Apec policies prevent growth of PH SMEs, says ex-solon

Economic policies of the Asia-Pacific Economic Cooperation (Apec) hinder the growth of small and medium enterprises (SMEs) in the Philippines, according to a former lawmaker.

Teddy Casiño, former Bayan Muna representative and spokesperson of the anti-Apec group #PHFightApec, on Tuesday said it would be illusory for SMEs to dream of linking with global value chains unless local conditions support their strength.

Casiño said economic liberalization policies since the late 1980s “have caused the demise of the Philippine manufacturing sector, many consumer goods, and even agro-industrial products.”

“Filipino manufacturers and farmers have been decimated by the deluge of cheap imported goods and raw materials brought about by government’s policy of slashing tariff rates to one of the lowest in [the Association of Southeast Asian Nations]. Philippine SMEs are under threat of extinction because of globalization,” Casiño said in a statement.

“At present, 91.5 percent of Filipino enterprises are micro-enterprises, which contributed a mere 4.9 percent of value added to the economy and are too small and inefficient to compete for a piece of the global or even regional value chain. For Apec to preach that they should target the global market is giving them false hopes,” he added.

Casiño said government programs should be able to support SMEs from credit up to research and development in order for them to be globally competitive. “Otherwise, only a handful will have the capability to jump to the global market or link up with global value chains,” he said.

Citing “official figures,” Casiño said about 72,777 manufacturing firms—mostly MSMEs – closed between 1996 and 2012, or some 4,549 annually, partly due to increased global competition.

“The small and medium-sized firms that have the most chances in global competition are dwindling and find little support at home, since most large industries in the Philippines source their equipment, parts and materials from foreign suppliers. Such local linkages between large enterprises and SMEs are crucial to maintaining a robust and sustainable SME sector whose benefits rebound to the local economy,” Casiño said.

“Unfortunately, policies like trade and investment liberalization and economic deregulation make it double difficult for countries like the Philippines to industrialize in a wholistic and integrated manner. The local linkages between the large enterprises and SMEs have broken down, with foreign suppliers taking the place of local SMEs. Unless this is reversed, our SMEs will merely end up as subcontractors of transnational corporations, offering mostly contractual work and low wages,” he added. RC