Micro, small and medium enterprises (MSMEs) are encouraged to maximize the opportunities for international trade to further boost their economic contribution and strengthen inclusive growth in the country.
Trade Secretary Ramon Lopez said at an event on Monday that MSMEs in the Asia Pacific Economic Cooperation (APEC) region have yet to fully realize the opportunities in the global trading market.
He noted that the MSMEs in the APEC bloc account for only 35 percent or less of direct exports.
“Therefore, we need to tap the potential that MSMEs hold and encourage their development to build their capacity to engage in international trade, whether as direct exporters or as part of regional and global value chains,” the trade chief said.
World Trade Organization (WTO) Director General Ngozi Okonjo-Iweala agreed that MSMEs—accounting for over 90 percent of the businesses and two-thirds of the labor force in APEC economies—will benefit from tapping the global trade and supply chains.
Noting that trade is an “important tool for MSMEs,” she said in the same event that 70 percent of the APEC exporters are MSMEs.
“Where there are opportunities for MSMEs, there are opportunities for everyone. When MSMEs thrive and tap in to national, regional and global supply chains, growth and trade become more inclusive,” she said.
Both officials said that MSMEs should be given assistance, especially in access to finance, to allow trade facilitation.
“MSMEs face many challenges on lack of knowledge on foreign markets to difficulties accessing finance and navigating a complex and regulatory environment,” the WTO chief said. “Covid-19 has been especially hard on smaller firms, from reduced demand or trade disruptions to more limited financial resources to weather the crisis.”
For the part of the Department of Trade and Industry (DTI), Lopez said they have been ensuring continued access to formal financing windows for the MSMEs.
He cited the MSME Credit Guarantee Program and the Covid-19 Assistance to Restart Enterprises (CARES) Program under the Small Business Corp.
The DTI reported previously that the CARES microfinancing program has processed and approved P4.5 billion worth of loans covering 30,408 applications as of June 9.
Lopez is expecting that the remaining funding under the MSME microfinancing facility will be maximized by the end of June. The DTI chief earlier said replenishing the allocation would help the economy recover amid the pandemic.
Adapting in pandemic
Meanwhile, the trade chief said that MSMEs have adapted in pandemic, implementing business measures to stave off the impact of the pandemic in their operations.
These include shift to digital platforms, cost reduction, diversification of products and services, use of non-cash payment options and work-from-home arrangements for employees, Lopez explained.
“Some of these changes delivered greater efficiency for their business and more convenience for their customers,” Lopez said. “We expect that these MSMEs will endure well after the Covid-19 crisis has receded.”
Lopez said that around 38 percent of the total registered business temporarily closed last year during the height of the lockdowns.
With the economy slowly reopening since the second half of last year, the figure improved to 4 percent to 8 percent, which depends on the degree of community quarantine imposed.