Uplifting Micro, Small, and Medium Enterprises (MSMEs) in the Philippines thru DTI’s 7Ms: Suggested Policies for Implementation

Introduction           

          Micro, small and medium enterprises (MSMEs) are the backbone of the PHL’s economy since they serve as critical drivers of our economic development, particularly in fostering growth, employment, and income. The government, as it continues to put its economic plan in place is an indication of recognizing the importance of MSMEs in our country. Armed with this mission, effective and efficient actions such as implementation of policy provisions is essential to carry out the plans in addressing, sustaining and expanding the programs and services of the MSMEs which will undoubtedly contribute to the country’s GDP and growing labor force.

           In 2017, the MSMEs accounted 99.52 % of the total establishments in the Philippines and employed 62.9% of its workforce who are expected to be empowered and competitive in the domestic and global markets.  The top five (5) industry sectors that include (1) Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles; (2) Accommodation and Food Service Activities; (3) Manufacturing; (4) Other Service Activities; and (5) Financial and Insurance Activities, accounted for about 83.62% of the total number of MSME establishments. (Department of Trade and Industry, 2020). Evidently, majority of the business establishments in our country are MSMEs which signify that the largest bulk of our workforce belong to this sector.

            With the renewed thrust of recognizing MSMEs as substantial contributor to our country’s economic growth and employment, improved and innovative initiatives from the government have been crafted including convergence of available development resources and coordination among stakeholders to ensure MSMEs’ sustainable growth and accelerate the achievement of our country’s economic goals. Among the initiatives of the government is the DTI’s 7Ms which aims to help Filipinos to set up their own business and be smarter entrepreneurs.  With the planned projects in attaining the seven-point strategy that includes Mindset, Mastery, Mentoring, Markets, Money, Machines, and Models of Business, the Department of Trade and Industries hopes that these ways can make a difference in the market which will consequently contribute to the larger cause of sustaining the Filipino entrepreneurship revolution (Department of Trade and Industry, 2018b).

Uplifting Micro, Small, and Medium Enterprises (MSMEs) in the Philippines thru DTI’s 7Ms: Suggested Policies for Implementation
The 7Ms of Successful Entrepreneurs Source: https://www.dti.gov.ph/business/msmes/the-7ms-of-successful-entrepreneurs

         In implementing the seven-point agenda of 7Ms, several factors must be put in place since this initiative remains a big challenge bearing in mind the limited resources and technical people who can provide the proper approaches and methodologies to ensure that the required entrepreneurial competencies needed by Filipinos to start and manage a business venture along any of its risks would be achieved. In most cases, the government programs despite the availability of the budgetary allocation still fail due to lack of comprehensive strategic planning and prioritization of activities. For more strategic implementation of activities, the use of research findings including statistics pertaining to knowledge and experiences on entrepreneurship of Filipinos should serve as a baseline in determining what agenda among DTI’s 7Ms must be prioritized to ensure strategic allocation of funding and resources. Furthermore, research findings can also serve as a point of reference in the determining the effectiveness of the existing programs on entrepreneurial promotion and improving the training programs on entrepreneurship, particularly in the curricular and instructional enrichment by the different agencies to eliminate duplication of efforts. To achieve its overall goals and objectives, this policy brief suggests implementation policies which may serve as a guide in implementing the DTI’s 7Ms to uplift the MSMEs in Philippines.

 

Assessing Entrepreneurial Behaviors and Competencies of Filipinos

            Filipino entrepreneurs are known for their practicality, passionate about business, confident and self-reliant; hard-working and goal oriented; and a leader and an innovator. These character traits are indicators that Filipino entrepreneurs, no matter how successful they are, they never loss sight of why they are striving to make their business thrive and grow (Philippine Daily Inquirer, 2012). In 2013, the Global Entrepreneurship Monitor (GEM) reported that Filipinos have a high regard on entrepreneurship, with 85 percent expressing interest to make entrepreneur as a good career choice and respondents showed a very high intention (44.1 percent) to start a business (Reyes, 2015). Meanwhile, the results of the 2015 Philippine APS (Adult Population Survey) and NES (National Experts Survey) revealed that more than half of the population sees business opportunity in the country and close to 70% believe that they have the necessary skills to seize the entrepreneurial opportunities in the economy (Velasco et al., 2017). Likewise, studies show that women entrepreneurs in the country are strong in the goal setting, information seeking, and systematic planning and monitoring competencies ((Resurreccion, 2012);

           Although most Filipinos may possess many positive entrepreneurial behavior and competencies, the 2015 Philippine APS and NES however revealed that there is a high business closure rate mainly due to unprofitable business operations and difficulty in accessing financing to continue business operations (Velasco et al., 2017). According to the Social Enterprise Development Partnerships, Inc. (SEDPI) Filipino millennials, who represent almost half of the country’s work force are least financially literate. In the study conducted by Mendoza (2015) on the financial performance of MSMEs found that enterprises performed favorably in liquidity, activity and leverage but suffered from a low-level profitability. Aside from financial skills, a study on entrepreneurial competencies among 100 college level SME operators of Ozamiz City Public Mall revealed that almost 43 percent were found to have moderate competencies on time management skills, marketing management skills and technical skills (Betonio, 2014). Furthermore, research findings on personal entrepreneurial competencies of students and practicing Entrepreneur in Cordillera Administrative Region and Cities of Baguio, Dagupan, and San Fernando, La Union show that they are weak in risk taking ((Bautista et al., 2007).

           In this context, these findings have significant implications on the implementation of the DTI’s 7Ms for these will serve as bases in determining the appropriate programs, activities and projects and address emerging issues that will obstruct the goal achievement of the seven- strategic agenda.

