1

SECOND QUARTER
MODULE 1- WEEK 1
CONTEMPORARY ECONOMIC ISSUES OF THE FILIPINO
ENTREPRENEUR

CONTENT STANDARD :The learner demonstrates an understanding

of the law of demand and supply and the
factors affecting the economic situation.

PERFORMANCE STANDARD :The learners shall be able to conduct a

survey of current economic situations within
the vicinity.

LEARNING OUTCOMES : Cite the different challenges of a Filipino

Entrepreneur through a comical skit/poster.

COMPETENCIES/CODE : Analyze the effects of contemporary

economic issues affecting the Filipino
entrepreneur.

ABM_AE12-Ia-d-8

WEEK : Week 1

TOPICS : Contemporary Economic Issues of the

Filipino Entrepreneur

2
 What I Know
Identification: Write your answer on a separate sheet of paper.

Opportunity Seeking Goal Setting

Persistence Information Seeking

Commitment to Work-Contract Systematic Planning and Monitoring

Demand Efficiency and Quality Persuasion and Networking

Risk Taking Self-Confidence

For numbers 1-5. On the box are the traits and qualities of an entrepreneur.
You may choose your answers on the box.

1. What is the difference between having faith in yourself and feeling

scared out of your wits?
a. Persistence c. Goal Setting
b. Risk Taking d. Self-Confidence

2. What is the ability to push and push toward the finish line even if the
finish line seems comically out of reach?
a. Persistence c. Goal Setting
b. Risk taking d. Self-Confidence

3. What is in their blood to give the “BEST” and achieve “EXCELLENCE”?

a. Persuasion and Networking
b. Demand Efficiency and Quality
c. Systematic Planning and Monitoring
d. Commitment to Work-contract

4. What is in knowing “when” and “whom” they should pursue potential

clients?
a. Persuasion and Networking
b. Demand Efficiency and Quality
c. Systematic Planning and Monitoring
d. Commitment to Work-contract

5. What is about having trust in what you know and your abilities to
handle the unexpected events that life puts in your path?
a. Persistence c. Goal Setting
b. Risk Taking d. Self-Confidence

6. What is an economic activity that forgoes consumption today with an

eye to increasing output in the future?
a. Tax c. Wage

3
 b. Investment d. Return
7. What is the price of labor?
a. Rent c. Profit
b. Interest d. Wage

8. What is imposed to individuals or entities by governments to primarily

raise revenue for government expenditures and other purposes?
a. Tax c. Wage
b. Investment d. Return

9. Which article of the 1987 Philippine Constitution that recognizes

entrepreneurship as an engine of economic growth?
a. XII c. IX
b. XI d. X

10. What is referred to assets that the company intend to hold for more
than a year?
a. Short-term investment c. Shortness investment
b. Long-term investment d. Longness investment

11. Your deposit of 2000 pesos in a savings account, and a year later
you have 2,100 pesos. Meanwhile, the consumer price index rises
from 200 to 204. In this case, what is the nominal interest rate and
the real interest rate?
a. 1 and 5 c. 5 and 1
b. 3 and 5 d. 5 and 3
12. If the passage of an investment tax credit encouraged firms to invest
more, what will be the effect to the demand for loanable funds?
a. Increase c. In equilibrium
b. Decrease d. Unequal

13. Nina wants to buy and operate an ice cream truck but doesn’t have
the financial resources to start the business. She borrows 5000 pesos
from her friend Max to whom she promises an interest rate of 7
percent and gets another 10, 000 pesos from her friend Dave to who
she promises a third of her profits. What best describes this situation?
a. Max is a stockholder and Nina is a bondholder
b. Max is a stockholder and David is a bondholder
c. David is a stockholder and Nina is a bondholder
d. David is a stockholder and Max is a bondholder

4
 14. If a popular TV show on personal finance convinces viewers about
the importance of saving for retirement, what will be its effect to the
loanable funds and interest rate?
a. The supply curve for loanable funds would shift driving the
equilibrium interest rate up
b. The supply curve for loanable funds would shift driving the
equilibrium interest rate down
c. The demand curve for loanable funds would shift driving the
equilibrium interest rate up
d. The demand curve for loanable funds would shift driving the
equilibrium interest rate down
15. If the business community becomes more optimistic about the
profitability of capital, what will be its effect to the loanable funds and
interest rate?
a. The supply curve for loanable funds would shift driving the
equilibrium interest rate up
b. The supply curve for loanable funds would shift driving the
equilibrium interest rate down
c. The demand curve for loanable funds would shift driving the
equilibrium interest rate up
d. The demand curve for loanable funds would shift driving the
equilibrium interest rate down

What I Need To Know

This module is focused primarily on the different economic issues that

a Filipino entrepreneur is facing especially in this time of pandemic. A
review on the introduction about entrepreneurship will also be tackled as
well as some Filipino entrepreneurs and their contribution to the world.

