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
Bulatlat
|
The new SM super mall in Bacolod City,
Negros Occidental is causing apprehensions among local businessmen who
feel threatened by the prospects of “unfair” competition
|
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
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