Government statistics show that as of 2009 the micro, small, and medium enterprise sector (SME) accounted for 99.6% of all business establishments; employed 63.2% of total jobs generated; and was made up of 60% exporters. Broken down further into size, 92% were micro enterprises and 7.6% were SMEs. By sector, retail and wholesale trading establishments made up 51%, 17% were in manufacturing establishments, and 12% were in the hotel and restaurant business.

The top five locations (about 63.7 of total MSMEs) were distributed in the National Capital Region, 27.9%; CALABARZON, 14.75%; Central Luzon, 10.21%; Central Visayas, 5.84%; and Western Visayas, 5.83%. MSMEs employed 63.2% of the 6.5 million total jobs generated, where 30.4% were micro enterprises and 32% were SMEs. The top five job-creating sectors were trading, 34.7%; manufacturing, 17.73%; hotel and restaurant, 13.4%; real estate, rental and related activities, 7.9%; and education, 6.25%.

As regards their economic contribution the MSME sector fell behind their larger counterparts. While manufacturing MSMEs created majority of the jobs, they contributed very much less in terms of sales and value added. The large manufacturing establishments contributed 77%, 72%, and 79% in the years, 1994, 1998, and 2003, respectively. In the same manner, labor productivity was 18.5% higher in larger manufacturing establishments when compared to SMEs.1

Early studies as well as current researches identify recurring challenges that MSMEs face. These are the lack of access to market, finance, and technology & skills; high cost of accessing raw materials; inadequate planning and management skills; unproductive and inefficient operations; lack of common support facilities; and high cost of doing business. Philippine SMEs are a hardy lot. They are still around despite these setbacks.

Government Efforts

The 2004-2010 Medium Term Development Plan (promised to provide credit, technology, and marketing support for 3 million MSMEs. The SME Development Plan (SMEDP) identified product development and credit provision among the priority support programs for the sector. This eventually put into place the One-Town-One-Product (OTOP) program of the Dept. of Trade and Industry (DTI). The 2002-2004 Philippine Export Development Plan (PEDP) adopted the industry clustering approach to boost Philippine exports in specific products particularly electronics, auto parts & components, wearables, coconut products, marine & aquatic products, food products, home furnishings, holiday decor & giftwares.

Several other government agencies were tasked to implement specific assistance programs. The DTI’s Bureau of Small and Medium Enterprise Development (BSMED) with its one-stop-shops; Center for International Trade Exhibitions and Missions (CITEM) with its international trade fairs and exhibits; Product Development and Design Center (PDDC) with product quality and packaging designs; and the Bureau of Export Trade Promotion (BETP) with its roster of suppliers of quality export products.

The Dept. of Science & Technology (DOST) implemented technology access and improvement projects including the Small Enterprise Technology Upgrading Program (SET-UP) and the Manufacturing Productivity for Exports Program (MPEX). The Magna Carta for Small Enterprises (R.A. Act 6977, which consolidated all government programs for SME promotion and development, created the Small and Medium Enterprise Council [SMED Council], and the Small Business Guarantee and Finance Corporation [SBGFC]) mandated all lending institutions to set aside 8% of their loan portfolio to SMEs. This provision was intended to ease the SME sector’s financing woes.

Legislation

In addition to the Magna Carta for Small Enterprises, Congress enacted two other laws, The Barangay Micro Business Enterprises Act of 2002 (RA 9178) and the Magna Carta for Micro, Small, and Medium Enterprises of 2008 (RA 9501). The BMBE Law sought to encourage new business creation by providing for incentives to barangay-based micro businesses that will register with the local government units. The latter, on the other hand, amended RA 6977 and expanded the SME sector to include microenterprises, giving birth to the new label, MSME sector, renaming the SMED Council to MSMED Council and SBGFC to Small Business Corporation (SB Corp), among others.

