Saturday, July 05, 2008 New law seen to boost local MSMEs in country
LOCAL businesses could gain many benefits from the Magna Carta for Small Enterprises or Republic Act (RA) 9501, especially when local government units are expected to participate in ensuring the viability and growth of this industry to attain countryside industrialization.
Additional representatives from government agencies like the Philippine Information Agency (PIA) and Department of Interior and Local Government are also identified to help promote, support, strengthen, and encourage the growth of micro, small and medium enterprises (MSMEs).
The law also provides a “precise” definition of MSME, which is any business activity engaged in an industry or agribusiness, whether single proprietorship, cooperative, partnership, or corporation.
Its categorization is based on total asset size. A business with not more than P3 million in asset value is a micro enterprise, P3 million to P15 million for small enterprise, and P15 million to P100 million for medium enterprise.
RA 9501 also amended the provision in RA 6977 that requires banks to set aside only six percent for small enterprises and two percent for medium enterprises. The newly approved law extends the mandatory allocations of all lending institutions for MSMEs to at least eight percent of their loan portfolio to micro and small enterprises.
RA 9501 also strengthens the MSME Development (MSMED) Council, which will be led by the Department of Trade and
Industry (DTI). Its members include secretaries of agriculture, science and technology, and tourism departments, chairman of the Small Business (SB) Corp., and representatives from the banking and MSME sector.
Services
Supervised by the Bangko Sentral ng Pilipinas, SB Corp. (formerly Small Business Guarantee and Finance Corp.), will assist MSMEs in all areas, including financing, information services, training, and marketing. It will have an authorized capital stock of P10 billion.
To monitor the implementation of the law, a congressional oversight committee is formed; the Senate committee on economic affairs head will be the chairperson.
President Arroyo signed RA 9501, which amended RA 6977 to include micro enterprises, into law last May.
To come up with its implementing rules and regulations (IRR), representatives from various MSMEs flocked yesterday at Parklane Hotel for a consultative meeting initiated by the DTI.
This followed after concerned agencies, including DTI, identified ambiguous provisions in the law and reviewed related legislation. Agreements drawn up from the consultation will be consolidated and used in drafting the IRR.
According to Rhodora Leaño, director of DTI’s Bureau of Small and Medium Enterprise Development, the National Statistics Office recorded roughly 783,065 registered enterprises in the country, 99.7 percent or 780,469 of which are MSMEs. Large businesses comprise only 0.3 percent or 2,596.
Breakdown
Breaking down the MSMEs sector that employs about 70 percent of the country’s work force, micro enterprises constitute 92 percent, small enterprise 7.3 percent, and medium enterprise 0.4 percent.
At least 50.13 percent of MSMEs are involved in wholesale and retail trade and 14.91 percent in manufacturing of food and beverage products and wearing apparels, among others.
Metro Manila is where 25 percent of the total MSME population is located.
However, Leaño said these businesses are facing four major concerns: Philippine SMEs are regionally and globally uncompetitive, productivity and structural limitations have prevented SMEs from maximizing their potentials, SMEs have been facing difficulty accessing funds, and SMEs have limited knowledge about market opportunities and access. (NRC)