As we go through this module, you are expected to:

1. Identify the different economic issues of Filipino entrepreneurs
2. Analyze the effects of contemporary economic issues affecting
the Filipino entrepreneur
3. Design a plan matrix on how to address the economic issues
affecting the Filipino entrepreneur

5
 What’s In

Write your answer on a separate sheet of paper.

What is a market? Have you ever invested financially or on anything before

this pandemic?

a. If not, what have you and your family been doing in this time
of pandemic in order to sustain your living conditions?
You can enumerate at least 3.

b. If yes, what were the measures that you and your family
been implementing in order to sustain the investment in the
competitive market? You can enumerate at least 3.

What’s New

Unexpectedly, the table turns and the usual becomes the unusual. In this
time of pandemic, the government had been distributing relief goods and
ameliorations just to make us feel better. I know a story that would help us
remember the things that we could have done if and only if we knew that
this pandemic would come. I want you to read a short story about The Ant
and The Grasshopper.

6
 The Ant and the Grasshopper

One summer’s day, in a field, a Grasshopper was hopping about,

chirping and singing to its heart's content. An Ant passed by, bearing
along with great effort an ear of corn he was taking to his nest.

"Why don’t you come and chat with me," asked the Grasshopper,
"instead of toiling your life away?"

"I am helping to store up food for the winter," said the Ant, "and I
recommend you to do the same."

"Why bother about winter?" said the Grasshopper. "We have got plenty
of food at present."

But the Ant went on its way and continued its toil.

When winter came, the Grasshopper found itself dying of hunger, while
it saw the ants distributing, every day, corn and grain from the stores
they had collected in summer.

Then the Grasshopper knew...

https://www.kidsworldfun.com/shortstories_antandgrasshopper.php

On a separate sheet of paper, answer the following questions:

a. What do you think is the moral of the story?

b. In the financial aspect, what do you learn from this
pandemic?
c. Why should you save and invest?

7
 What Is It?

What exactly does the entrepreneur do? Entrepreneurs operate within

the market. They devise ways to increase trade. In other words,
entrepreneurs are those who promote trade. Since May of 2019, there are
1.42 million registered businesses from 900, 000 in 2017 in the Philippines
and 99.56% are MSMEs (Micro, Small and Medium Enterprises). Based on
the data, what sustains the economy last year is because of the MSMEs.

In this time of pandemic, most of those MSMEs collapsed because

entrepreneurs live with some degree of uncertainties. No one knows what
the future holds. In a competitive market, the landscape is littered with
entrepreneurs who have tried, succeeded and failed.

8
 Contemporary Economic
Lesson
Issues of a Filipino
6 Entrepreneur
How can an entrepreneur increase trade?

1. To produce a good or service that satisfies unmet demand.

Example: Steve Jobs, the co-founder of Apple Inc., was instrumental

in the development of such products such as IPads, IPhones and
IPods.

2. To reduce the transaction costs of making trades.

Example: Online buying and selling

Economic Issues of Filipino Entrepreneur

I. INVESTMENT

In Economics, investment is an economic activity that forgoes

consumption today with an eye to increasing output in the future. In finance
terms, investment is denoting a purchase of a security such as stocks or
bonds.

Classification of investment:
1. Long term
2. Short term

Long term investments are investments that a firm is willing to hold for
a long period of more than a year or 30 years at most. Being in a long term
investment, investors are willing to accept the risk in the pursuit of higher
rewards.

Example:

1. Stocks –these are paper investment, which means it’s not like a
property to manage. Investing in stocks is investing in the economy.

