Home Special Reports How much support should small businesses expect under Marcos?

How much support should small businesses expect under Marcos?


By Revin Mikhael D. Ochave, Reporter

THE support needed for small businesses in a fiscally constrained environment need not necessarily be monetary, with help in digitizing the operations of micro-, small- and medium-sized enterprises (MSMEs) seen delivering an impact out of all proportion to what it is expected to cost.

Makati Business Club (MBC) Executive Director Francisco Alcuaz, Jr. said in a Viber message that MSMEs should be supported in their digital transition.

“(The) government and businesses need to make it easier for other businesses to onboard. (The) government should nudge businesses to go digital by making more services available online and by shifting to e-receipts and e-invoices,” Mr. Alcuaz said.

“Some businesses don’t even have an e-mail address… But you need e-mail for most digital sign-ups: That’s one measure of the onboarding challenge. Once on board, it becomes much easier for customers to buy, allowing businesses to expand and create jobs,” he added.  

Mr. Alcuaz said that the Marcos administration should ensure that government services are corruption-free with minimal bureaucracy. Managing inflation, boosting production, and addressing supply chain issues will also be critical in effecting an MSME recovery.  

The Philippine Statistics Authority (PSA) has estimated inflation in June at 6.1% accelerating from 5.4% in May, on the back of higher food and transport prices.

“Short, medium, and long term, what any business mostly needs is public services that work, with no red tape, and no kickbacks. If President Marcos and his team can get national and local government agencies to make progress there, entrepreneurs will be pumped to start up or expand, creating jobs,” Mr. Alcuaz said.  

“A shift to e-receipts and e-invoices won’t just curb tax cheating, it will also be a big bang for e-payments, which will make it much easier to buy, boosting sales,” he added.

European Chamber of Commerce of the Philippines (ECCP) President Lars Wittig said in a Viber message that the government can help MSMEs by cushioning the impact of external shocks.

“The ECCP recognizes that MSMEs, with their overall share in the Philippine economy, are crucial to rebuilding the country’s economy. With government programs on financing, upskilling and reskilling, as well as wider efforts to mitigate economic impact from internal and external shocks, small businesses can be in a better position to sustain recovery and growth,” Mr. Wittig said. 

Mr. Wittig added that the government can also help businesses by sustaining efforts in the area of Ease of Doing Business, and by providing support for sustained digitalization.

“The continued implementation of ease of doing business measures is likewise a crucial factor that will encourage individuals and firms to build or grow their businesses. It is also critical that businesses are assisted to better adapt to the technological developments and trends to boost competitiveness and productivity,” Mr. Wittig said.

According to Mr. Wittig, the private sector can help MSMEs through training, adding that it is committed to working with the Marcos administration to boost the economy.

“(The) private sector can also continue to be a part of this initiative by providing opportunities for smaller businesses to engage in partnerships and benefit from mentorship, skills and development training,” Mr. Wittig said.

“The ECCP remains committed to working with the Marcos administration and industry players to reap the benefits of a stronger and more stable Philippine economy through increased business and employment opportunities,” he added.

Trade Secretary Alfredo E. Pascual has said the digitalization of MSMEs will be a priority.

“We want (MSMEs) to embrace digital transformation so they can improve operating efficiency, reduce cost, and earn profits even as they make their products more affordable to the consumers. Our objective is to enable businesses to grow and graduate from micro to small, from small to medium, from medium to large,” Mr. Pascual said.

Mr. Pascual also promised to help expand the markets for MSMEs to help them recover from the pandemic.

“We will (also) help them have the capability to participate in the bigger market through e-commerce. So, we also need the capability for digital transactions, accounting and record keeping, which can be helped by digital technology,” Mr. Pascual said.

“Standing alone and standing still, our small businesses will find it difficult to develop and become sustainable. We want our small businesses to be driven by science, technology, and innovation to meet changing market demands for quality and new products,” he added.

Eric Teng, president of the Restaurant Owners of the Philippines (RestoPH), said in a phone interview that the agriculture industry should be modernized to help restaurant MSMEs, while credit should also be offered to struggling restaurant operators.

