion pesos for the poverty alleviation program. The next
national budget has programmed more money for the poor of this country.
The amount of money given directly to poorest of the poor will give them a little food for the day. The
government attached conditions that those given cash grants should send their children to school and should visit
government health centers. The government hope that with literate population it will help sustain the modest
economic growth of the country. Assuring them that healthy bodies will make them productive, individuals have
guarantee that economic development could be achieved.

II. DEVELOPMENT OF BETTER EMPLOYMENT OPPORTUNITIES

Employment generates income for the people. With income, the people have money to buy the basic needs of
food, clothing, shelter, and improved condition. This will develop the local economy as factories will be producing
basic necessities of life. They will be able to generate local employment that will in turn pay taxes to the
government to provide basic services like education and health.
While employment is the hope for the needed component of economic development, it still remains the elusive
for the many job seekers as the need has exceeded more than the demand. We need skilled manpower and those
who can be employed in OUTSOURCING COMPANY.
Our college graduates who have undergone college with English as medium of instructions are supposed to have
developed the mastery of the language. In high school, English is the medium of instruction and another four years
in college yet we remain not qualified for call center agencies for failure to deliver the necessary skills. The survey
conducted on this area needs some fifty thousand more employees especially those of other languages like Spanish
and Japanese.
Our high school graduates lack skills for employment. We need welders, steelman, masons, skilled carpenters,
and many others in the construction industry yet the supply of this manpower is not enough. Electronic companies
want to hire machine operators and expand their manpower base for plant expansion yet many are not qualified
for the position.

III. INVESTMENT IN NEW INDUSTRIES

Investment in new ventures especially in the countryside will develop the economy of the nation. It will create
more employment of the nation. It will create more employment and other local business ventures. Investment of
foreign nationals should be looked into according to the provisions of law. Filipino entrepreneurs must be partners
in such venture to protect our own interest and those of the environment.
The agricultural sectors remain to be a wide area for investment. Our coconut resources in the Southern Tagalog
region and those in Mindanao are vast areas of development for exportable products. Coconut husk and shells
need new technology for more viable product for development either for local industries and those of export
market.
Coconut juice is beginning to find new market abroad and we need to process these in the countryside where
these resources are more abundant. Good vinegar comes from coconut or sasa palms better that synthetic and
chemicals.
The government should come in for intensive research for medical plants that abounds in the countryside so
that we can supply our population with local medicines. We need to sustain our health program with cheaper local
products so that we can get away from the bondage of branded medicines that are dictated by foreign nationals.
Investment in medical research is investment in the future of our nation and the better health program for the
masses.
The vast agricultural areas that remain uncultivated could be planted to exportable high value fruits and crops
like mangoes, durian, jackfruit or langka, and various fruits that could be processed into dried chips or puree for
export to other countries. The switch of taste buds from the bottled drinks to more fruit flavours are opportunities
for expansion.
Investments in the export processing zone for the manufacture of machinery components and other electronic
industries should be encouraged by the government for employment opportunities of the expanding semi urban
population. TESDA Training component should go hand in hand with this development in investment so that
qualified manpower could be supplied in these industries.

IV. TOURISM AS ECONOMIC COMPONENT

The country is noted for its beautiful beaches and sceneries that attract people with money and wealth for
leisure and pleasure. The government should come in the development of these potentials for more money and
investment.
 Government investment in promotional activities abroad could do nothing to change the image of this country if
we do not improve the following areas which are component for the attraction of more tourists:
1. Educational campaign among those involved in this industry should be put in place along the following:
a. The Government Authorities at the Port of Entry.
The port of entry is the show window of the country especially for people who travelled widely to
compare our facilities with those countries where they spent their time. Our facilities should include among
others special tourist lounges where they could experience the usual Filipino hospitality.
A show window of our bamboo organ, our native dances and pictures of beautiful Philippine scenery not
only of Boracay but also other tourist destination, that remained unexplored by other tourists. The usual
Filipino smile of hospitality must be experienced in their visit to our country.

V. IMPROVEMENT IN PEACE AND ORDER SITUATION

The tourist will not come to a country where their life and property will be in danger. The taxi drivers serving the
tourist should show the utmost courtesy and trust in their honesty of service. Tourists must have peace of mind
while in their hotels and places of accommodations, that no bad elements will harm them in their time of peace
and enjoyment. Their money must be worth in terms of service or the products that they bought for souvenirs.
There is more fun in the Philippines if tourists are happy to tell other tourists that they enjoyed their stay and
have not experienced any problem in their stay in this beautiful country.
Investors should not come in the country where other nationalities are not sure of their stay and be protected of
their investment. Peace and order is the prime responsibility of the government. Mindanao is the haven of
investment. Investment in agriculture in this region is profitable due to its weather condition and the rich natural
resources.
No investment in the countryside would come in if the government could not control the left leaning forces that
collect revolutionary taxes from businessmen. They will be paring more in taxes, one from the government and
another for outside force. This is the sad state of countryside business activities and does not encourage
investment.

