MSME highlights for the half of 2023
BASED on the latest record of the Philippine Statistics Authority, a total of 1,080,810 business enterprises operate in our country. Of these, 99.58 percent are micro, small and medium enterprises (MSMEs). MSMEs also hold 63 percent of the country's workforce. This is the reason why our current administration is focusing on prioritizing support for MSMEs. The Philippine Statistics Authority (PSA) has released a record of 1,080,810 business enterprises in the country, with 99.58 percent of these being micro, small and medium enterprises (MSMEs). This includes loans, digitization and broader trade opportunities, as well as the World Bank approving a $600-million loan to support the Philippine financial sector. Banks were able to disburse loans to MSMEs with a rise of 3.2 percent from January to September compared to P440.34 billion in the same period in 2021. MSME financing has never been more crucial as the government steers the country's economic recovery to regain pre-pandemic momentum toward poverty alleviation and financial inclusion. The US Agency for International Development (USAid) launched a P1-billion, five-year program aimed to help SMEs in the Philippines transition to e-commerce businesses, and the Regional Comprehensive Economic Partnership Agreement entered into force for the Philippines will allow them to be integrated into the global value chain.
Pubblicato : 2 anni fa di Emman Santiago in Business
BASED on the latest record of the Philippine Statistics Authority, a total of 1,080,810 business enterprises operate in our country. Of these, 99.58 percent are micro, small and medium enterprises (MSMEs). MSMEs also hold 63 percent of the country's workforce. This is the reason why our current administration is focusing on prioritizing support for MSMEs.
We can see the prioritization of MSMEs this 2023. These prioritizations are seen mostly focused on the topics of loans, digitization and broader trade opportunities. Regarding loans, just this January 2023, the World Bank approved a $600-million loan to support the Philippine financial sector. The loan is geared toward expanding financial inclusion for MSMEs. More on this topic of loans, banks were able to disburse loans to MSMEs with a rise of 3.2 percent to P454.31 billion from January to September compared to P440.34 billion in the same period in 2021, according to the Bangko Sentral ng Pilipinas. Loans for MSMEs play a crucial role in a healthy business. Having access to loans enables MSMEs to keep their daily operations running and cover their commitments in finishing their projects with their clients. In addition, loans enable businesses to expand and reach their full capacity and yearly financial goals.
With the recent overview of the Financing Industry by the Philippines Finance Association (PFA), it emphasized that there is still a limitation to Capital Access for Filipinos and especially for MSMEs. The PFA stated that MSME financing has never been more crucial as the government steers the country's economic recovery to regain pre-pandemic momentum toward poverty alleviation and financial inclusion. MSME financing has never been easier through the efforts of fintech lending companies. Digital lending has been a big aid for MSMEs. Based on the Asean Access to Digital Finance study conducted by the Cambridge Center for Alternative Finance at the University of Cambridge Judge Business School and the Asian Development Bank Institute, digital financial services contributed to boosting financial inclusion for both consumers and businesses. The study measured digital financial services for consumers and MSMEs in the Philippines and other Asean countries. It was stated in the study that the top three reasons MSMEs get loans from fintech platforms were to raise working capital, business expansion and business growth efforts. It also shows that the misconception of business loans is just for failing and struggling businesses.
The Department of Trade and Industry (DTI) is our primary agency for the promotion and development of MSMEs in the country. With this responsibility, the DTI was able to get P1.2-billion funding under the 2023 General Appropriations Act. This funding is part of the MSME Development Plan and other initiatives to promote the growth of MSMEs in the country. The DTI also prioritizes lending capital to MSMEs. It has various programs such as the P3 and new loan programs that create credit access for business owners. It is also very active in getting credible financing partners that will help it support lending with MSMEs. Just this month, Trade Secretary Alfredo Pascual signed a renewed partnership with First Circle for another two years. First Circle has partnered with DTI since 2016 to provide capacity-building programs and financial access to SMEs. With the innovative financing solution of First Circle, SMEs can access up to P20 million in credit, which they can use to expand business operations and cover their cash flow gaps.
On the topic of digitization and broader trade opportunities, MSMEs received great news when the United States government, through the US Agency for International Development (USAid) launched a P1-billion, five-year program aimed to help SMEs in the Philippines transition to e-commerce businesses. The program aims to improve the capacity to adopt digital technologies by supporting the integration of SMEs and e-commerce platforms in logistical supply chains, using e-payment systems and other fintech innovations. Another great news, the Regional Comprehensive Economic Partnership Agreement entered into force for the Philippines. This will allow SMEs to be integrated into the global value chain. MSMEs should learn how to utilize this Free Trade Agreement. This will enable them to get cross-border trade opportunities for their products and services.
Now that we are almost ending the half of the year. We are all hoping to get more great news for all our fellow MSMEs in our country and end this year with a better business performance than the previous challenging years.
Eman Santiago is a relationship manager from First Circle. He is passionate about helping SMEs in the Philippines. He is also a trader in PSEI and the Crypto market.