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?


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 Bu?ag

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. (

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