The government’s program for the development of micro, small and medium enterprises (MSMEs) is likely to incur a huge budget cut next year, the Department of Trade and Industry (DTI) said.
Following the 2019 national budget hearing of the agency on Tuesday, the DTI data showed the government has allocated P1.36 billion for the MSME development program for 2019. The fund is lower compared to this year’s P2.2 billion.
The Shared Service Facilities (SSF) project, which is under the MSME development program, will face a big cut with only P62.71 million for 2019, from P1- billion allocation this year.
This after, the Congressional Policy and Budget Research Department (CPBRD), citing the 2017 annual audit report of the Commission on Audit, said the COA has called the attention of the DTI on the non-utilization or partial utilization of SSF equipment.
The SSF project was implemented with project partners intended to improve the competitiveness of MSMEs by providing them with machinery, equipment, tools, systems, skills and knowledge under a shared system.
The CPBRD, in its budgetary note, said beneficiaries of the projects are the actual and potential users of the SSF, which should be predominantly cooperatives, associations or groups of MSMEs, including MSMEs or individual entrepreneurs.
Meanwhile, some of the projects under the MSME development program are the establishment of Negosyo Center with P512.38- million budget for next year, One Town-One Product: Next Generation Project with P89.58 million, and the Rural Agro-Enterprise Partnership for Inclusive Development Project with P58.25 million.
Before the budget cuts, Trade Secretary Ramon M. Lopez said his agency is seeking to double its funding for MSMEs to P4 billion next year to improve the department’s programs and services, particularly on microfinance, shared service facilities, exports promotion and consumer protection.
Moreover, despite the budget cut for MSMEs, the CPBRD said there is a special provision in the 2019 national budget providing additional fund for DTI’s Micro, Small and Medium Enterprise Development Council Fund amounting to P21.32 million, which shall be used for the development of the MSMEs sector. The fund will be sourced from 90 percent of the total penalties collected by the Bangko Sentral ng Pilipinas from lending institutions.
There is also budget for the “Pondo sa Pagbabago at Pag Asenso” or P3 program to improve the capacity of MSMEs. The P3 program is designed to give MSMEs easy access to credit, where they can borrow as much as P300,000 with a maximum interest rate of 26 percent per annum and no collateral requirement. It is also intended to veer them away from onerous loans, particularly the “5-6” money-lending system, which has a 20-percent interest per day, week or month charged by the lender.
Figures from the Philippine Statistics Authority showed 99.6 percent of all businesses in 2016 were MSMEs. Out of the 915,726 business enterprises listed that year, microenterprises account for 89.63 percent (820,795); small enterprises 9.5 percent (86,955); and medium enterprises 0.44 percent (4,018).