MSMEs to get boost with P2.2B funding next year

Micro, small, and medium enterprises (MSMEs) battered by the slowdown of economic activities due to COVID-19 are expected to get the much-needed shot in the arm with at least P2.2 billion funding from the annual budget for 2021.

The allocation comprises close to half of the P5.35 billion proposed budget for the Office of the Secretary of the Department of Trade and Industry (DTI), according to the National Expenditure Program (NEP) for 2021 uploaded on the website of the Department of Budget and Management.

"Every peso of the P4.506-trillion FY 2021 NEP went through numerous budget hearings and consultations with the agencies," the DBM said in an earlier statement.

Broken down, the amount for MSME development program includes P1.302 billion in maintenance and other operating expenses (MOOE); P569.720 million in capital outlays; and P362.804 million for procurement services.

The MSME Development Program is in line with the Medium Enterprise Development Plan 2017-2022, which aims to provide greater opportunities to help entrepreneurs start up, sustain, expand, and internationalize their businesses.

Other programs of the DTI include the Exports and Investments Development Program (P860.192 million); Consumer Protection Program (P555.954 million); Industry Development Program (P489.485 million); and Consumer Education and Advocacy Program (P84.200 million).

Aside from this, there are also special provisions for the Micro, Small, and Medium Enterprise Development Council Fund equivalent to P21.321 million. The council is tasked, among others, to review existing policies of government agencies that affect the growth and development of MSMEs.

The NEP also indicates the appropriation of P587.132 million for the implementation of the Shared Service Facilities, which will be used for projects that aim to improve the quality and productivity of MSMEs. Its implementation shall be primarily based on priority industry clusters identified by the DTI in consultation with key stakeholders.

This will be used for the development of the MSME sector, sourced from 90% of the total penalties collected by the Bangko Sentral ng Pilipinas (BSP) from lending institutions.

Latest data from the DTI show that MSMEs accounted for 99.52% of the total 1.003 million business establishments in the country in 2018.

Micro enterprises are defined as those with total assets worth less than P50,000; cottage enterprises with assets worth P50,001 to P500,000; small with P500,001 to P5 million; and medium from over P5 million to P20 million.

According to the NEP, the DTI was able to assist 39% of the total businesses in 2019 under the MSME Development Program, higher than the 25% target.

This is equivalent to 347,324 MSMEs out of the 200,000 target, and 688,980 clients assisted by the Negosyo Centers out of the 575,000 target.

In May, however, Trade Secretary Ramon Lopez said over 525,000 or 52.66% of MSMEs in the country had to stop operations due to the lockdowns designed to curb the spread of COVID-19.

In June, the Philippine Statistics Authority (PSA) reported an unemployment rate of 17.7% in April, reflecting an increase of 5 million jobless Filipinos to 7.3 million.

For its part, the DTI has rolled out its P1-billion COVID-19 Assistance to Restart Enterprises (CARES) program which grants loans to MSMEs, but the department has sought more funds as the program has already been oversubscribed. —LDF, GMA News