During the dictatorial regime of former president Ferdinand Marcos, our then modern day heroes were the thousands of Filipino migrant workers – domestic helpers going to Hong Kong and seamen boarding international ships – who would sacrifice their being away from the bosom of their families to be able to earn better pay they could send home.
In 1986, new heroes were born as EDSA became the venue for thousands of Filipinos who, fed up with the corrupt leadership of Ferdinand Marcos and his government, forced a peaceful turnover to Corazon Aquino, widow of slain opposition leader Ninoy.
These days, as the country strives to maintain its upward economic trajectory, the phrase inclusive growth has become a rallying cry that focuses on spreading the tools of domestic productivity to micro, small and medium-sized businesses or MSMEs.
The MSMEs are envisioned to be the new heroes to boost the country’s economic growth.
Transforming MSMEs
Various legislative interventions have been introduced over the last decade starting with the most basic, the Magna Carta for MSMEs in 1991, and followed by the Barangay Micro Business Enterprises Act of 2002.
More recently, the Department of Trade and Industry (DTI) paved the way for the adoption of the Philippine e-Commerce Roadmap 2016-2020, which is believed to be the lynchpin that will transform MSMEs into stronger partners of the country’s economic growth.
Private sector advocacy groups have also been supportive of MSME growth, the most prominent being Joey Concepcion’s Go Negosyo and PLDT’s Ka-Asenso campaigns. More recently, Union Bank started its Ureka forum that encourages MSMEs to use the digital platform to promote their businesses.
More work needed
While all these initiatives have helped improve the profile of MSMEs over the last decade, their actual contribution to the country’s gross domestic product (GDP) has continued to be lower than what our neighboring ASEAN countries’ MSMEs contribute.
But there is hope, not only in the growth of the number of MSMEs, but also in the scope of their operations and financial well-being. In 2010, there were only about 775,000 MSMEs registered in the Philippines comprising about 99.6 percent of the whole business eco-system. Today, this figure is close to a million.
While the percentage shares are still almost the same (micros are at about 90 percent, small at about nine percent, and medium for the remainder), the potential of MSMEs that have been given the right support in a bullish economy will dictate the pace by which the country overcomes its poverty.
But getting MSMEs to go beyond their size and scope continues to be a big problem. Some of the challenges that have continually been discussed in the past and even at present are access to financial support, savvy in doing business (coming up with game-changers that will expand the operations), and capability to overcome business crises.
On the part of government, the policy environment for MSMEs needs to be further strengthened so that institutional support is not just on paper, but is actually working. Philippine MSMEs continue to lag behind their Asian counterparts, including competitiveness outside the local environment.
e-Readiness
Taking a leaf from the success of China’s Alibaba, which was instrumental in opening up the global market to millions of its MSMEs, the Philippine government vowed to crank up e-commerce readiness to about 100,000 MSMEs by 2020.
The roadmap’s main objective would be to contribute 25 percent to the country’s GDP over the next four years from only 10 percent in 2015, and to take advantage of an expected boom in global e-commerce currently estimated at $1.15 billion already.
The DTI is optimistic that Philippine MSMEs will be able to adapt to e-commerce at a faster rate based on the propensity of Filipinos to take to the internet. According to statistics, the average Filipino spends 6.3 hours online, either through a desktop, laptop or a smart phone. Mobile subscriptions were also one of the highest in the region.
With the huge investments of the telecommunications industry in upgrades of its services and infrastructure, the DTI is optimistic MSMEs will be able to appreciate e-commerce that would rely on systems that can deliver faster internet speeds at lower costs.
Of course, trust and security issues with online shopping and e-payments will have to be further addressed so that the public and MSMEs are adequately protected from scams and cyber crimes.
Infrastructure support
Union Bank, which came up with its Ureka Forum in 2015, quoted a 2016 study by Google and Temasek that e-commerce in the Philippines would grow at 34 percent from $5 billion in 2015 to $9.5 billion in 2025. Furthermore, the number of online buyers would grow by 18 percent annually or five times in 10 years to reach 42 million potential online buyers.
The Philippines, understandably, with its still evolving telecommunications support, is looking forward to give birth to the equivalent of Alibaba, e-Bay, AirBnB, Amazon or all those e-commerce sites that have been successfully launched and gained international prominence.
Preparing MSMEs for global competition
There is much work to be done, in the meantime, to prepare our MSMEs to be ready for the take off, and to compete in the global landscape. Aside from the telecom infrastructure and security, the e-commerce roadmap also speaks about the government’s ability to keep up with business.
Currently, only a handful of government agencies can provide full online services. This has to be given more attention if the Philippines truly aspires to bring its MSMEs to embrace e-commerce within the next decade.
The Philippine government also needs to streamline its laws and regulations about e-commerce, particularly in the handling of investments from other countries, trade barriers and taxation regulations covering e-commerce businesses.
Supportive environment
Looking at how fast Filipinos have embraced the digital world truly amazes, and this somehow feels consistent with the way our government is relying on this new marketplace to bring about inclusiveness and growth for small Filipino entrepreneurs.
But again, let us not be carried away by all the excitement of e-commerce’s potential, and forget all the work that still needs to be done. Indeed, we may be seeing the early stages of a pregnancy that will bear the country’s future heroes.
For a successful birthing, though, the right attention must be there. For our MSMEs, this means improved telecommunication infrastructure, a supportive regulatory environment, and the determination to succeed.
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