Helping the backbone of Philippine economy

After years of having to make do with what little the government can dole out, micro, small and medium enterprises (MSMEs) may be finally getting the support they need so they can expand and take advantage of free trade deals.

In his keynote message during the Association of Southeast Asian Nations Mentors for Entrepreneurship Network at the Asean Business and Investment Summit last Sunday, President Duterte declared that he intends to increase funding for MSMEs. In his speech, the President suggested an amount of P50 billion for MSME development.

The President’s pronouncement came after Manila urged the World Trade Organization (WTO), which would hold its 11th Ministerial Conference in Argentina next month, to help MSMEs participate in international trade. In the country’s statement concerning its priorities for the WTO meet, the Philippines asked the WTO to consider how the multilateral trading system can impact and benefit MSMEs.

In the recently concluded Asia-Pacific Economic Cooperation summit held in Vietnam, the President had also urged his fellow leaders to give MSMEs the support they need to flourish in the international market.


The Philippine Chamber of Commerce and Industry, the country’s biggest business organization, earlier told the BusinessMirror that access to financing is the chief concern of MSMEs. While many MSMEs are keen on making it in the international stage and benefiting from free-trade agreements, they could not do so because they do not have the funds that will allow them to leverage information technology. The inability to have access to cheap credit also prevents small businessmen from ensuring that their products are on a par with international standards and joining trade exhibits where they can promote their offerings.

Despite grappling with these challenges for years, Philippine MSMEs continue to serve as the backbone of the country’s economy. Based on 2015 data from the Philippine Statistics Authority (PSA), of the 900,914 establishments in the Philippines, 99.5 percent are MSMEs, while the remaining 0.5 percent (4,075) are large enterprises.

PSA data also showed MSMEs generated a total of 4,784,870 jobs in 2015 versus 2,981,819 for the large enterprises. This means that small businesses contributed nearly 61.6 percent of total jobs generated by all types of business establishments that year. Of the total jobs created by the sector, micro enterprises accounted for nearly 30 percent; small enterprises, 25.3 percent; and 6.8 percent by medium enterprises.

Trade Secretary Ramon M. Lopez said the money that the President wants to allot to the MSMEs will not just be used for expanding MSMEs’ access to cheap financing. He said part of the amount will be used for training, product development, as well as local and foreign market promotion. Trainings and mentoring would certainly help MSMEs, as many of them are unfamiliar with the terms of free-trade deals.

The President should also consider increasing the funding of the Center for International Trade Expositions and Missions, an agency attached to the Department of Trade and Industry, so it could help more MSMEs participate in trade exhibits.

But pouring money on the MSME sector is not enough. The Duterte administration should continue to focus on implementing the needed reforms to cut red tape and make it easier for local and foreign investors to do business in the country. The President should also stop at nothing to stamp out corruption in government.

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Turning Points 2018