A. BASIC SME POLICIES  

§         Magna Carta for Small Enterprises  (RA 6977 as amended by RA 8289)

The Magna Carta for Small Enterprises is the landmark legislation which reflects the current policy to foster a dynamic SME sector, particularly rural and agri-based manufacturing ventures.

This Law is guided by three principles in setting the pace for small and medium enterprise development:

-          Minimal set of rules and simplification of procedures and requirements.

-          Participation of private sector in the implementation of SME policies and programs

-          Coordination of government efforts

There are three major provisions contained in the Small Enterprises Act, namely:

-          Creation of the Small and Medium Enterprise Development Council

-          Creation of the Small Business Guarantee and Finance Corporation

-          8% mandatory allocation to SMEs (6% for SEs, 2% for MEs)

 §         An Act Providing Assistance to Women (RA 7882)

This particular legislation recognizes the special role of women in development and supports women entrepreneurs who are engaged in manufacturing, processing, service and trading businesses. Under this program, government financing institutions (GFIs) like the Landbank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) are mandated to provide assistance to :

-         Non-governmental organizations (NGOs) engaged in developing women’s enterprises to a limit of P2M, provided the NGOs has an operating track record of a year;

-          Existing women enterprises to the upper limit of P50,000; and

-          Potential women entrepreneurs with sufficient training up to a limit of P25,000 each. 

§         SME Development Strategy, 1998

SMEs face various challenges in the area of human resource development, technology and R&D, access to financing, to name a few. These concerns are addressed in the "Philippine SME Development Strategy (1998)". The Strategy prioritizes the following five strategic imperatives in SME development:

1.      Narrowing the focus by identifying priority sectors

Identify list of 5 priority sectors

2.      Promoting mutually beneficial linkages among small and large firms

Promote industrial-subcontracting exchange schemes, strengthening SME associations, establishment of linkages and cooperation between small, medium and large firms

3.      Strengthening technology and R&D initiatives

Boost agencies’ efforts in examining and promoting technologies that would benefit SMEs, promote use of quality standards, and fast-track the full operationalization of APEC Center for Technology Exchange and Training for SMEs (ACTETSME) as a resource center for information networking, mobilization of training opportunities, and upgrading technical know-how.

4.      Bolstering human resource development

Create, expand and improve curricular training programs in entrepreneurship, management, and technical skills for SMEs and develop appropriate materials for such training. Identify HRD requirements in specific industries. Provide facilities/resources for skills training in special economic zones.

5.      Improving access to finance

Develop innovative financing schemes using non-traditional sources and schemes such as cooperatives and associations, and, equity financing and venture capital, respectively.  

§         Philippine Export Development, 1999-2001

The PEDP 1999-2001 provides the guide to boost export performance for the next three years and lay the groundwork to develop a sustainable and globally-competitive export industry. It puts emphasis on the synergy and complementation among the various programs and initiatives to create a unified and cohesive agenda.  The Plan defines roles and commitments of both government and the private sector. It emphasizes the need to implement what have, for some time now, remained mostly on paper, and to evaluate such efforts with clear bottomlines. The Export Development Council (EDC) oversees the implementation of the Plan.  

The export-led agenda is supported by the following strategies:

1.       Provision of a macroeconomic environment that promotes competitiveness, efficiency, and entrepreneurship.

This includes maintenance of a low and stable domestic inflation rate, competitive exchange rate, and favorable interest rate policy.

2.      Improving market access and market presence.  

Policy Level - Opening up of new markets by acceding to various multilateral agreements such as the ASEAN Free Trade Area (AFTA), APEC, and WTO. Review of the privatization of trade promotion functions of the government Act of 1994. A study has been completed years back but no action has been taken. 

Institutional support - 

-         Department of Trade and Industry will focus on effective representation and negotiation to improve market access, conduct of commercial intelligence such as identification of potential and existing barriers to Philippine exports and means to overcome these, and promotion and marketing overseas.

-          Private trade and investment promotion through private sector or corporate entities

-          Promote the development of strong and professional industry associations. 

