Philippines pushes support for small businesses

The Philippine government on Monday mulled increasing the share of the micro small and medium enterprises (MSMEs) to 40 percent by creating the environment for these small businesses to link with the global value chain (GVC).

At a forum on global value chains, industrial policy and MSMEs integration in the GVC, trade undersecretary Zenaida Maglaya said it was important that Philippine MSME find their path to the GVC as the ASEAN Community integration nears.

"It has to be stressed that while GVCs are global, this does not mean that GVCs are only for big companies with multinational capabilities or reach. The operative word here is 'chains' - implying that value is added through the linkages that exist between and among firms (large or MSME) cutting across regional and national boundaries," she said.

MSMEs account for about a third of the country's GDP at 31 percent.

MSME constitute 99 percent of registered businesses in the country, about a fifth of the country's manufactured exports, and about two-thirds of employment generated - making MSMEs key to achieving inclusive growth.

Maglaya underscored the fact the Philippine MSMEs needed to globalize as supplier of intermediate products used by direct exporters such as in the case of Yokohama in rubber, Kennemer in cacao, or Moog in aerospace parts.

Participation in regional and global production networks will provide MSMEs access not only to export markets, but also access to newer technologies.

"Lead multinational firms usually provide their local affiliates and local suppliers with more rapid technological upgrading and greater attention to quality control, cost control, and human resource development," Maglaya said.

GVCs provide opportunities for MSMEs to specialize in activities within an industry value chain in which they have expertise to be more productive, more capable of competing in the global market, and generate higher income.

"To make this happen, we are focusing on the development of agro-industries particularly high value crops like rubber, coconut, coffee, cacao, fruits, vegetables and other resource based industries," said Maglaya.

The government is also promoting automotive, aerospace parts, electronics, chemicals, and shipbuilding.

The vision is to create globally competitive industries in order to become manufacturing hubs in regional and global production networks in the near future.

MSMEs can serve as suppliers of outsourced parts or services that have increasingly grown in sectors such as automotive, machineries, electronics, garments and food. Endit