Aquino seeks strategic interventions for SMEs
Philippines President Benigno Aquino III, speaks during the opening of the Asia Pacific Economic Cooperation (APEC) 2015 CEO Summit in Manila, Philippines, Monday, Nov. 16, 2015. (Ritchie B. Tongo/Pool Photo via AP)
WHILE heads of state and corporate leaders converge in Manila for the Asia-Pacific Economic Cooperation (Apec) summit, President Aquino has pitched for greater support for micro, and small and medium enterprises (MSMEs), recognizing their key role in making economic growth more inclusive.
At the opening of the Apec SME Summit at the Green Sun Hotel in Makati City Tuesday, Mr. Aquino called for strategic interventions to help MSMEs compete in regional and global markets, especially as countries dismantle trade barriers that some people fear would make small enterprises stay on the sidelines.
Speaking before a crowd of around 2,000, including a number of young Filipino entrepreneurs, the President said that throughout its yearlong hosting of Apec, the Philippines had broadened the scope of the summit and had given intensified attention to innovation, entrepreneurial development, business resiliency, finance and capacity-building for MSMEs.
He noted that significant commitments had been made among Apec’s 21 member-economies through the Boracay Action Agenda, which would focus on priority actions in trade facilitation, trade finance, e-commerce and institutional support to help these enterprises go global.
Mr. Aquino also cited the Iloilo Initiative, which promoted dialogue among MSMEs, large businesses and policymakers alongside other programs to boost MSMEs’ participation in global value chains and international trade.
“The Philippines has also proposed the establishment of an Apec Trade Repository, which is envisioned to be an online reference on the trade and tariff regimes of Apec member-economies and which would be an invaluable resource to MSMEs and other businesses,” he said.
Decline in tariffs in region
Interventions are especially important today given the dramatic decline in tariffs across Apec’s 21 economies throughout the decades, according to the President. From 17 percent in 1989, average tariffs had fallen dramatically to 5.2 percent in 2012. As a result, total regional trade of the Asia-Pacific region from 1989 to 2013 increased sevenfold—outpacing the rest of the world and boosting trade among member economies.
But the growth of the economies should be felt by all of their people. As Apec chair, the Philippines brought to fore MSMEs to emphasize the need for inclusive growth in all economies. It was the Philippines that coined the Apec theme, “Building Inclusive Economies, Building a Better World.”
“We want Filipino MSMEs to be able to participate more in that trade. We want to help them make the most of the vast market that regional economic integration provides. In fact, we want to achieve the same for all SMEs across Apec member-economies. If MSMEs can be strong drivers of inclusive growth in the Philippines, we believe that the same is true for all of Apec,” Mr. Aquino said.
Asenso, magna carta
He said that through the Access of Small Enterprises to Sound Lending Opportunities (Asenso, or progress), over P153.1 billion had been released to over 174,000 enterprises from 2010 to 2014.
The implementation of the Magna Carta for MSMEs likewise played a significant role in microfinance, he said. By requiring banks to allocate 10 percent of their total loan portfolio for credit to MSMEs, more than P427 billion had been lent to Filipino entrepreneurs as of June 2015.
“We want to ensure that they do not just have access to capital, but that they are able to maximize it,” Mr. Aquino said.
The Department of Trade and Industry, for its part, has pioneered the establishment of shared service facilities (SSF), or common production centers for MSMEs. As of September this year, the President said, 1,305 of such facilities had been put up around the archipelago.
“For example, 13 MSMEs in Kalibo, the province of Aklan, are making use of 60 handlooms in an SSF in order to meet the high demand for abaca cloth products coming from countries as far away as France and the US. Meanwhile, six MSMEs in Diffun, the province of Quirino, have likewise moved beyond just producing gifts and souvenir-type products to producing fresh and dry vegetable noodles from squash and carrots, among others,” Mr. Aquino said.
In a number of municipalities in Ifugao province, he said, more than 750 coffee growers were making use of an SSF with equipment, like coffee hullers and pulpers, allowing them to more than quadruple their production from 230 packs to just under 1,000 packs a month. On the other hand, sales increased six fold—from P10,000 to P60,000 a month.
Nestlé farm
The President said the private sector had likewise supported MSMEs, noting how Nestlé’s Experimental and Demonstration Farm in Davao has helped coffee farmers move up the value chain in terms of quality and how Jollibee’s Farmer Entrepreneurship Program has allowed small farms to sell produce like onions, tomatoes and bell peppers directly to institutional markets.
“There’s also the partnership that our Technical Education and Skills Development Authority has with Coca-Cola in training women entrepreneurs who own and operate small stores called ‘sari-sari’ stores, which are small, neighborhood stores. Not only do they learn bookkeeping, inventory management, product selection, etcetera; they are also taught how to make the most of their increased income,” the President said.
He cited the country’s SME Roving Academy, which travels around the country to conduct training seminars on topics like marketing, product development and financing.
“Perhaps one of the most significant areas in which government is educating MSMEs is that of ‘Doing Business in Free Trade Areas,’ which helps them get relevant market information and avail themselves of preferential tariffs,” Mr. Aquino said.
Go Negosyo Act
The Philippines has institutionalized these efforts through the Go Negosyo Act of 2013, which seeks to ease doing business and facilitate MSMEs’ access to services. The President reported that 113 Go Negosyo centers had been launched nationwide to facilitate this.
The President said the Philippines “is determined to lead efforts to spur the growth of Apec SMEs,” drawing confidence from what he said was the success of Filipinos in their businesses that led to the creation of even more opportunities for other Filipinos.
“Just take a look at the numbers: SMEs account for over 97 percent of enterprises, generate more than 50 percent of employment and account for up to 50 percent of GDP (gross domestic product) in the Asia-Pacific. That is why the Philippines has chosen to make fostering SMEs’ participation in regional and global markets a priority of Apec 2015,” he said.
In the Philippines, MSMEs comprise over 99 percent of all business enterprises and account for 63.7 percent of total employment.
Invest in SME dreams
“Of course, if we are investing in their potential and in their abilities, then why should we not invest in their dreams as well?” Mr. Aquino said.
He said his mother, the late President Corazon Aquino, herself pursued the “empowerment” of Filipinos by working in microfinance that helped “poor Filipino entrepreneurs to take hold of their own destinies, which has contributed to reducing poverty levels.”
“In a very real way, my mother’s belief has been translated into our inclusive growth agenda,” the President said.
On the part of the private sector, Apec Business Advisory Council (Abac) chair Doris Magsaysay-Ho said the recommendation to heads of state was for every economy within Apec to build its digital infrastructure and innovation system, support research and development hubs in universities and private incubators, and set good intellectual property laws.
