BETTER DAYS
Senator Sonny Angara
In preparation for the 19th Congress, my office recently convened a consultative meeting focused on micro, small, and medium enterprises (MSMEs) in line with our Tatak Pinoy advocacy. The roundtable discussion was headlined by former Presidential Adviser for Entrepreneurship Joey Concepcion and attended by officials from various government agencies, MSME mentors, and small business proprietors. The avowed aim of the meeting was to give the attendees a venue to sound off on their views and recommendations on how the Go Negosyo Act (RA 10644) could be further improved, nearly a decade since it was enacted.
The need to initiate such dialogue was necessary because, in the intervening years, much has happened to exacerbate the plight of many Filipino MSMEs. For instance, the Covid-19 pandemic forced many of these small businesses to scale-back their operations, downsize, or worse, shutdown altogether.
Despite numerous challenges, Filipino MSMEs still muster the courage to continue carrying the responsibility of providing jobs and income for their fellow Filipinos. Truly, MSMEs play a vital role in the Philippine economy, as they comprise 99.5 percent of all businesses and employ up to 63 percent of the country’s workforce. However, they contribute only 36 percent of value-added to the economy — a gap that is only expected to worsen if MSMEs are not able to offer better products and services and keep up with shifting ways of doing business around the world.
Former Sec. Joey Concepcion emphasized the three “M’s” — mentorship, money, and market — that must be embraced by the Go Negosyo Act moving forward. While the mentorship component has been operationalized through various programs over the years, Sec. Concepcion said that this can be taken a step further by putting greater emphasis on entrepreneurship in school curriculums so that learners will acquire skills to encourage and allow them to start a business. Moreover, it is crucial for the economy to remain open while preventing strict lockdowns amid the pandemic to enable money to flow among MSMEs so that they can repay their debts and restructure. The market also presented an opportunity for MSMEs to shift to digital transactions as Filipino consumers, who initially resisted electronic payments, now widely use e-wallet services.
Resource persons from the Department of Trade and Industry (DTI) pointed to possible amendments that would make the registration process for online businesses easier given that these have flourished during the pandemic and would make those in the informal sector become part of the formal economy. There was also the suggestion of extending tax breaks to e-commerce fledglings in the first few years of their operations.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) raised that enhancing the “bankability” of MSMEs must be pursued. For one, the BSP cited the Philippine Personal Security Act (RA 11057), as it reduces the cost of lending by promoting the use of movable assets like inventories and crops as an acceptable collateral. On the other hand, the Credit Information Corporation (CIC) said that they have been lobbying the use of “reputational collateral” or factors that indicate the behavior of MSMEs such as their repayment rates and the requirement of a single loan application form to make credit more cost-effective and accessible. In building MSMEs creditworthiness, both the BSP and the CIC concur that financial literacy sessions and debt advisory services should be extended to micro enterprises.
On the private sector’s side, the Federation of Filipino Chinese Chambers of Commerce and Industry (FFCCCII), and microfinance institution CARD MRI echoed the grievance of MSMEs on the persistent red tape they encounter when it comes to registration and other processes. FFCCCII added that government agencies must expedite their digitalization programs to cope with the changing times as many billing and receipt systems are now done online. CARD MRI pressed that MSMEs must also be supported through sufficient access to information technology infrastructure. In addition, interest-free loans, business management training, and a national MSME data center where products can be displayed were recommended by the ASA Philippine Foundation as interventions that would benefit micro enterprises nationwide.
Entrepreneurs and GoNegosyo mentors observed firsthand how micro enterprises are hesitant to be part of the formal economy as they have a hard time not only registering their business, but also complying with several rules such as labor regulations and tax laws as these entail complicated processes and added costs. Moreover, they also called out how the Philippine Business Databank, which is a repository for all local enterprises, must be updated as it failed to show accurate information about registered businesses.
These are just some of the insights our MSME stakeholders have shared, which we’ll take into account heading into the 19th Congress. Overall, our goal is to analyze and to include these views in the various Tatak Pinoy measures that we are currently crafting. We hope that these conversations would snowball into wider consultations to further uplift the welfare of our Filipino micro enterprises.
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Senator Sonny Angara has been in public service for 18 years — nine years as Representative of the lone District of Aurora, and nine as Senator. He has authored and sponsored more than 250 laws. He is currently serving his second term in the Senate.