MSMEs generate 6M direct, indirect jobs

THE Department of Trade and Industry (DTI) in Northern Mindanao has noted around six million direct and indirect jobs generated through the government’s effort in developing the micro, small and medium enterprises (MSME) in the country.

In a data posted on its website, the DTI said MSME dominates the business sector as they comprise 99.7 percent of all establishments in the country, contributing 32 percent to the nation’s gross value added and absorbed 70 percent of the employment figure.

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Indirect employment means contracting an agency for job placements while direct employment refers to acquiring jobs on a person’s own efforts.

The DTI said MSMEs serve as the backbone of the Philippine economy as they play a major role in fostering economic development, especially in the countryside as their labor-intensive operations bring about a balanced economic growth and more equitable income distribution in the localities where they are situated.

MSMEs also develop rural technology and promote Philippine culture through exports of goods featuring indigenous designs and materials.

However, the DTI said the growth of the MSME sector is threatened by stiffer competition resulting from a more liberal and globalized business environment that has been causing the influx of cheaper imports and substitutes into the country.

The agency said because of this, demand for goods and services produced by local MSMEs have been affected by a global economic slow-down due to increased macroeconomic and geopolitical uncertainties.

Because of these developments, the DTI said the need to craft state plans, programs and laws that would adapt with the changing business environment has never been more crucial.

The development of the country’s MSME sector is one of the cornerstones of the 10-point agenda promulgated by former president Gloria Macapagal-Arroyo in 2004.

Identified as micro businesses are those with an investment of not more than P3 million while small enterprises have investments of between P3 million to P15 million.

Medium enterprises, on the other hand, have an investment of up to P100 million.

During her term, Arroyo launched the SME Development Plan 2004-2010 (SMED Plan) in July 2004 and mandated the SME Development Council (SMED Council) to shepherd its implementation.

The SMED Plan was meant to help graduate MSMEs to higher levels of business undertakings, upgrade their productivity and value-added capabilities and help increase the sector’s gross value added contribution to the Philippine economy.

The Plan was likewise developed to generate sustainable jobs in line with the Arroyo administration’s thrust of creating around six to 10 million jobs.

Recognizing its significance to the Philippine economy, Arroyo made certain that the MSME sector be given more than adequate focus and support under her administration to help foster economic development, bring about a balanced and more equitable economic growth, develop rural technology, and promote Philippine culture through exports of goods featuring indigenous designs and materials.

After five years of concerted and cohesive effort, the implementation of the SMED Plan has achieved notable accomplishments in delivering the results envisioned in the Plan, and in promoting and building the capacity of national and sub-national MSME development stakeholders to help in the development effort.

Four outcome areas were identified by stakeholders as critical channels of MSME development – business and investment enabling environment (BIEE), access to finance (A2F), access to markets (A2M) and productivity and efficiency (P&E).

The DTI said the implementation of the Plan has either directly or indirectly increased business registration by helping reduce the cost of doing business in cities and municipalities around the country.

The plan has also allowed more than 5.7 million MSMEs to access a total of P340.085 billion in loans from government financial institutions, generate total exports of US$1.4 billion and domestic sales of P18.4 billion, and increase their level of productivity through various training and direct assistance programs implemented by national and local government agencies and private sector MSME development partners.

The MSMED Plan, according to the DTI, encouraged the registration and formalization of some bogus MSMEs by helping improve their businesses.

Included in the program was the provision of productivity and efficiency enhancement training and other capacity-building programs to enhance the level of MSMEs for both local and international competitiveness.

It also empowered and built capacity of provincial MSME stakeholders to develop and manage provincial MSME development plans harmonized with the MSME development agenda.