Gov’t sees more revenues in 2 million MSME workers

The backbone of the economy is made of micro, small and medium enterprises (MSME), that generate 62 percent of the total employment and contribute 35.7 percent of total government revenue.

The government’s aim is to reach 2 million employees and increase revenue contribution to 40 percent by 2016 at par with neighbors in Asia like Indonesia.

To do this, more support and capacity-building for this sector is needed, said Rhodora M. Leano, director of the Department of Trade and Industry – Bureau of Micro, Small and Medium Enterprise Development at the Central Visayas MSME Conference held at the City Sports Club on Tuesday.

The MSME sector makes up for 99.6 percent of the 777,000 regitered firms in the country.

“Most of the MSMEs are in Luzon and other highly urbanized areas. Central Visayas ranks fourth in terms of number of MSMEs,” said Leano.

“We think that we need to strengthen this sector and help them grow, generate more income and create more jobs thus improving the economy of the country,” said Leano.

Under the Philippines’ MSME Development Framework for 2011 to 2016, four main challenges of the sector  were identified –   an enabling business environment, access to financing, access to markets and productivity and efficiency.

Most MSMEs feel that it’s difficult to do business in the country because of high cost, registration and licensing of businesses are difficult, not harmonized and collaborated policies and incentives for businesses, laws supporting MSMEs are not fully enforced while some lack investment codes.

“We feel that it is the responsibility of the government to ensure an enabling environment for businesses so that we can encourage more investments,” said Leano.

Most MSMEs lack the knowhow to avail of loans. Most financial institutions are also in highly urbanized areas making it difficult for MSMEs in the countryside to access their services.

“They also lack the capacity for financial management so a lot of them fail,” said Leano.

MSMEs also feel that there is no adequate link between them and the markets and that they are often faced with competition with smuggled goods.

“They lack good packaging for their products, they have limited access to modern technology for marketing and most of them also lack certifications that will allow them to tap new markets,” said Leano.

Another challenge faced by MSMEs is productivity and efficiency, which is affected by high cost of inputs like power and water.

They lack education on achieving productivity and suffer from piracy of high skilled workers who prefer to work for high paying companies.

They also have very limited access to ICT or information, communication technology tools that could help them become more efficient and productive.

“This is not only the work of one agency. We are looking at convergence. This meeting today is very useful as it gives us a venue to also encourage you to empower yourself. Now that you are aware of the challenges, you can now better decide how to address these issues at your level,” Leano told the MSME participants in the conference.

Leano said the national government could address challenges especially in their priority industries like tourism, business process outsourcing, electronics, ship building, agriculture, infrastructure, shipping, logistics and mining.