Programs

-          National Communication Plan for Export Promotion

-          Expand market presence through Electronic Commerce

-          Use counter-trade and South-South trade as tools for export expansion

-         Supplement available resources for export promotion through bilateral/multilateral technical cooperation programmes and foreign assisted projects.

3.      Developing a competitive export base   

Policy Level - The PEDP presents a comprehensive Export Policy Agenda and outlines specific policy directions and initiatives necessary to support the export drive. It is presented in the following headings:

-          Financing

-          Investment and Incentives

-          Cost of Doing Business

-          Agricultural Policies

-          Technology Agenda

-          Education and Training

-          Employment Policy, Labor and Productivity'

-          Competition Policy, Liberalization, and International Commitments

-          Institutional Framework 

Institutional Support -

-          Export Development Council provides the forum for participatory governance

-          Department of Trade and Industry is the primary agency responsible for the implementation of the Plan.

-          DTI will draw sound advice from the Eminent Persons Group, a top level Committee, composed of respected and accomplished Filipino experts.

-          Specific government agencies will be mandated to attend to identified problems.

-          Involvement of private sectors/industry associations in policy and program formulation and implementation.

-          Creation of permanent Committee on Trade Facilitation to streamline export procedures. 

Programs

-          Clustering of Industries

-          Formulating a policy framework for service exports

-          Developing backward linkages for exports

-          Promotion of "global" companies: competitiveness upgrading

-          Product search program

-          Promotion of standards such as ISO 9000 and 14000 series

-          Promotion of information management

-          Conduct of Bilateral and Multilateral programs

-          Investment promotion

-          Identification of materials support clusters

4.      Information: As core trade development service

-          Strengthening of primary focal points for delivering information services related to export such as the Philippine Trade Information and Network Systems (PHILTINS) and, One Stop Export Information Assistance Center (EXPONET).

-          Electronically linking up all DTI offices and commercial posts around the world to facilitate information exchange 

§         Other SME Initiatives

Along with this, the Small and Medium Enterprise Development Council, the country’s primary agency responsible for the promotion and growth of SMEs, is finalizing the National Strategy for the year 2000 that defines specific actions to address SME concerns. Following are some preliminary recommendations:

1.       Finance-  Increase and widen the access of SMEs

Promote active participation of industry/trade/ professional associations and Provincial SMEDCs in helping SMEs access financing from banks; holding SME financing fairs; and establishment of Venture Capital Corporations

2.      Information- Operationalize pro-active, efficient, comprehensive, reliable information delivery systems for competitive SME planning and increased productivity.

Align databases according to SMEs needs. Promote IT/E-commerce. Speed up development of websites among industry and local associations, and government agencies, and syndicate hyperlinking of their databases. Develop complete     "one-stop" SME Website.

3.      Marketing - Expand market share of selected sectors such as garments.

Promote furniture, processed food, GTH, and services sectors. Pursue trade promotions such as fairs, missions and promote IT/E-commerce in doing business.

4.       Human Resource Development - Increase the number of competent owners-managers and workers of SMEs.

Conduct benchmarking, documentation of best approaches in Human Resource Development, policy advocacy, training needs assessment and client targeting.

5.       Technology - Enhance productivity and competitiveness of SMEs through the effective and judicious application of technologies and related resources. 

Upgrade database systems on technologies (including experts' services) for SMEs. Match technology requirements of SMEs with existing programs/resources and, conduct benchmarking activities. 

The government of the Philippines is still open to new initiatives to properly position SMEs at competitive level in the global business arena. Several bills are awaiting legislations, which are expected to provide additional protection and assistance to SMEs. Among these, are the establishment of Business One-Stop Shop, and the re-implementation of Countryside Barangay Business Enterprises or Kalakalan 20. 

Similarly, there are efforts to tap the capital market as additional source of funds for SMEs. At present, eight small firms have been qualified for listing at the Philippine Stock Exchange Board but they have requested deferment until such time that the economy, so with the capital market, has fully recovered. Relative to this, there is a pending bill to establish a separate Board for SMEs which will be named as Small and Medium Stock Exchange (SMEX).   

 B.       BEST PRACTICE PROGRAMS 

§         Access to Information

§         Human Resource Development

§         Human Resource Development (Con’t)

§         Marketing