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BARRAMEDA, Jhoerence
CERDEA, Arrianne R.
CHUA, Kelly C.
DEL PILAR, Patrick John
ESGUERRA, John Christopher R.
LAZERNA, Andrei B.
LLESIS, Joanna Pauline B.
PARALA, Kenneth
UY, Melizza Jane L.
VALIENTE, Mark Jefferson M.

June 24, 2016

According to DTI, micro, small and medium enterprises (MSMEs) are
considered the backbone of economic development and key stakeholders in regional
economic integration in the Philippines; whether as direct exporters or participants in

global value chains (GVCs). MSMEs account for over 99% of businesses and employ more
than 50% of the countrys workforce. As we enter into ASEAN Integration, the Department
of Trade and Industrys Industry Promotion Group (DTI-IPG) urged micro, small and
medium enterprises (MSMEs) to follow international product standards to break into
upcoming open economy or growing global market. Recently, they conducted a seminar
under the Negosyo, Konsyumer, at Iba Pa (NKATBP) in Cebu City. From the event, DTI
Undersecretary Nora K. Terrado said that entrepreneurs should look beyond the local
market. DTI-IPG even highlighted how to drive businesses into growing global market
and the challenge for our exporters in expanding their market reach and how they can
make their products unique among others. The event also aims to heighten the
awareness of localities especially MSMEs and consumers, about the services offered by
the department. A question arises as to why the DTI chose to help improve the MSMEs
over large enterprises. Presented in this paper are some of the factors including its
effects, whether good or bad, as to why DTI chose MSMEs over large enterprises.
First factor is the ASEAN Integration. According to Investopedia, the
Association of Southeast Asian Nations (ASEAN) is an organization of countries in the
Southeast Asia formed to promote cultural, economic and political development in the
region. ASEAN was officially formed in 1967 with the signing of the Bangkok Declaration.
Since its formation, ASEAN has been growing slowly, and more countries in the region
have gained membership. Through cooperation, the goal of the organization is to
increase the welfare of the people in the region, both economically and culturally. The
integration is expected to boost investments, job creation, and incomes in the region. As
a Filipino entrepreneur, should you be concerned with the ASEAN Integration? What does
it mean to your business? While the ASEAN Integration is expected to level the playing
field among industries in the region, it is also expected that Philippine firms should brace
for an intense competition with their ASEAN counterparts. An intense competition will
therefore raise the bar for innovation, quality and productivity, which will enable
businesses to compete head on with other players.
Second factor is the exporters innovation for global market and unique
quality product among others. According to Export Development Council (May 20, 2016),
with the urge of DTI for MSMEs to go global, DTI-Export Marketing Bureau Director, Senen
Perlada emphasized the 8th strategy of the Philippine Export Development Plan (PEDP)
2015-2017 which enhances the innovative capacity of the export sector through an
efficient system of national innovation. If MSMEs will go global then exporters have to be

more competitive because they are with the other countries. Strategy 8 aims to help the
exporters to improve their access to appropriate knowledge network that will be useful to
them to find and identify the relevant technologies and information. According to Senen
Perlada the strategy was personally added by the President which aims to develop and
diffuse new technologies. Strategy 8 is one of the ways for the exporters to have more
developed thinking on how they will be competitive in terms of exporting products.
Provided that exporters will consider the said strategy, it will help them to know how to
make use of their resources effectively.
Third factor: Tariff needed order to exports the goods in other country. Tariff
is defined as the tax imposed on goods produced abroad and sold domestically or so what
they call imported products. A tariff reduces the quantity of imports and moves the
domestic market closer to its equilibrium without trade. With a tariff, total surplus in the
market decreases by an amount referred to as a deadweight loss. But then again, the
Philippines can only impose little of tariff due to the agreement made by the General
Agreement on Tariffs and Trade (GATT). Because little tariff can be imposed on the
imported products, the difference between the locally produced and the internationally
produced products became very insignificant so competition arises between products.
MSMEs, so as to contend with the situation, needs to improve the quality of their offered
products so that their products would be favored by the consumers. Other countries also
impose their imports with tariff to protect their local products, and this makes it harder
for the Philippines to enter the international market. If the tariff imposed on the country's
export products is high, it has a huge effect on the country's production and may lead to
unemployment. Loss of jobs by the people may reduce the capacity of the consumers to
buy and result to a higher country surpluswhich is bad for the economy of the country.
And lastly, MSMEs Entrepreneurship in the Philippines: opportunities and
challenges for inclusive growth. Addressing widespread poverty is the single most
important policy challenge facing the Philippines. Not only is poverty high when
benchmarked against countries in Asia, but also the rate of poverty reduction has been
slow. While the Philippine economy has grown at an average of 6 percent for the last five
consecutive quarters (since 2012), poverty incidence remains above 20 percent of the
population. The critical challenge is to spread the payback of this huge economic
turnaround among the people, especially the poorest of the poor. They should feel the
benefits of the growing Philippine economy.

Entrepreneurship can provide the solution by creating wealth, jobs, and

social empowerment. If we are to address the issue of poverty with some degree of
success, history tells us we have no choice but to actively encourage entrepreneurial
ventures. In the Philippines, entrepreneurship is viewed as important to empowering the











Development Plan (PDP) further reinforces the thrust on entrepreneurship through trade
and investment to achieve the governments goal of economic development and job
creation. Based on the plan, measures for macro-economic stability, employment, trade
and investment, agribusiness, power-sector reforms, infrastructure, competition, science
and technology, and anti-corruption are being pursued to strengthen Philippiness
competitiveness and contribute to job creation.
Based on 2014 figures provided by the Philippine Statistics Authority (PSA),
there are 946,988 establishments in the Philippines. Of these, 99.6% (942,925) are micro,
small, and medium enterprises (MSMEs) and the remaining 0.4% (4,063) are large
enterprises. Of the total number of MSMEs, 90.3% (851,756) are micro enterprises, 9.3%
(87,283) are small enterprises, and 0.4% (3,886) are medium enterprises. MSMEs
generated a total of 4,891,836 jobs in 2014 versus 2,897,421 for the large enterprises.
This indicates that MSMEs contributed almost 62.8% of the total jobs generated by all
types of business establishments that year. Of these, 30.5% or 2,372,678 jobs were
generated by micro enterprises; 25.5% or 1,986,823 by small enterprises; and 6.8% or
532,335 by medium enterprises.
By industry sector, MSMEs in the wholesale and retail trade, repair of motor
vehicles and motorcycles generated the most number of jobs with 1,734,823 in 2014
followed by MSMEs in manufacturing, 786,268; accommodation and food services,
678,275; education, 274,750; and financial and insurance services, 238,438.

Majority of the jobs are generated by MSMEs in the National Capital Region
(NCR) with 1,573,463 jobs; followed by MSMEs in Region 4-A (CALABARZON), 703,005;
Region 3 (Central Luzon), 485,748; Region 7 (Central Visayas), 377,734; and Region 6
(Western Visayas), 266,707.
DTI are aiming at the MSMEs because they are the businesses which are
only in the starting line of the economical race. MSMEs that are in start-up stage can
provide fresh and competing ideas. The DTI intends to provide guidance to MSMEs to
drive them into the growing global market and how government programs and initiatives
can assist in finding the right market for their products and services.
These factors seem to give a positive impact on the country, but are the
people and their businesses ready enough?

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