“We’ve endured a lot of losses in the last two years. So, we are hoping that there are some credit products that can be given to struggling small and medium enterprise restaurant operators,” Mr. Teng said.

“Agriculture is one of those things that is easy to focus on and develop. It is also a fantastic export industry because everybody needs to eat every day. There’s a constant demand not just in the Philippines but around the world,” he added.

Mr. Teng said he is hoping more Filipinos participate in the agriculture sector.

“We don’t have enough farmers. We need more people who are dedicated to growing food from the land. Our farmers are getting older,” Mr. Teng said.

“We’re going to reach possibly 130 million Filipinos by 2030. So, we need to give attention to food security. We cannot just rely on imports. We really have to find better ways to produce and produce better products,” he added.

Mr. Teng concurred that government should make more MSMEs e-commerce and e-trade ready.

“What the coronavirus disease 2019 (COVID-19) pandemic gave  an opportunity for is logistics and e-commerce. It surged during the pandemic so I hope that we can learn from that experience and even expand the adoption of e-commerce and e-trade. That is the future,” Mr. Teng said.

Foundation for Economic Freedom (FEF) President Calixto V. Chikiamco said in a phone message that the Marcos administration should continue the “Build, Build, Build” (BBB) infrastructure program of former President Rodrigo R. Duterte to help MSMEs.

“President Marcos can continue the BBB and invest more in public goods. For example, the crisis in transportation is causing MSME employees to be late or spend hours commuting due to the absence of reliable, affordable mass transit. Another is labor-market reforms to exempt MSME’s from the minimum wage and strict job security standards in the Labor Code,” Mr. Chikiamco said.

In addition, Mr. Chikiamco said that Mr. Pascual should push for the ratification of the Regional Comprehensive Economic Partnership (RCEP) trade deal.

“(Mr. Pascual) should push for the ratification of RCEP since it will expand market access (of the Philippines) to RCEP partners,” Mr. Chikiamco said.

RCEP failed to win Senate approval in the 18th Congress after some senators voiced concerns regarding the absence of protection for agriculture. Participation in RCEP will be decided by the 19th Congress.

RCEP, which started coming into force on Jan. 1, involves Australia, China, Japan, South Korea, New Zealand and the 10 members of the Association of Southeast Asian Nations (ASEAN).

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the Marcos administration could provide additional loan facilities such as those provided under the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) legislation.  

Leyte Representative Martin G. Romualdez filed House Bill No. 1, or the refiled version of the GUIDE bill, on July 3. The bill seeks to provide additional funds for state-run Land Bank of the Philippines (LANDBANK) and Development Bank of the Philippines (DBP) to broaden their loan programs for MSMEs affected by the pandemic.

According to the measure, LANDBANK would be given P7.5 billion while DBP will receive P2.5 billion from the National Treasury to support loans for MSMEs.

“We can also have more loan guarantees for MSMEs (to help them) access more loan/credit facilities and also somewhat help lower borrowing costs,” Mr. Ricafort said.

“The continued reopening of the economy through 100% face-to-face/in-person schooling (can) also help many MSMEs, especially those that sell to students whenever the latter attend school, that were hard hit since the pandemic started,” he added.

Go Negosyo founder and former Presidential Adviser for Entrepreneurship Jose Ma. A. Concepcion said in a phone interview that most MSMEs that he has talked to are reporting sales growth even amid the challenges.

“Right now, business is pretty okay. Most of the people I talked to had good sales unlike during the (height of the) pandemic. What is important is that we do not have a lockdown,” Mr. Concepcion said.

According to the PSA, 99.5% of the Philippines’ 957,620 business enterprises operating as of 2020 are MSMEs. MSMEs employ over 62% of the workforce.

Some 88.77% or 850,127 establishments are micro enterprises, 10.25% or 98,126 establishments are classified as small, and 0.49% or 4,716 qualify as medium-sized.

The PSA identified the top industries for MSMEs as wholesale and retail; repair of motor vehicles and motorcycles; accommodation and food service activities; manufacturing; “other” services; and financial and insurance activities.