Laws on MSME development

Judging from the statements of some of the economic advisers of President-elect Ferdinand Marcos Jr., the development of micro-, small- and medium-enterprises (MSME) would be one of the measures his administration would implement to improve the economy.

MSMEs are businesses engaged in industry, agribusiness or services whose total assets, inclusive of loans but exclusive of the land on which they operate, have the following asset values: micro, not more than P3 million; small, P3 million to P15 million; and medium, P15 million to P100 million.

For their usual employee complement, micro has one to nine employees; small, 10 to 99 employees; and medium, 100 to 199 employees.

According to the Philippine Statistics Authority, in 2021, more than 1.08 million MSMEs were in operation and they generated a total employment of 8.57 million, or roughly 5 percent of the approximately 41.2 million Filipinos employed during the same period.

Note that in the same year, more than 3.7 million Filipinos were out of job due to the closure of hundreds of businesses for reasons related to COVID-19.

To the advantage of the incoming administration, it will not have to start from scratch in its plan to take the MSME development route to improve employment opportunities in the country.

Three laws, namely, the Go Negosyo Act, Barangay Micro Business Enterprise Act (BMBE Act) and Magna Carta for MSMEs, are already in place for that purpose.

The Go Negosyo Act provides for the establishment of a “Negosyo Center” in all provinces, cities and municipalities to, among others, promote ease of doing business and access to services for MSMEs within their respective jurisdictions, and build local support networks and establish market linkages for them.

The BMBE Act exempts micro enterprises registered with the Department of Trade and Industry from income tax and from the coverage of the minimum wage law, but their employees shall receive the social security and health-care benefits that employees of other industries are entitled to.

The Magna Carta for MSMEs calls for the strengthening of the Micro, Small and Medium Enterprises Development Council in order to, among others, help establish the needed environment and opportunities conducive to the growth and development of MSMEs, and streamline the registration of business enterprises.

In addition, it created the Small Business Guarantee and Finance Corporation (SB Corp.) for the purpose of extending all forms of financial assistance to eligible MSMEs and to guarantee their loans.

The SB Corp. is, in effect, supposed to act as “interim” financier and credit guarantor to MSMEs, which is often a critical factor in any starting business.

Indeed, the means and procedures needed to make MSMEs play a significant role in the development of the economy have been in place for years.

Since the implementing rules and regulations of these laws have long been issued, there is no need to reinvent the wheel, so to speak. The problem is, many of our well-meaning laws are long on substance but short on implementation.

A close review of these laws would show that the accomplishment of their objectives depends to a large extent on the participation and cooperation of the local government units (LGU) where the MSMEs plan to conduct their business.

To illustrate, the issue of ease in securing business permits or licenses can be addressed by the LGUs by streamlining the procedure for their processing and issuance, i.e. getting rid of “fixers” in cahoots with the processors.

In this regard, LGUs can take a leaf from, for example, Valenzuela City, which has come up with a system where business permits and licenses can be applied for digitally or, if that is not feasible, be able to apply for and get them without hopping from one window to another in less than an hour or so.

It bears noting that when MSMEs are able to profitably operate, the LGUs’ coffers and their constituencies benefit from that success. INQ

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