Categories of stocks:

a. Growth stocks – often pay no dividends at all, primarily

reinvest profits in growth

9
 b. High dividend stocks – have the prospect of capital
appreciation

2. Bonds – are interest bearing certificates with terms greater than 10,
20 or 30 years. Not only provide interest income but also capital
appreciation

Note: mutual funds and exchange traded funds are function as

portfolios of large number of different stocks and bonds

To illustrate stocks and bonds:

Figure 1: https://purefinancial.com/learning-center/blog/bonds-vs-stocks-vs-mutual-funds/

Figure 2: https://www.thebalance.com/the difference-between-stocks-and-bonds-417069

10
 3. Real Estate – an alternative to stocks and as the best long term
investment

Two ways to make money investing in rental real estate:

a. Rental income
b. Capital appreciation

To illustrate:

Figure 3: https://realtybiznews.com/why-real-estate-agents-shouldnt-fear-being-replaced-by-technology/98742305/

4. Tax Sheltered Retirement Plans – aren’t actual investments but get

important tax benefits

5. Annuities – are solid investments and more of an investment contract

10 Best Philippine Stocks for Long Term Investment:

1. Ayala Corp
2. Ayala Land Inc.
3. Aboitiz Power Corp.
4. Banco de Oro
5. Bank of the Philippine Islands
6. DMCI Holdings Inc.
7. First Metro Philippine Equity
8. GT Capital Holdings
9. International Container Terminal Services
10. Jollibee Foods Corp.

Short term investments are highly liquid, and by liquid would mean easy
to turn asset into cash. Tend to be lower risk, meaning sacrificing a
potentially higher return for the safety of having money.

Examples:
1. Savings Account – are highly liquid, you can add money to the
account and it is insured under the PDIC or Philippine Deposit
Insurance Corporation

2. Corporate Bond Funds – typically considered safe and pay interest.

However, it is not insured by the government so it can lose money

11
 3. Government Bond Funds – just like corporate bonds except that it is
issued by the government. It is not insured under PDIC but it
promises to repay money

4. Money Market Accounts – another kind of bank deposit and usually

pay a higher interest rate than savings account. It is protected by
PDIC. It is highly liquid.

5. Certificates of Deposit – it is referred as the time deposit

II. TAXATION

The Philippine tax law system was based on the 1987 Philippine
Constitution and sets its limitations on the exercise of the power to tax in
the following articles:
a. Article 6, sections 28-29
1. Requirement of uniformity and equity in taxation (Article VI,
section 28, Legislative Department)
2. Prohibition against taxation of religious, charitable and
educational entities(Religious and charitable institutions exempt
from property taxes) (Article VI, section 28, Legislative
Department)
3. Prohibition against taxation appropriation for religious purposes
(Article VI, section 28, Legislative Department)
b. Article 16, section 4
Prohibition against taxation of non-stock , non-profit educational
institutions and proprietary educational institutions (exempt from
property and income taxes as well as customs duties except income
derived from business activity not related to its educational purpose)

The latest revision of the tax law is the National Internal Revenue Code of
1997.

Taxes are the lifeblood of government. These are used to finance the
basic services such as health care and education as well as infrastructure.

In 2017 Doing Business Report of World Bank, the Philippines ranked

th
99 out of 190 economies in terms of filing of taxes. It takes 185.6 hours or
28 times each year to file taxes.

Main objectives of taxes:

1. Revenue raising to provide public good

2. Redistribution of income and wealth
3. Economic regulator to promote social and economic welfare
4. Harmonization among other states

12
Classification of Taxes:

1. By tax base – is a convenient classification for economic analysis, for

example, in examining who exactly bears the burden of a tax known
as incidence of taxation

2. Indirect/direct – a direct tax is one levied directly on the person who is

intended to pay the tax whereas the indirect tax is borne by a person
other than the one from whom the tax is collected

3. Unit/ad valorem – a unit or specific tax is levied on the volume of

what is being taxed whereas an ad valorem tax is levied on the value
of the tax base

4. Distribution of the tax burden – the way in which burden of tax is

distributed among the taxpaying community

a. Progressive taxes take an increasing portion as the value of the tax

base rises and depends on the marginal rate of tax
b. Proportional taxes take a constant portion of the value of the tax
base and depends on the marginal and average rates of tax being
equal
c. Regressive taxes take a declining portion as the value of the tax
base rises and depends on the average rate of tax being greater
than the marginal rate of tax

*Levied means impose

*Marginal means extra or additional or increment

Marginal Rate of Tax = Change in tax paid

Change in income

Average Rate of Tax = Total tax paid

Total income

In the Philippines, the government adopted the progressive taxation

scheme in the collection of income tax in order to allocate the burden of tax
fairly between members of the community. Under the progressive taxation,
the rate of tax would increase as the level of income increased. This implies
that the system should be used to correct income inequalities.

