Greater flexibility for SME policies

The Manila Times Microenterprise Forum held at Ascott Makati on Thursday provided many positive takeaways, adding some dimension to what most of us already knew: The micro, small and medium-sized enterprise (MSME) sector in the Philippines is a vibrant and growing part of the economy and offers virtually unlimited possibilities. It is encouraging that the government clearly understands the importance of the small and medium-sized enterprise sector and has worked hard to develop policies and programs to support this sector. Some evidence of the resilience of the MSME sector and the effectiveness of government policies supporting the sector can be found in the startling statistic that at the height of the economic downturn during the Covid-19 pandemic, new business registrations actually increased by 42 percent, which consequently helped… economic recovery.

However, there is another statistic that has been shared on the forum that tends to dampen the enthusiasm that our SME sector can be successful. Despite accounting for 99 percent of the Philippine corporate sector, the MSME sector only accounts for about one-third of the country’s total economic output. As a reminder, the oft-quoted “99 percent” figure is not exclusive to the Philippines; in a recent speech, US President Joe Biden praised the contribution of small businesses to the world’s largest economy, where they also account for almost 99 percent of all businesses. Globally, small and medium-sized enterprises account for about 90 percent of all businesses, 60 to 70 percent of all employment and about 50 percent of global gross domestic product, according to the United Nations.