The Department of Trade and Industry (DTI) is seeking the release of at least 20 percent of the annual P1-billion fund allocated for the crafting and implementation of programs and projects geared toward innovating the operations of micro, small and medium enterprises (MSMEs).
Trade Secretary Ramon M. Lopez said the DTI is requesting Congress to release at least P200 million of the P1-billon innovation fund institutionalized by the Philippine Innovation Act. The yearly allocation was created to assist MSMEs engaged in developing innovative solutions that are benefiting the poorest of the poor.
The fund, from which grants to MSMEs will be issued, is administered by the 25-member National Innovation Council (NIC), of which the DTI is a part of.
“The innovation fund is supposed to have P1 billion, but in the Congress, as we discussed in the deliberation of the budget, we try to add about the first P200 million or P300 million for next year so we can start with this. We are making that appeal to the Congress, the Senate, as we deliberate on the budget to include this part that’s included in the law, but was not included yet [in the budget],” Lopez told reporters on Monday.
The trade chief explained the amount for the fund failed to make the budget proposal because the law—although signed in April—was only promulgated in July, at a time agencies are already done crafting their money framework for next year.
Lopez is hoping legislators will consider the government’s request to allow the fund to start revolving next year. Otherwise, he said the fund will only be activated by 2021, delaying the process programs and projects intended to innovate MSMEs.
He argued it is important for the government to provide financing for efforts that will improve the capacity of MSMEs, as this will show commitment in the campaign to develop the sector comprising over 99 percent of all business establishments.
“Right now, frankly, there is little effort. The government is not really into this [innovation] in a big way because of zero budget. If we say we want to support this, there should be a budget. Otherwise, you will rely on the private sector,” Lopez lamented.
“Directionally, we are aligned, but what is important is to put your money where your mouth is,” the trade chief added.
President Duterte in April signed Republic Act 11293, or the Philippine Innovation Act, that sets aside P1 billion annually for the innovation fund. Apart from the fund, the law created the NIC, chaired by the President himself, tasked “to develop the country’s innovation goals, priorities and long-term national strategy.”
Further, the law requires all banking institutions—whether state or private—to set aside at least 4 percent of their total loanable funds for innovation development credit.
The 4-percent credit quota is subject to a joint review by the NIC and the Bangko Sentral ng Pilipinas after three years of implementation to check whether the law has been effective in accomplishing its objective of promoting innovation. The NIC is also mandated to evaluate yearly the compliance of banks to the credit quota and submit its recommendations to the BSP.
In the Global Innovation Index 2019, the Philippines improved 19 notches to 54th among 129 economies after securing better scores on institutions, business sophistication, knowledge and technology outputs and creative outputs.
The index tracking the innovation performance of countries awarded the Philippines a score of 36.18 this year, from 31.56 last year. This put the country fifth among the eight Southeast Asian economies included in the annual survey.
Singapore headed the region by finishing eighth overall, followed by Malaysia at 35th, Vietnam at 42nd, Thailand at 43rd, the Philippines, Brunei Darussalam at 71st, Indonesia at 85th and Cambodia at 98th.
