As President Duterte puts micro, small and medium enterprises (MSMEs) on top of his agenda at the upcoming Asia-Pacific Economic Cooperation (Apec) Summit in Vietnam, local businessmen lamented that the lack of access to financing is making it difficult for local MSMEs to barge into the international stage.
In an interview with the BusinessMirror at the sidelines of the Ayala-University of the Philippines School of Economics Forum on Monday, Philippine Chamber of Commerce and Industry (PCCI) President George Barcelon said many MSMEs do not have access to funds that would help them expand their business.
He added this prevents them from using as leverage, for instance, information technology, which can propel their businesses to the international scene, as this would require additional capital.
“We’re talking to the banks, financial institutions, to be more flexible with the small companies,” said the head of the PCCI, which is the largest business organization in the country. “We’re asking for accessibility, since there are times collateral is not needed. Small businesses often do not have collateral. So what we’re saying is their primary collateral is their knowledge collateral, what they know, their innovation.”
Barcelon, however, said that once MSMEs gain access to finances, these companies must be “fiduciarily responsible” and ensure that they use the funds to grow their business.
He added that they should also be responsible creditors, who pay back the financial institutions that entrusted them with funds.
Apart from access to finance and being responsible creditors, Barcelon said MSMEs need to do their homework and understand the international market.
He said this is where information communications technology (ICT) can come in. MSMEs must harness technology to gain more information about prospective markets and partners.
Barcelon said MSMEs must also educate themselves in terms of learning about the various trade agreements that they can maximize to grow and expand their businesses.
“It’s an opportunity, but its also about competition,” Barcelon said. “Use ICT as leverage to know how you can be competitive, and in what sector. The opportunity’s there but you gotta do your work.”
On Monday BusinessMirror reported that the Philippines and 27 other countries are asking the World Trade Organization (WTO) to establish a program that would reduce trade costs and make it easier for more MSMEs to participate in and benefit from international trade.
The Friends of MSMEs, a 28-nation group that includes the Philippines, has submitted a draft ministerial decision on establishing a work program for MSMEs to the WTO General Council. The draft ministerial decision, a copy of which was obtained by the BusinessMirror, has been circulated among WTO member-countries upon the request of the Friends of MSMEs. The group hopes that it will get the nod of member-countries during the 11th WTO Ministerial Conference (MC11) this December in Buenos Aires, Argentina.
Once the draft ministerial decision is adopted by WTO member-countries at MC11, a work program addressing the issues surrounding the participation of MSMEs in global trade shall be established.
Meanwhile, Manila will push for the full participation of MSMEs in the global value chain at the Apec summit as part of the Duterte administration’s efforts to promote MSMEs with trading partners.
Foreign Affairs Assistant Secretary Leo Herrera-Lim said the promotion of MSMEs tops Duterte’s agenda in his attendance at the Apec summit in Danang, Vietnam, from November 8 to 11. “In the 2017 Apec Economic Leaders’ Meeting, the key priorities of the Philippines would be full participation of the micro, small and medium enterprises in the global economy, sustainable and inclusive growth, connectivity and human-resources development,” Lim said in a news briefing on Monday.
Lim added that the Apec summit will be an opportune avenue for the Philippines to endorse its MSMEs, citing “9 out of our top 10 trading partners are within Apec economies.” Lim said the President is expected to discuss with high-value businessmen the benefits of investing on MSMEs, which is one of the focal points of his chairmanship of Asean.
“It’s pretty much a drive or a push for the micro, small and medium enterprises, not only in the Philippines, but [also] across the region,” the diplomat said. “At the same time, the President will push for pretty much the foundation [of his] MSME advocacy, which is sustainable and inclusive business.”
In his chairman’s statement for the 30th Asean Summit, the President said leaders of the region are eager to pursue the three strategic measures of “increasing trade and investment, integrating MSMEs in the digital economy and developing an innovation-driven economy.”
“We were pleased with the stronger focus on MSME development in this year’s Asean economic agenda,” Duterte said.
The President, together with Asean leaders, believes investing on MSMEs will lead to an “inclusive and innovative growth in the region,” in particular, microenterprise stakeholders, “which comprise up to 99 percent of registered businesses and generate a large proportion of total employment in the region.” Carrying with him national and regional interest, Lim said Duterte will bring the promotion of MSMEs at the spotlight of the Apec summit.
Aside from this, the President is also scheduled to hold bilateral meetings with economic leaders of China, Russia and Vietnam to tackle matters on trade and investment.
On the other hand, Lim discounted the possibility of Duterte using the Apec summit as a platform to ramp up negotiations on the Regional Cooperation Economic Partnership (RCEP).
“I think we’re modestly satisfied that we’ve made substantial improvements [on the negotiations on the RCEP]. In terms of using [the Apec Summit] as a platform for [the] RCEP, I don’t think it will happen,” the diplomat said, adding there was so much work already completed on the proposed trade agreement under the Chief Executive’s chairmanship of the Asean.
The RCEP is the proposed trade agreement between Asean countries and trading partners Australia, China, India, Japan, South Korea and New Zealand. It aims to lower, if not remove, tariff on trade in goods between the 16 negotiating parties.
According to the Office of the United States Trade Representative, Apec member-economies account for at least 41 percent of the world’s population, 54 percent of the world’s total GDP and 44 percent of global trade activity.
The President is scheduled to travel to Vietnam on Wednesday and return to the Philippines on Saturday, in time for Manila’s hosting of the 31st Asean summit.