VI. DEVELOPMENT OF BETTER INFRASTRUCTURE

Airport and Road facilities for tourist destination must be improved by the government in order to attract
tourists. Incentives in the development of better hotel facilities and other recreational areas must come from the
government. Liberal interest rates must be given to local entrepreneurs in the development of their areas and
encourage foreign partnership.
Foreign investors in the tourism industry worldwide must discover that the Philippines has all the potential for
investment. Tourist would come in if proper exposure is also made by those who have the expertise to develop
areas of tourist attractions.
Government infrastructure program should focus in the development of more highways in the countryside and
better road facilities for the transfer of agricultural products to the urban center. Traffic in the Metropolitan Manila
and its surrounding areas are causing a lot of fuel consumption and travel time.
A more viable system of transportation should be put in place to avoid this traffic condition. The transfer of raw
materials and finished products must be efficient. They must reach their destination without delay especially
perishable goods like vegetables, fruits, and fish products that came from the countryside. Traffic caused by
KOTONG COPS in the transport of important commodities must be totally eliminated.

VII. POLITICAL STREAMLINING

Too much politics in this country could be one of the greatest evil in the economic development of this country.
Politics is the entrepreneurial activity of those in power. Their investment during election is their investment to
amass more money when they come into power through graft and corruptions. They hold valuable government
contracts and projects and the release of fund carries with it some grease money.
Billions of PORK BARRELS or in other words, countryside development funds are in the hands of Congress and
Senate. How they spend this money is not known. These are political “fish rods” that lure the electorate showing
their banners of accomplishments. The same is true in the local political arena even those in the Barangay level.
Political Dynasty abounds in all areas in the political arena. The same dirty politicians hold the wheels of
government. The national administration has stopped such practice but local politics could not follow for their
personal interest.

VIII. INVESTMENT IN PRODUCTION TECHNOLOGY AND RESEARCH

The economic success of most countries in the western world and Japan is attributed to the introduction of
more advance technology in the production of goods and services. The more advance technology would mean
more goods from the production line. More production would mean less cost as the economies of scale operate in
the system.
More goods for consumption would mean lesser price for the buying public. Steady supply of farm products to
the urban center with the introduction of modern farming system would mean price stability for the basic
necessities for the growing Filipino population.
Technology transfer needed government support to make things happen. New farm implement that would
reduce labor cost in the cultivation of the land should be the investment priority of the government better than the
cash transfer program. Increase agricultural productivity would remove the bondage of poverty in the countryside
and this would minimize the internal migration to the urban centers that causes imbalance in the distribution of
population.
Our fishing industry needs new technology and the preservation of fish sanctuary needs government attention.
Modern fish culture should be introduced in the countryside to preserve our dwindling fish resources. Dynamite
fishing should be totally banned for it destroys our corrals and fish sanctuaries.
 Research and Technology would make investments in the processing of more local products into exportable
products for the world market. Our local handy craft industry needs new technology. Improve our local products so
that we will be able penetrate the export market. More research programs should be done by the government as
these area would improve the country’s economic landscape.

IX. GOVERNMENT INCENTIVES TO SMALL AND MEDIUM ENTERPRISES

Most of the economic activities in the Philippine setting are found in the countryside and operates as small and
medium enterprises. We find them as retailers, dealers, buy and sell small vendors, and mostly sole proprietor
entrepreneur.
Small and medium enterprises are the great contributors in the development of our economy. More people are
employed by small entrepreneurs and they contribute immensely to our economy. We are poor as a people
because we lack entrepreneurial interest as government imposes a lot of restriction in the organization of business.
The Government should encourage the development of entrepreneurial activity in transforming local resources
into products or services that would generate the necessary employment opportunities and improve the economic
conditions of the people.

The following suggestions for government incentives that generate entrepreneurial activities.
A. Small Entrepreneurs with Capital of less than 1 million
1. They should be free from tax for a period of at least 2 years. They have to learn the rudiments of
business activities and find viable means of operation. They need some take off points.
2. DTI Registration should be at two hundred pesos, Municipal licenses and permits should not be more
than 1,000 pesos and Barangay permits should not be more than 100 pesos.
B. Entrepreneur with Capital Base of more than 1 million to 5 million
1. Tax free for a period of 1 year
2. DTI registration – P500
3. Barangay permits – P200
4. Municipal licenses and fees – P5,000
C. Entrepreneur with Capital base of more than 5 million
1. Tax free for 6 months
2. DTI registration – P2,000
3. Barangay permits – P1,000
4. Municipal permit and license fee – P10,000
These enterprises shall pay regular taxes and fees as imposed by the regulating agencies of the Bureau of
Internal Revenue and the Municipality after the expiration of their period of exemption. The government has to
generate the necessary funds for development of the community. Government should conduct the necessary audit
to make them pay the right taxes as most entrepreneurs also make false statement of income to avoid the payment
of right taxes.