The following are the arguments in favor of progressive taxation:

a. Vertical equity – tax rates should be progressive in order to promote

equality of sacrifice like the loss of a one peso of a rich person is less a
burden compared to the loss of a one peso to a poor person.

13
 b. Redistribution of income – socially aware governments seeking reduce
poverty and promote social welfare can use progressive taxation to
achieve a greater degree of redistribution

c. Benefit theory – may be justified on the grounds that wealthier

individuals receive more benefit from public services such as defense
and law and order as they have more to lose than poorer individuals
with few possessions

d. Achieve equity in the tax system as a whole – can compensate for

regressive taxes in the tax system so that the total burden of taxation
from all taxes is proportional

The following are arguments against a progressive taxation

a. Simplicity – it is argued that steeply progressive rates of income tax

make it more complicated increasing the incentive to avoid and evade
the tax

b. Political objection – the fact that a government is voted in by the

majority of the electorate but the highest progressive rates of tax
would only apply to a minority may be politically unacceptable, as in
effect the majority would be allowed to determine rates of tax that
would fall exclusively on the minority

c. Economic efficiency – highly progressive rates of income tax are likely

to reduce savings and the creation of capital making society as a
whole worse off

Ambisyon Natin 2040 paved the way of passing the major laws. The Tax
Reform for Acceleration and Inclusion or the well-known TRAIN bill, tax
amnesty legislation and Republic Act No. 11032 of 2018 which aims to fast
track measures of cutting red tape and make the process of setting up and
maintaining a business easier and efficient. The Tax Reform for Attracting
Better and High-Quality Opportunities or the TRABAHO bill is the second
component of the tax reform package which is to make corporate tax rates
in the Philippines competitive with those of its regional neighbors and to
enhance fiscal incentives regime.

1. TRAIN bill was implemented in January 2018 to increase government

earnings to fund higher public expenditure which are better
infrastructure, health, education, jobs and social protection.

A simplified income tax system was also developed for small

businesses introducing the possibility of being taxed at a flat rate of
their gross sales on receipts provided that this does not exceed an
annual threshold of 3 million.

14
 2. TRABAHO bill proposes an income tax holiday incentive be granted for
a period not exceeding three years and other incentives for
businesses.

3. Green Jobs Act of 2016 referring to employment that contributes to

the preservation and restoration of the environment

4. Tax Amnesty Act of 2018 or RA 11213 with taxpayers benefitting from

two types of tax amnesties:
a. Estate Tax Amnesty
b. Tax Amnesty on Delinquencies

Ease of Doing Business Act

Republic Act No. 11032 of 2018 or otherwise known as the Ease of

Doing Business and Efficient Government Service Delivery Act provides for
an adoption of simplified requirements and procedures that will reduce
bureaucratic requirements and expedite both business and non-business
related transactions with the government.

The law provides a zero contact policy wherein government employees

are prohibited from having any contact of any type with any transacting
applicant except on the following cases:
a. During preliminary assessment of the request
b. While evaluating the sufficiency of submitted requirements

The present administration took the initiative so that entrepreneurs can

do business at ease.

III. WAGE

Employment is like any other market exchange which obviously can be

explained using the supply and demand in a market equilibrium setting.
Wage is the price of labor and is usually in monetary compensation paid by
an employer to an employee in exchange of a work done. What drives the
higher supply of labor is the wage even if there is low demand for it. Higher
wage means higher supply of labor.

Wage rate in the Philippines is at 13, 487.30 pesos since 2018 compared
to the 12, 646 pesos in 2017. For small businesses to acquire and convince
individuals to offer their skills, expertise and time is to make compensation
be competitive in the labor market. Attractive benefits and other perks
entice a skilled individual to be part of your growing business.

