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Manila Bulletin devider Opinion devider MSMEs: Future of the local economy

MSMEs: Future of the local economy

Published Nov 25, 2024 04:01 pm

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Latest statistics on Micro Small and Medium Enterprises (MSMEs) from the Department of Trade and Industry indicate that in 2023, we have  a total of 1,246,373 enterprises up from 1,109,684 in 2022. In 2023, about 99.6 percent of these enterprises fell into the MSME category.


Within the MSME sector, about 90 percent are micro business enterprises in 2023. These are the small boutiques, stores, food carts, eateries, repair shops, bakeries, “kakanin” stalls and even online businesses in our neighborhoods and even farms, employing one to nine employees with an asset size of up to ₱3 million. Small enterprises are slightly larger, with between 10-99 employees and have an asset size of between ₱3 million and ₱15 million. In many small towns, there are only micro and small enterprises.


Now, imagine the benefit to your town’s economy if each of these small and micro-enterprises grew slightly larger in capital, and added two or more employees next year? There will be a greater demand for the services of tricycles and public transport, giving more livelihood to drivers. 


The company would likely have uniforms made by a local tailor or dress shop. More food will be bought by employees, increasing the demand for the local farmers’ produce. Based on my observation, Filipinos who live in small towns lead simpler lives, and source their basic needs like food from local producers.


The resulting increase in demand for goods and services in a local economy will be met with supply. Current MSMEs and new investors will capitalize on this new growth to meet the increased needs, creating more jobs in the process of operating these new enterprises to meet the expanded set of customers. If the town has tourist attractions, hotels and restaurants to cater to tourists bringing money in will boost growth further. 


Some OFWs may come home to set up businesses or to work in these new enterprises. Government will need to spend money to build new roads and facilities. As a result of all these investments to meet increased demand, the economy grows.


Simply put, a town’s MSMEs are the future because many of these businesses will spur growth when they expand. What will be needed by these small enterprises are two things: the desire and dream to grow, and the capability to grow.


The desire demands that the entrepreneurs can set their sights on growth and expansion. It means dreaming of that better business. This means looking beyond current limitations, the present customer base and innovating new products and services. This takes creativity and courage. Simply put, what other customers can your food business serve? Will you be limited by the foot traffic of your location? Can you deliver to other locations to increase your customer base?


Capability includes access to credit, technology, business networks and other inputs to realize this dream. These include tools such as more and better credit in formal channels such as banks, new skills in marketing and product innovation.


But the truth is that desire must come before capability since it charts the future path of growth. Without this, any capability built may improve the bottom line performance of their businesses for now, by increasing some revenue, cutting costs and increasing accumulated retained earnings. But it is the desire that pushes the boundaries and creates growth opportunities beyond today’s improved performance. 


Next week, we will look at other factors that can help boost micro and small enterprises.
 

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John Tria
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