Monday, July 26, 2010

Helping Small Businesses

Puerto Rico has been in a recession for the past five years, and many economists see entrepreneurship as one of the possible solutions to help the economy get out of its funk. Movimiento Empresarial ("entrepreneurship movement) is one such government initiative to promote the unemployed to start their own businesses. In many countries throughout the world, like the U.S, small businesses serve as an engine that can drive an economy forward. After all, they generate employment, taxes and spur innovation. Most of the revenue generated by small businesses also tends to stay within the community, another added bonus. I have always been a huge supporter of small mom and pop shops, as I myself come from a family of entrepreneurs.

In order to help encourage the start-up of companies, as well as helping existing small businesses flourish, the government must create an environment where the process to start a company is streamlined and the collection of taxes is done in a transparent and efficient manner. According to a CNN Money article, Singapore is the best place in the world to start a business and New Zealand came in at second place. In the latter country, it only takes 24 hours to start a business. One of the common factors which creates a business friendly environment is the utilization of technology to help achieve efficiency, especially in terms of collecting taxes. The objective is to minimize government bureaucracy. I believe the Puerto Rican government should benchmark such practices. On the island, too much time is wasted at government agencies standing and waiting. How can business owners succeed when they have to spend so much time dealing with red tape?

Several weeks ago, I was at el Departamento de Hacienda (the Puerto Rican tax collection agency) for nearly the entire day trying to work out an alleged outstanding tax payment. To make a long story short, the representative at Hacienda nonchalantly said there was an "error" ("hubo un error en el sistema") in the system. Turns out we owed practically nothing in taxes. It was a huge relief, but I still couldn't believe my eyes and ears. Nevertheless, this is not a first time occurrence. Our family business, which is in the beverage industry, has been operating for over 40 years and there have been many instances where we have found ourselves in such situations. Having a small business is no cakewalk, especially when the government doesn't have its own house in order.

1 comment:

Rich's Excellent Adventure in Paradise said...

In Singapore, residents, including government workers, pride themselves on enabling their fellow citizens to succeed and prosper. They demonstrate a real sense of "we're all in this together."

A colleague of mine here in Puerto Rico was frustrated last week by a non-interested government employee who said that she couldn't help him because government spending cuts had left her office short-handed. (It sounds like they kept one employee too many!)

What would it take to get some of Singapore's "can do" spirit here?