15
 The minimum wage law is determined by the regional wage boards every
year. The determination is based on the following factors:

1. Needs of workers and their families

2. Capacity to pay
3. Comparable wages and incomes
4. Requirements of economic and social development

The data from the Philippine Statistics Authority and from the National
Economic Development Authority will be used in determining each factor.

IV. RENT

In the Philippines, a law intended to protect millions of Filipino renters

across the country which took effect in 2009, the Rent Control Act of 2009.
In 2018, the Philippine Statistics Office recorded at least 1.5 million renters
and 97% of these renters are renting with rates costing 10, 000 pesos per
month. For entrepreneurs and owning a business in the Philippines, one
major concern is the property. It is important for business owners or
entrepreneurs to be knowledgeable about the property law

16
 What’s More

A. Matching Type: Match Column A to column B. Write your answer on a

separate sheet of paper.

Column A Column B

1. RA 11032 a. Adopted income tax

2. RA 11213 b. Tax Reform law
3. Rent Control Act c. Tax Amnesty Act
4. Wage d. Environment
5. Green Jobs Act e. Income Tax Holiday incentive
6. 1987 Philippine Constitution f. Price of labor
7. National Internal Revenue Code g. Lifeblood of the government
8. TRABAHO bill h. Limits the exercise of the
9. Progressive Tax power to tax
10. Ambisyon 2040 i. Law to protect renters
j. Build, Build, Build project

B. Answer the following questions on a separate sheet of paper.

1. In this time of pandemic, explain the importance of tax collection

by the government? How important is a tax incentive to the
business community? Limit your answer to a minimum of 5
sentences per question.

2. Create a comical skit showing at least one of the challenges that a

Filipino entrepreneur faces in this time of pandemic and design an
action plan matrix on how to address that challenge.

Follow the action plan matrix template.

ACTION PEOPLE TIMELINE

RESPONSIBLE (When?)
(Who will do it?)
(What?) Challenge as
mentioned in your
comical skit
(How?) Action or
steps to be taken…

17
 What I Have Learned
Give at least 5 suggested economic policies and solutions to address the
economic issues of Filipino entrepreneurs in this time of pandemic. Refer to
the following guide questions for your suggested policies:

a. If you are the breadwinner of the family, what could you have done for
the Filipino entrepreneurs in this time of pandemic?

b. If you are the Filipino entrepreneur, what could you have done for
your business in this time of pandemic?

What I Can Do

Answer the question on a separate sheet of paper.

1. As a Filipino citizen and one of the many affected by the pandemic, do

you think you are entitled of a share from the taxes collected by our
government? Explain in 5 sentences.

2. What is your opinion about those who have not paid taxes or the free
riders as they are called, are they entitled to a share in the
community? Explain in 5 sentences.

18
 Assessment
Multiple Choice: Write your answer on the separate sheet of paper.

1. Which government office or agency determines the minimum wage law

in the Philippines?
a. Central bank governor c. Firm or company
b. Regional wage board d. Department of Labor and
Employment

2. What is the price of labor?

a. Rent c. Interest
b. Income d. Wage

3. Which bill proposes for an income tax holiday incentive?

a. Ambisyon 2040 c. Build, Build, Build
b. Trabaho bill d. Tax Amnesty bill

4. What is the main objective of the Green Jobs Act? is to preserve and
restore the ______________.
a. To preserve and restore the government
b. To preserve and reconstruct the mining companies
c. To restore and protect the environment
d. To beautify and preserve the Manila Bay

5. The intention of the law is to avoid red tape, what law provides a zero
contact policy?
a. Republic Act No. 11032 of 2018 “An Act Promoting Ease Of
Doing Business And Efficient Delivery Of Government
Services”
b. Republic Act No. 11032 of 2017 “An Act Promising Ease Of
Doing Business And Efficient Delivery Of Government
Services”
c. Republic Act No. 11032 of 2016 “An Act Promoting Easiest
Way Of Doing Business And Efficient Delivery Of
Government Services”
d. Republic Act No. 11032 of 2019 “An Act Promising Easiest
Way Of Doing Business And Efficient Delivery Of
Government Services”

19
6. What is the simplified tax scheme of the TRAIN bill that provides an
incentive for small businesses?
a. Its gross annual income threshold does not exceed 3.5
million
b. Its net annual income threshold does not exceed 3 million
c. Its net annual income threshold does not exceed 2.5 million
d. Its gross annual income threshold does not exceed 2 million
7. What is meant by liquid in a short term investment?
a. Anything that conforms to the shape of a container
b. Easily turned or converted into cash
c. A state of matter
d. Made up of tiny vibrating particles