X. STABILITY IN THE PRICE OF GOODS AND SERVICES

While prices dictate the world economy and the fluctuation in the exchange rate, the government must support
price stability as it is an important component in the growth of the business sector.
There are two opposing components in the foreign exchange rate. When the value of the dollar goes higher the
exporter are happy as they get more for their products, when it falls the importers are happy as they enjoy lower
cost of imported materials.
The market forces in the exchange rates are conditioned by the ability of the government to make balance in the
growth of export and the control of imports. Balance in the supply of foreign reserves stabilizes the exchange rate
of the country that will result in the stability of prices. The flow of dollars to the country in terms of remittance
from OFW is another factor in the stability of our dollar reserves.

XI. SMUGGLING
Smuggling means an outflow of dollars without government control and it is a different to the growth of our
local industries and our economic development. Strict government control on these activities could develop our
local industries and our economy.
Smuggling of garlic, onions and other vegetables from China is deterrent to improvement in the agricultural
sectors as prices are beyond the production cost of the local farmers who were not given incentives by the
government. Smuggled imported shoes from China and Korea killed the shoe industry in Marikina and other shoe
producing towns of Laguna. Taxes from these imported goods could be turned into production incentives for small
business entrepreneur that are trying hard to compete with foreign products.

XII. ENTREPRENEUR AND SOCIO-ECONOMIC DEVELOPMENT

The development of the nation economic activity is the making of small and medium enterprises mostly located
in the countryside. They contribute to the economy of big corporations as they are also consumers of their
production. It is the entrepreneur who develops new products and makes innovation that becomes the backbone
of more economies.
The following are the contributions of the Entrepreneur in our Socio Economic Development:
1. The Entrepreneur Provides Employment
2. The Entrepreneur Pay Taxes
3. The Entrepreneur Provides New Lifestyle and Pleasures
4. The Entrepreneur Improves the Capital Base of the Economy
5. The Entrepreneur Creates People Empowerment and Social Mobility
6. The Entrepreneur Provides Healthy Competition
ACTIVITY 1. TERMS AND CONCEPTS FOR STUDY.
Write it on your notebook.
A. Discuss the following terms.
1. Investment
2. Political Streamlining
3. Pork Barrel
4. Technology
5. Research and Development
6. Price stability
7. Smuggling
8. Agricultural Cooperatives
B.
1. Discuss the factors that would attract tourist to visit our country and contribute to our economic
development.
2. Discuss the important role of peace and order in the development of entrepreneurship.
3. Discuss the negative effects in entrepreneurship of too much Politics in the government system.
4. Enumerate the possible alternative that could profile economic development.
5. Discuss the effects of smuggling in our economy.
6. Enumerate and discuss the contributions of entrepreneur in our economic development.

ACTIVITY 2. TERMS AND CONCEPTS FOR STUDY.

Test I – Write TRUE if the statement is correct and FALSE if the statement is wrong.
_______1. Our college graduates are mostly under employed in most industries and offices.
_______2. The agricultural sector remains to be a potential ground for investment.
_______3. Our high school and college graduates are prepared to assume employment positions in the industry.
_______4. Tourism is one important industry that could generate income not only in the urban sectors but also in
the countryside due to our beautiful beaches.
_______5. Tourist will come into in tranches even if the peace and order situation and our value system of good
service and honesty is in low level.
_______6. Political stability and peace in order are great factors and attracting investors in our country.
_______7. The traffic situation and lack of good infrastructure will attract investors.
_______8. Politics is the business of people in the political dynasty.
_______9. Employment and the development of industry are two important priority of local politicians as they will
contribute to their campaign funds.
_______10. More goods for people consumption would mean low prices.

Test II – Enumeration
1. Enumerate the important contribution of the entrepreneur in our economic development.
2. What are the contributory factors that will help develop our economy as a nation?

Test III – Identification

_____1. It refers to most job seekers that exceeded the industrial demand.
_____2. It is the coming of more industries that would create employment opportunities.
_____3. Our country is noted for scenic beauties and beaches that is good for investment.
_____4. It is a condition where people could live in peace and harmony.
_____5. It refers to the improvement in physical facilities for investment like roads, airports and our means of
transportation.
_____6. It refers to the political determination of government officials in honest governance and administration.
_____7. It refers to the introduction of new system of producing goods and services and exploration of new ideas.
_____8. It refers to the government assistance in the development of small and medium enterprises that will help
propel economic activity in the rural areas.
_____9. It is entrepreneur pride in developing products and services that is better that the others in the same kind
of business.
_____10. It is the contribution of improved products and service that would change peoples’ lives and behavior.

a. Technology and research e. Infrastructure

b. Government support f. Employment opportunities
c. Peace and order g. Tourism
d. Lifestyle and pleasure h. Competition
i. Political streamlining j. Investment