 

Suggested Policies for Implementation

          In assuring the long-term viability of the DTI’s 7Ms, policies for the implementation of the planned programs, activities and projects is formulated to make certain that all strategic agenda will be achieved to their fullest possible extent.

Policy 1:    Dissemination of the 7Ms Strategic Plan
It shall be the policy of DTI that:
The  programs and projects in relation of 7Ms shall be disseminated through various  ways to all government agencies and stakeholders to ensure active participation of all concerned authorities.

Policy 2:          The priority strategic agenda shall drive the budget process
It shall be the policy of the DTI that:
The strategic agenda of the 7Ms shall provide the basis upon which the MSME Council establish annual priorities, the government training institute identify annual programs and for the DBM’s recommendation on annual budget.

Policy 3:          Integration of entrepreneurial mindset, mastery, and mentoring in the curriculum of   educational system
It shall be the policy of the DTI that:
All levels of the educational system shall integrate the programs, activities and projects of DTI with respect to the 7Ms strategic agenda on mindset, mastery and mentoring. All government entrepreneurial education and training institutions shall be directed to identify and use appropriate instructional designs including the development of instructional materials needed on these aspects to ensure that the required skill and competencies shall be transferred to students’ long-term memory. Evaluation on the delivery of instructional services on entrepreneurial education shall be done at the end of the semester and results shall be submitted to DTI for review and enrichment of the programs, activities and projects.

Policy 4:          Conduct Training of Trainers on Entrepreneurial Development
It shall be the policy of the DTI that:
The MSME Council in collaboration with all concerned government entrepreneurial education and training institutions in the country shall conduct annual training of trainers on entrepreneurial development to enhance the capabilities of entrepreneurial trainers and increase the number of human resources who will be involved in facilitating the training programs.

Policy 5:          Conduct series of regional entrepreneurial education and training on financial management, profitable machines, market access and business models
It shall be the policy of the DTI that:
The Bureau of Micro, Small, and Medium Enterprise Development (BMSMED) shall coordinate with all concerned government entrepreneurial education and training institutions including Local Government Units (LGUs) in the country to conduct series of regional training on financial management, proven profitable machines, market access and types of business models that are suitable for MSMEs business venture.  Training shall include interactive activities that would align the skills of participants with the potential industrial development in their respective regions. Regional trainings shall provide activities that are align with the participants’ skills and the needs of the local industries.

Policy 6:          Assessment of Implementation of Programs, Activities and Projects
It shall be the policy of the DTI that:
Through BMSMED, all government educational and training institutions and LGUs shall submit annual reports reflecting the extent to which the programs, activities and projects that are connected to strategic agenda of 7Ms for review purposes.

Policy 7:          Annual Updating of Programs, Activities and Projects
It shall be the policy of the DTI that:
The BMSMED and the MSMED Council shall update the programs, activities and projects in relation to 7Ms to positively respond to the emerging needs in entrepreneurial development.  In coping with emerging needs, government educational and training institutions and LGUs shall be allowed to recommend in writing to the BMSMED for the MSMED Council’s review and appropriate actions.

 

Conclusion

Empowering marginalized sectors with the right mindset to move up in life requires comprehensive programs that will align the skills of Filipino entrepreneurs with the needs of the Philippine industries. With the implementation of the suggested policies, this would address the issue on provision of appropriate training programs that will enhance the skills and competencies of every individual that will consequently eradicate issues on mismatch of entrepreneurial skills and expectations that commonly lead more labor workers to give up looking for jobs.

 

References:

Bautista, R. S., Barlis, M. J. P., & Nazario, A. G. (2007, October 1). The Personal Entrepreneurial Competencies of BS Entrepreneurship Students of the Cordillera Administrative Region and Practicing Entrepreneurs in the Cities of Baguio, Dagupan, and San Fernando, La Union: A Comparison. 10th National Convention on Statistics (NCS), Mandaluyong, Metro Manila.

Betonio, J. R. (2014). Entrepreneurial Competencies of the Small and Medium Enterprise Business Operators of Ozamiz City Public Mall Philippines: Basis for Community Extension Programs. Iamure International Journal of Multidisciplinary Research, 8(1). https://ejournals.ph/article.php?id=2630

Department of Trade and Industry. (2018a). MSME Development in the Philippines. http://www.microfinancecouncil.org/wp-content/uploads/2017/08/Empowering-MSMEs_Alice-Opena.pdf

Department of Trade and Industry. (2018b, October). The 7Ms of Successful Entrepreneurs. Department of Trade and Industry: Enabling Busines, Empowering Consumers. https://www.dti.gov.ph/businesses/msmes/the-7ms-of-successful-entrepreneurs

Department of Trade and Industry. (2020). 2018 MSME Statistics. https://www.dti.gov.ph/business/msmes/msme-resources/msme-statistics

Mendoza, R. R. (2015). Financial Performance of Micro, Small and Medium Enterprises (MSMES) in the Philippines. The International Journal of Business and Finance Research, 9(4), 67–80.

Philippine Daily Inquirer. (2012, July 7). A profile of Filipino entrepreneurs. Inquirer.Net. https://business.inquirer.net/69655/a-profile-of-filipino-entrepreneurs

Resurreccion, P. F. (2012). Entrepreneurial Competencies and Work – Life Balance of Rural Women Entrepreneurs:  Evidence from the Philippines. Journal of Sociological Research, 3(2).

Reyes, R. R. S. (2015, January 20). Filipinos view entrepreneurship positively. https://businessmirror.com.ph/filipinos-view-entrepreneurship-positively/

Velasco, A. L., Castillo, P. J., Conchada, M. I. P., Gozun, B. C., Largoza, G. L., Perez, J. A., & Sarreal, E. D. (2017). Philippine Entrepreneurship Report 2015–2016. De La Salle University.

 

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