Last year four members of the House of Representatives (Congresswoman Emmeline P. Aglipay and Congressmen Tomas V. Apacible, Francis Martin G. Romualdez, and Romualdo T. Romulo) filed separate house bills amending some provisions of the BMBE Law of 2002. The House Committee on Small Business and Entrepreneurship chaired by Congressman Teddy Casińo has already convened several committee hearings which were participated by the government agencies involved with MSME promotion and development to deliberate on the proposed amendments. The latest development was the creation of a technical working group (TWG) which has started to meet and discuss the proposals.

What Lies Ahead for Philippine SMEs? 

How have the development plans (MTDP, SMEDP, PEDP) and various laws on small and medium enterprises, including the amendments (e.g., from one Magna Carta to another) and changing the names (SMEs to MSMEs, SMED Council to MSMED Council, SBGFC to SB Corp) spurred the creation of new enterprises and improved their competitiveness? Are SMEs or MSMEs, for that matter, better off today?

Multi-stakeholders Convergence Forum

Find the answers in the forum that the UP Institute for Small-Scale Industries (UP ISSI) has organized for Thursday, August 04, 2011. With the theme, “Towards building an Entrepreneurial Society," the Multi- stakeholders Convergence Forum aims to push for a collaborative effort in building an entrepreneurial society. It will provide the venue for discussing burning issues and concerns of Philippine MSMEs and putting together practical and doable solutions.

The Forum will update the audience on what the government has achieved insofar as the SMEDP 2004-2010 is concerned and how it will deliver the promises stated in the SME Sectoral Development Plan 2011-2016. Various speakers have been invited to share their researches, experiences, and studies on the flagship projects of the government and private sectors, particularly the One-town-one-product (OTOP), Go Negosyo, Sulong sa Tao, Rural Micro enterprise Promotion Program (RUMEPP), SET-UP, MPEX, human development and capability building, and values-driven human resource strategy for quality and productivity (ISTIV) programs.

The resource persons include high-level experts including DTI Undersecretary for Regional Operations Engr. Merly M. Cruz, DOST Undersecretary for Regional Operations Dr. Carol M. Yorobe, Philippine Center for Entrepreneurship Executive Director Mr. Ramon M. Lopez, DOST Technology Application and Promotion Institute (TAPI Division Manager Engr. Jovito Rey E. Gonzales, DTI Regional Director Blesila A. Lantayona, SB Corp. President and COO Mr. Benel P. Lagua, German Development Cooperation Program Manager Dr. Volker Steigerwald, DTI Asst. Director and RuMEPP Program Manager Director Jerry T. Clavesillas, UP College of Engineering (UPCE) Professor and UP ISSI Director Nestor O. Rańeses, National Wages & Productivity Commission Deputy Executive (NWPC) Director Esther F. Guirao, and BMSMED Director Rhodora M. Leańo.

The Chairperson of the House Committee on Small Business Chairperson and Entrepreneurship Congressman Teddy M. Casińo has also been asked to talk about the legislative agenda for MSMEs.

To achieve a more meaningful and interactive analysis of the issues at hand, discussants who are as equally respected and esteemed were invited to react on the presentations. They include Philippine Institute for Development Studies (PIDS) President Dr. Josef E. Yap, National Competitiveness Council (NCC) Co-chair Mr. Guillermo M Luz, Export Development Council (EDC) Deputy Executive Director Emma Z. Mijares, National Livelihood Development Corporation (NLDC) President Gondelina G. Amata, UP Technology Management Center UP TMC) Director Prof. Edison D. Cruz, UPCE Professor Dr. Virginia J. Soriano, UP College of Public Administration and Governance (UPNCPAG) Dean Dr. Edna E. Co, and Small Enterprises Research and Development Foundation (SERDEF) Trustee Ms. Nida F. Lavador, Entrepreneurship Educators Association (ENEDA) National President Ms. Ma. Luisa B. Gatchalian, and Bangko Sentral ng Pilipinas Dept. of Loans & Credit Deputy Director Mr. Reysan Gantuangco.

original source: http://www.gmanews.tv