Harnessing the power of the country’s MSMEs

Micro, small and medium enterprises are the lifeblood of the economy. Post-pandemic, they are seen playing a vital role in creating jobs and driving economic growth. And they are a really potent force: The Department of Trade and Industry said MSMEs comprise 99.5 percent of all businesses in the Philippines, and generate 62.66 percent of the country’s employment in 2020.

Unfortunately, MSMEs were the ones hit hardest by the fallout of the Covid-19 pandemic. The World Economic Forum said the pandemic and the resulting lockdowns in 2020 caused 114 million people to lose their jobs. In the Philippines, Covid wiped out 1.7 million jobs in the 12 months to January 2021, according to the Asian Development Bank.

As the country rebounds from the pandemic, solutions are needed to give our MSMEs the support they need to survive and continue to contribute to our economic recovery.

In a bid to fast track the recovery of the country’s economy from the pandemic, Senator Joel Villanueva believes the key lies in stimulating MSMEs. That’s why he filed Senate Bill 138, creating the MSME Growth Stimulus Program to extend assistance, strengthen, and facilitate the growth and development of MSMEs for regional job generation. Villanueva said the bill will “help MSMEs become resilient and disaster-proof,” based on the lessons learned from the pandemic and recent economic crises (Read, “Senate bill creates MSME stimulus contingency fund,” in the BusinessMirror, August 22, 2022).

“Most of our MSMEs took massive losses during the pandemic, leading to their closures and laying off employees. Now that the economy is opening up, our MSMEs need booster shots of government aid to keep local goods and services afloat and help MSMEs keep their employees,” Villanueva said, adding that the MSME Growth Stimulus program will provide interest-free loans through the Land Bank of the Philippines and the Development Bank of the Philippines.

Villanueva’s Senate Bill 138 creates the MSME Stimulus Contingency Fund, which can be implemented for priority job-generating industries affected by disasters, public health emergencies, armed conflict, and other related contingencies such as technological or policy-related disruptions. It also mandates the Department of Finance, through the Social Security System, to provide wage subsidies to cover all or a portion of the wages of the employees of qualified MSMEs affected by said emergencies.

“The MSME Growth Stimulus program shows how much we believe and take pride in our local enterprises and entrepreneurs as crucial components in our economic recovery,” Villanueva said.

In a statement for this year’s Made in the Philippines Product Week from August 17 to 23, Villanueva batted for continued support for MSMEs, saying local products boost employment, stimulates the economy, and instills hometown and national pride. “Let’s take for example the sweets and delicacies from Bulacan. There’s a unique sense of pride that something that delicious can be made in your hometown, and shared throughout the country and the whole world. Every Filipino should feel that kind of pride,” Villanueva said.

In the US, small businesses create two-thirds of new jobs and deliver 43.5 percent of America’s gross domestic product. That’s why President Biden has focused on providing America’s small businesses with the tools and resources they need to reopen, rehire, and build back better. To-date, the Biden administration has distributed more than $400 billion in critical relief to more than six million small businesses.

From Goldman Sachs: After extensive research, Goldman Sachs launched the 10,000 Small Businesses UK program in 2010 to specifically address the support gap for small enterprises, helping them to unlock the economic and job creation potential of their businesses. Designed to provide high-quality, practical education and business support to leaders of high-growth small businesses across the country, the program brings together leaders of small businesses from across industry sectors and creates unique networking and peer learning opportunities.

It has been proven that the private sector can also play a big part in helping MSMEs grow. Big corporations usually get a lot of attention when it comes to creating jobs, but the DTI said small businesses employ more Filipinos—at least 62 percent of the labor force. With proper support, our MSMEs can be a powerful engine that can create sustainable pathways out of poverty for millions of Filipinos.

Image credits: Ed Davad

Source link