This story
was taken from Bulatlat, the Philippines's alternative weekly
newsmagazine (www.bulatlat.com, www.bulatlat.net, www.bulatlat.org).
Vol. VII, No. 6, March 11-17, 2007
Bacolod Businessmen Feel
Threatened by SM Entry One
of the most renowned mall stores in the country and perhaps in the whole of
Asia, the SM super mall is a force to reckon with; but as it started its
operations last week, local businesses have raised apprehensions despite praises
from some sectors. Is SM really advantageous to the city and province? BY
KARL G. OMBION AND RYAN B. LACHICA
BACOLOD CITY – One
of the most renowned mall stores in the country and perhaps in the whole of
Asia, the SM super mall is a force to reckon with; but as it started its
operations last week, local businesses have raised apprehensions despite praises
from some sectors. Is SM really advantageous to the city and province?
More jobs and
benefits?
At the opening of
SM super mall on March 1, Bacolod City Mayor Evelio Leonardia allayed the fears
of small and medium business operators in the city especially around the
supermall in the downtown area that their income would be affected with opening
of the giant mall.
Leonardia said he
fully understood the predicament of small business operators that SM super mall
would draw in and absorb the city’s customers. “The fear is based on wild
speculations and there is no truth to rumors that my administration is giving
special treatment to a giant shopping mal,” Leonardia said.
He stressed that
the SM super mall will instead generate around 4,000 jobs and, in effect,
increase the supply and circulation of money in the city and province, aside
from the projected increase in the city’s taxes.
The Department of
Labor and Employment (DoLE) and the Metro Bacolod Chamber of Commerce and
Industry (MBCCI) joined Leonardia in welcoming the entry of SM saying that the
establishment of its branch in the city would generate many jobs as well as open
a wider market for merchants.
Leonardia said
that it is possible that a large volume of local consumers will flock to the new
shopping mall during its opening day and a week after, but not all them will be
there all the time. Some, he said, would return to downtown areas to patronize
their local establishments.
Not speculation
Small and medium
business owners in the downtown area and around the SM super mall interviewed by
Bulatlat however argued that their fear of losing income and eventually
forcing them to close shop is not merely speculative but based on past
experiences with other malls.
A wholesaler of
dry goods said that she used to have two branches, but a few months after
Robinson’s and Gaisano malls opened in the city some few years back, incomes of
her stores dropped, and months later she was forced to close the branches and
focus on her remaining store.
A proprietor of a
restaurant near one of the malls said that he closed shop five months after the
malls opened. “Except for my few loyal clients, most of the customers who used
to eat in my restaurant shifted to commercial eateries inside the mall because
of convenience,” he said.
The owner of a
small grocery in the vicinity of the public plaza adjacent to SM said that she
used to have a lot of customers. But barely a week after SM opened, her sales
suddenly dropped by 60 percent.
A long-time
businessman who is a member of the MBCCI but who asked not to be named made a
disturbing remark saying, “In exchange for a handful of employment opportunities
the city is still shortchanged by this intruding super mall because most of the
revenues of the mall will be repatriated to its national office not to local
coffers; these super malls have mostly been disadvantageous to local
businesses.”
He cited the
experiences of local businesses in other cities like Iloilo and Cebu that also
host SM and other big malls, saying they have the same experiences of slumping
businesses amid unfair competition.
He mentioned as a
positive development the case of Tagbilaran City where the City Council issued a
resolution barring the entry of super malls, and instead promoted local
businesses.
“In the end, the
local employment that these big malls promise to generate is an illusion because
most of the workers they hire for various mall services are contractuals,” he
added.
Even south-bound
transport groups were not spared. They also complained of a new traffic
rerouting scheme forcing them to pass the SM. But they complained of having to
shell out their hard-earned money to pay for special stickers for the SM route.
Siphoning local
resources
The opening of the
SM super mall might decrease the local revenue collection of Bacolod City
government, said Mansueta Rios, Branch 77 Revenue District Officer, of this
city.
In a press
conference attended by Rios, Hon. Jose Mario Buñag, Commissioner of Internal
Revenue; Atty. Diosdado Mendoza, Assistant Regional Director; Dir. Esmeralda
Tabule, and the different Revenue District Officers of the province, Rios warned
Buñag that there might be a decrease in revenue collections here with the
opening of SM Super Mall.
Rios explained
that most of the stores operating in the SM pay their taxes to the national
government and not to the local government, given that most of them are just
franchises.
She said that out
of 122 certificates of registration 111 are branches while only 11 are head
offices. She said that it would be the head offices which are located mostly in
the National Capital Region (NCR) which would pay the whole companies’ taxes.
This means that
the supposed revenues of the city would be siphoned to the NCR. Consequently,
she said, the supposed increase in money supply would happen in the NCR and not
in Bacolod.
Although the city
would gain through the payment of land taxes and through license and permits a
big bulk of potential revenues would still be lost if local branches would
channel their payment of taxes through their head offices, she added.
Rios further said
that with the possible decrease in revenue collections of the city in the long
run, its Internal Revenue Allotment (IRA) would also be affected. The tax
collection of Bacolod City in 2006 was P3.6 billion ($69.2 million based on the
year’s average exchange rate of $1:P54.05).
Buñag on the other
hand said that he cannot think of any solution to this potential problem. “I
don’t know the answer, frankly” said Buňag
He further said
that there might be a possibility that local merchants would be affected citing
a similar case in the U.S. where local businesses in some areas collapsed with
the opening of big malls.
He said that so
far this is the rule in “head branches” and “large-non large” tax schemes.
Buñag said that
the BIR (Bureau of Internal Revenue) would review the localization or the
devolution of taxes but it would be a long, difficult process.
“Going through the
Congress that could enact a law to effect this devolution would not be easy
“said Buñag. Bulatlat © 2007 Bulatlat
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