In last week's column, I focused on how we will need to boost our economies with cooperation within ASEAN in light of challenges posed by enlarged global conflicts, which have become more apparent with the US bombing of sensitive Iranian sites. Already, projected hikes in fuel prices threaten our current growth, which needs to expand if we are to achieve and stay within middle income status that we are aiming for.

The recent presentation of the country partnership framework of the World Bank in a May 23 Manila Bulletin article highlights the chance for the country to enter middle-income status within the current decade. The article notes how our average growth has risen from 3.7 percent from 1990 to 2010, to 5.2 percent from 2010 to last year. I credit this to infrastructure investments where they mattered, and the contribution of Mindanao’s growth, which has eclipsed the country’s GDP in the previous seven years. With this trend, it is clear that Mindanao’s growth will continue to lift the country’s growth.

I would like, however, to note the comments of former BSP Deputy Governor Diwa Guinigundo, who, in a study featured in a March 17, 2025 MB article noted that any growth below nine percent per year will lead to job losses and a wage crisis. I believe, therefore, that we will need to grow faster than we do now for long term growth to remain within middle income levels.

Despite the challenges, I attribute the last 20 years of growth to the expansion of our Micro Small and medium Enterprises (MSMEs), and the growth of the Mindanao economy. When Filipinos establish enterprises, they enable themselves by expanding. I notice that in the case of Davao, restaurants and food carts often expand into one additional branch within a year of starting up. This horizontal expansion amplifies their contribution to the growth of the local economy since they buy more farm produce as raw material, and hire more employees. Many BPO workers eventually become entrepreneurs or operate a side business. Little wonder that the Davao region has breached into a trillion peso economy in 2023.

Given this economic history and the urgent imperative to grow faster, the private sector is our main growth engine. The role of the private sector is cited by Kim-See Lim, the regional director for East Asia and the Pacific of the World Bank arm international Finance Corporation (IFC) in the May 25, 2023 MB Article, saying that a “a vibrant and dynamic private sector is crucial for the Philippines to achieve its next stage of development and create quality jobs for its growing population.”

Our MSMEs serve as the consistent backbone of private sector growth. Unleashing their capacities and encouraging the expansion of the private sector is key to the higher rates of sustainable growth we need. Policies to encourage and guide their formal expansion should be put in place and promoted at the national and local level. This is because formality allows access to better credit rates and terms from established banks and financial institutions, and employs more people. When MSMEs expand, the local and national economy grows.

Local governments can initiate local business loan programs and business matching activities in cooperation with business groups to help current microbusinesses expand. Encouraging larger manufacturing investments will provide opportunities for local MSMEs to provide locally produced goods and services to cater to the needs of these larger companies.

We all need to work together to boost this MSME sector, to achieve and sustain higher economic growth as we face a challenging world.