8. Which is considered to be the best long term investment?

a. Stocks c. Bonds
b. Real Estate d. Portfolio

9. Which of the following short term investments are highly liquid?

a. Government bonds c. Annuities
b. Time deposit d. Savings account

10. What entices an individual to offer their skills, expertise and time to
a growing business?
a. Attractive benefits c. Company perks
b. Competitive salary d. All of the above

11. Why is President Duterte keeps on reminding the owners of

buildings and apartments about not letting their tenants go in this
time of pandemic? Because ____________.
a. It is stipulated in the tenant-landlord contract
b. Of Rent Control Act
c. We are Filipinos
d. Of humanitarian reasons

12. Why is progressive taxation scheme makes society as a whole worse

off?
a. Because it will most likely to reduce consumption
b. Because it will most likely to increase investment
c. Because it will most likely to reduce savings
d. Because it will most likely to increase government income

13. What are these interest bearing certificates that would last from 10,
20 or 30 years?
a. Stocks c. Retirement Plan
b. Bonds d. Savings Plan

20
14. Why are investors willing to accept the risk in a long term
investment?
a. The higher the risk the higher the interest
b. Because it is part of the business game
c. In the pursuit of bigger reward
d. Due to holding of ownership

15. What is an economic activity that forgoes consumption today for the
future?
a. Taxation c. Savings
b. Rental Income d. Investment

21
References

Arnold, R. A. (2015). Principles of economics. 11th ed. Cengage Learning.

Bylund, Per. (2018). 3 Keys To Determining Fair Wages for Your Team
Members. Retrieved from
https://www.entrepreneur.com/article/312878

Kenny, Thomas. (2020). How Stocks and Bonds Differ and Why It Matters.
[Figure 2] Retrieved from https://www.thebalance.com/the
difference-between-stocks-and-bonds-417069

Kids World of Fun. (2020). The Ant and The Grasshopper. Retrieved from
https://www.kidsworldfun.com/shortstories_antandgrasshopper.php

Greenlaw, S. A., Shapiro, D., & Taylor, T. (2018). Principles of economics-2e:

OpenStax. Retrieved from

https://d3bxy9euw4e147.cloudfront.net/oscms-prodcms/media/doc
uments/Economics2e-OP_I2ne43X.pdf

Greenlaw, S. A., & Shapiro, D. (2017). Principles of macroeconomics 2e. Rice

University. Retrieved from
https://d3bxy9euw4e147.cloudfront.net/oscms-prodcms/media/doc
uments/Macroeconomics2e-OP.pdf

Mankiw, G. N. (2015). Principles of economics. 7th ed. Cengage Learning

Mercadante, Kevin. (2020). Best Long-Term Investment Strategies &
Products. Retrieved from https://www.goodfinancialcents.com/best-
long-term-investments/

Nightingale, Kath. (2015). Taxation: Theory and Practice. Prentice Hall:

Pearson Education

Official Gazette of the Philippines. (2020). How Is Wage Determined?

Retrieved from https://www.official gazette.gov.ph/featured/how-is
minimum-wage determined/

Oxford Business Group. (2020). The Report: Philippines 2019. Retrieved

from https://oxfordbusinessgroup.com/philippines-2019/tax

Perry, Brian (2018). The Difference Between Bonds vs Stocks vs Mutual

Funds. [Figure 1] Retrieved from https://purefinancial.com/learning
center/blog/bonds-vs-stocks-vs-mutual-funds/

Royal, James. (2020). 7 Best Short-Term Investments in October 2020.

22
 Retrieved from https://www.bankrate.com/investing/best-short-term-
investments/

Universal Picture. (2020). Business Entrepreneurs Issues in Property and

Ownership. Retrieved from https://www.universalclass.com/articles/
business/business-entrepreneurs-issues-in-property-and-ownership.
htm

Wheatley, Mike. (2017). Why Real Estate Agents Shouldn’t Fear Being
Replaced By Technology. [Figure 3]. Retrieved from
https://realtybiznews.com/why-real-estate-agents-shouldnt-fear-
being-replaced-by-technology/98742305/

23