Micro, Small, and Medium Enterprises (MSMEs) refers to any business engaging in agribusiness, industry, and or service activities. They are categorized according to their assets, excluding land and employment size. Micro enterprises have an asset size of not more than three million pesos and an employment size of nine or less.
Small enterprises hold 3 to 15 million worth of assets and 10 to 99 employees. With an asset size of more than 15 million but not exceeding 100 million and an employment size of 100 to 199, medium enterprises take the last category but the most value of available means than the other two.
Republic Act No. 9051, also known as the Magna Carta for Micro, Small, and Medium enterprises, promotes the potential of MSMEs to contribute to economic growth by generating more employment and establishing an industrial foundation that is self-sufficient for the country.
MSMEs vary from typical retail stores to manufacturing and import-export firms, yet they are different from the existing informal economy regarding legitimacy. The former is listed in various government institutions like the Department of Trade and Industry (DTI) and the Securities and Exchange Commission (SEC).
𝗧𝗵𝗲 𝗠𝗦𝗠𝗘'𝘀 𝗪𝗼𝗿𝗹𝗱
The Philippine Statistics Authority (PSA) recorded 952,969 MSMEs in the 2020 List of Establishments, comprising 99.51% of 957,620 operating business enterprises. 88.77% or 850,127 of tallied constitutes micro-enterprises followed by small enterprises and medium enterprises at 10.25% or 98,126 and 0.49% or 4,716 respectively.
Wholesale and retail trade tops the industry sectors with the most MSMEs, with repairs for motor vehicles and motorcycles at 445,386, followed by accommodation and food service activities with 134,046 businesses operating. Manufacturing constitutes 110,916 establishments, while financial and insurance activities at 45,558 mark the third and fifth spots of the leading industry sectors.
The majority of the MSMEs operate in Metro Manila and Central and Western Visayas. A total of 60.33% establishments in the country are running in these locations. The concentration of MSMEs in these regions is related mainly to economic activity and population size.
𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗣𝗼𝗹𝗶𝗰𝗶𝗲𝘀 𝘁𝗼 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗮𝗺𝗶𝗱 𝗣𝗮𝗻𝗱𝗲𝗺𝗶𝗰
In the emergence of the global pandemic covid-19, many businesses, including the 38% of MSMEs, are forced to cease operations due to quarantine restrictions imposed by the government. These measures severely affected the economy, as reported by PSA through the -9.5% decline of the country’s Gross Domestic Product (GDP) in 2020.
The government implemented fiscal measures to serve as an economic stimulus package. The Republic Act No. 11469, commonly designated as the Bayanihan to Heal as One Act signed last March 2020, allotted 52 billion pesos or around 0.3% of the GDP to assist vulnerable workers and MSMEs.
In September 2020, the Bayanihan to Recover as One Act or Republic Act No. 11494 added support by about 1.5% of the 2020 GDP and included capital injections to state-owned banks and Philippine Guarantee Corporation (PHILGUARANTEE) that enables loan guarantee support of up to 100 billion pesos to the MSMEs.
On the other hand, the Bangko Sentral ng Pilipinas (BSP) temporarily cuts credit risk weights by half and sets zero risk weight to loan exposures as assured by the PHILGUARANTEE to encourage lending and allow MSME loans as reserve requirement compliance of the banks.
As the Philippine economy strives to recover from the recession, United Nations Development Programme (UNDP) Philippines Officer in charge Enrico Gaveglia believes that MSMEs will play a crucial role in the country's recovery from the pandemic.
He highlights that the UNDP will continue to support the government and its development partners to present solutions to MSMEs drawbacks through sector representation in policy dialogues and program planning.
Gaveglia also noted that the organization is working with private sectors to ensure that MSMEs can access e-commerce education since the trend of businesses transitioning to digital platforms escalates as an adaptation to the new normal.
𝗠𝗦𝗠𝗘'𝘀 𝘁𝗼 𝗣𝗛 𝗘𝗰𝗼𝗻𝗼𝗺𝘆
Despite the pandemic, MSMEs generated a total of 5,380,815 jobs that make up 62.66% of the country’s total employment. Micro and small enterprises comprised 55.16%, while medium enterprises are behind at 7.50% of the MSMEs generated work.
The MSME contributed 35.7% in the 2020 GDP, wherein the manufacturing sector contributes largest at 6.87%, followed by wholesale and retail trade and repair with 6.58% and financial intermediation at 6%.
Small enterprises lead the share distribution by accounting 20.5%, followed by medium enterprises’ 10.3%, then micro enterprises’ share with 4.9%.
In terms of total exports revenue, MSMEs are accounted for by their 25% contribution, in which 60% of the exporters in the country came from the MSMEs.
--------------------------------------------------------------------------------------------------------------------
Written by: Julie Anne Duyongan
Layout and Design by: Dan Kurt Buenaventura
Sources:
Comentarios