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Your neighborhood sari-sari (variety) store, the Internet café on
the street corner, the food stall where you buy cheap meals to fix
that grumbling stomach—they may not be as huge as a shopping mall,
an IT hub or a fastfood restaurant, but these micro-, small- and
medium-enterprises (MSMEs) help bolster the domestic economy amid a
global crunch.
According to latest data from the Department of
Trade and Industry (DTI), of the 783,065 businesses operating in the
country in 2006, 780,469, or 99.7 percent are MSMEs. Of these MSMEs,
92 percent are micro enterprises, 7.3 percent are small enterprises
and 0.4 percent are medium enterprises.
Also, MSMEs created 70 percent of the total jobs
generated in the country in that period, the DTI said.
It added that about 25 percent of the
country’s total exports revenues are contributed by MSMEs, which
comprise about 60 percent of all exporters here.
The DTI defines an MSME as “any business
activity or enterprise engaged in industry, agri-business and/or
services, whether single proprietorship, cooperative, partnership or
corporation whose total assets, inclusive of those arising from
loans but exclusive of the land on which the particular business
entity’s office, plant and equipment are situated, must have value
[by asset size] falling under the following categories: up to P3
million [micro enterprises]; between P 3,000,001 and P15 million
[small]; and between P15,000,001 and P100 million [medium].”
MSMEs can also be categorized based on the
number of employees: between one and nine employees (micro
enterprises); between 10 and 99 workers (small); and between 100 and
199 workers (medium).
The DTI, in its website, said MSMEs are
important because:
• MSMEs play a major role in the country’s
economic development through their contribution in rural
industrialization; rural development and decentralization of
industries; creation of employment opportunities and more equitable
income distribution; use of indigenous resources; earning of foreign
exchange resources; creation of backward and forward linkages with
existing industries; and entrepreneurial development.
• They are vital in dispersing new industries
to the countryside and stimulating gainful employment. A country
like the Philippines where labor is abundant has much to gain from
entrepreneurial activities. MSMEs are more likely to be
labor-intensive, thus they generate jobs to the locality where they
are situated. In this sense, they bring about a more balanced
economic growth and equity in income distribution.
• MSMEs are quick in assimilating new design
trends, developing contemporary products and bringing them to the
marketplace ahead of the competition. They tend to be far more
innovative in developing indigenous or appropriate technology, which
may be grown later into pioneering technological breakthroughs.
• They are able to effectively increase the
local content or the value added in final goods that are processed
and marketed by large manufacturing firms.
• MSMEs are notably skillful in maximizing the
use of scarce capital resources and are able to partner with large
firms by supplying locally available raw materials in unprocessed or
semi-processed forms.
• Also, they can act as the seedbed for the
development of entrepreneurial skills and innovation; play an
important part in the provision of services in the community; and
can make an important contribution to regional development programs.
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