bIt is widely accepted that micro, small, and medium enterprises (MSMEs) are a major driver of the Philippines economic growth. MSMEs accounted for up to 99.6 percent[1] of total enterprise and employ at least 62 percent1 of the Philippines workforces. MSMEs also contribute to a significant portion of the country’s Gross Domestic Product (GDP) with 36 percent[2] of the total GDP. However, like many other MSMEs around the regions, MSMEs in the Philippines have difficulties in sustaining and growing their businesses.

Achieving sustainable growth for MSMEs: the role of Department of Trade and Industry (DTI)

The issue of business sustainability for MSMEs has been one of the focuses of Department of Trade and Industry (DTI) of the Philippines in their MSME development program. The Department of Trade and Industry (DTI), pursues a seven-point strategic framework to help MSMEs start up, sustain, expand, and internationalise their own businesses, and thereby become smarter entrepreneurs. This has not been an easy task due to the various aspects of support required in order to support MSMEs in growing their businesses. On that basis, DTI has introduced the 7Ms strategy, namely, Mindset, Mastery, Mentoring, Markets, Money, Machines, and Models that holistically equip MSMEs to make headway in increasingly competitive markets, while contributing to the larger cause of sustaining the entrepreneurial revolution.

Opening access to technology, the story of Shared Service Facility

In order to improve MSME’s productivity, DTI understands that MSMEs will be required to adopt more sophisticated technology in their production processes. However, the next challenge will be access to that technology. In support of one of the 7Ms: Machine, DTI has been implementing its Shared Service Facilities (SSF) Project as one of the strategies to achieve its goal of inclusive growth and jobs generation. Specifically, SSF aim is to increase productivity and improve the competitiveness of MSMEs by providing them with machinery, equipment, and tools under a shared system. SSFs are managed by cooperators for the common use of MSME beneficiaries engaged in priority industry clusters. The cooperator may be people’s organizations, cooperatives, industry/trade/business associations, local government units (LGUs), non-government organizations (NGOs), state universities/colleges (SUCs), technical vocational schools, and other similar government academic and training institutions. While the beneficiaries of the project are predominantly cooperatives, associations or groups of MSMEs, this includes individual MSMEs or entrepreneurs who may not be members of cooperative, associations, or organizations. Students, researchers, trainees, teachers, and service providers may also avail the services of the SSFs.

Since the project implementation in 2013, there are 2,231 established SSFs nationwide benefitting 92,337 MSMEs and generating 52,931 additional jobs. Most of the SSFs are in the cluster of processed food, coconut/ coco coir, gifts, décor, & housewares (GDH), handicrafts, and bamboo. Other sectors with SSFs are engaged in processing of abaca, cacao, ckalamansi, ceramics and pottery, coffee, dairy, fashion accessories, furniture & furnishings, meat (fresh and processed), metal and metalworks, milkfish, muscovado, organic fertilizer, pineapple, renewable energy, rubber, seaweeds, tuna, and veggie noodles.

Of the 2,231 facilities, 12 SSF-Fabrication Laboratories (FabLabs) have been established throughout the country. FabLab is a small-scale workshop where would-be and existing entrepreneurs may turn their ideas into new products and prototypes giving them access to a range of digital fabrication.

Future-ready MSMEs

Sto. Niño de Plaridel Parish Multi-Purpose Cooperative (SNPPMPC)

a

One of the inspiring stories from the SSF implementation comes from the Pandan and Bariw Bag Making community under the Sto. Niño de Plaridel Parish Multi-Purpose Cooperative (SNPPMPC). Pandan bag weaving is one of the most common thriving livelihoods in the Philippines. One of the cities that relies on the industry is Plaridel. Pandan bag weaving has been one of the main sources of family income for many who live in Plaridel. Many of Plaridel’s population work as pandan gatherers, strippers, weavers and traders. Traditional bags (bayong) and other woven products have been produced mostly by women weavers in the locality for many years. The traditional products were not marketable and thus sold at a very low prices in the market.  At some point, the weavers served as sub-contractors to handicraft exporters, for semi-processed bayong and other woven materials. Income from the pandan weaving industry was very minimal and weavers were often discouraged to continue weaving because of the minimal economic return until, they identified that there was a huge potential for the industry, if they could improve the quality in terms of workmanship and style of their bags.

The local Department of Agriculture and the Department of Trade and Industry then came together to assist the women-weavers in the industry. The LGU-DA organized the independent weavers and named themselves Uplifted Plaridel Women’s Association for Rural Development (UPWARD). After sometime, some members of UPWARD became entrepreneurs themselves like, M.O. Pangilinan and several others, establishing their own businesses although still continuing their membership with the association. The SNPPMPC was then their main source of financing for their respective businesses, through micro-lending.

Since the SNPPMPC qualified as SSF project Cooperator, the sewing machine SSF was turned-over to the Cooperative and not to UPWARD, although the members were engaged in pandan bag weaving. Furthermore, since most of the members of UPWARD were at the same time members of the cooperative, they were qualified beneficiaries of the project. Another group beneficiary that took part in the SSF was the Capoocan Women’s Association (CAPWA), Capoocan, Leyte. Some of the sewing machines were transferred (through a MOA) to their production center for convenience.

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[1] National sources (2017)

[2] ASEAN SME Policy Index (2014)