Promoting Inclusive Trade for MSMEs - Insights...

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2019/SOM2/HRDWG/SYM/009

Promoting Inclusive Trade for MSMEs - Insights, Perspectives, and Evidence-Based Policies for

Human Resources and Inclusive Trade: The Philippine Experience

Submitted by: Asian Institute of Management

Symposium on Trade and Human Resources Development: Capacity Building for Inclusive

TradeViña del Mar, Chile

3 May 2019

Promoting Inclusive Trade for MSMEsInsights, perspectives, and evidence-based policies for

human resources and inclusive trade: The Philippine

experience

RIVERA, John Paolo R., Ph.D.

Associate Director, Asian Institute of Management (Philippines)

Visiting Research Fellow, Ritsumeikan Asia Pacific University (Japan)

Symposium on Trade and Human Resources Development:

Capacity Building for Inclusive Trade

03 May 2019 | Viña del Mar, Valparaiso, Chile

Introduction: Trade Competitiveness

• Fukunaga (2015)

↘ Liberalization

reduction or elimination of tariff and non-

tariff barriers

↘ Deregulation

reduction or dismantling of monopoly

power and other domestic rules

• Tullao (2018)

↘ invite foreign players that can expand

income and employment among

economies

↘ respond to external pressures of

competition.

Scene Setting

• Objective: highlight various efforts

• to empower MSMEs to take part in international trade

to access global market

• Emphasis on women and minorities

• to grow entrepreneurs that can compete in the global

market.

• take into account the implementation of the Boracay

Action Agenda to Globalize MSMEs in Regional and

Global Markets

Key Facts

• Aside from expanding productive capacities, MSMEs are

vital for an economy to advance its business

competitiveness.

↘ firms invest to technologically improve; intensify market linkages; and strengthen capability and

flexibility.

↘ firms require superior infrastructures, trade facilitation services, and other types of services and

facilities provided by the government – all of which would demand investment funds.

• The Philippines

↘ MSMEs account for 99.5% of the total number of establishments

↘ Employ 62.8% of the total labor force

↘ Contributes 35.7% of the total value added to the economy

Key Facts

• MSME Development Plans

↘ MSME Development Plan (2011-2016) (under the Philippine Development Plan 2011-2016)

↘ MSME Development Plan (2017-2022) (under the PDP 2017-2022 and ASEAN Strategic Action

Plan for SME Development 2016-2025)

MSME Development Plan (2011-2016)

• Key Performance Indicator

↘ Business Environment

↘ Access to Finance

↘ Access to Markets

↘ Productivity and Efficiency

• Key Result Areas

↘ Created 1,003,776 MSMEs

↘ Provided USD 14.1 billion in loans

↘ Generated USD 1.6 billion in domestic sales and USD 110.1 billion export sales

↘ Assisted 710,908 MSMEs and supported 2,783,213 jobs


• Vision

↘ “A more globally competitive, regionally integrated, nationally resilient, highly sustainable and

productive, innovative and dynamic MSME Sector performing as one of the most effective

drivers of inclusive Philippine economic growth”

• Mission

↘ “By 2025, ASEAN shall create globally competitive, resilient and innovative SMEs seamlessly

integrated to ASEAN community and inclusive development in the region”

• Key Performance Indicators

↘ Promote productivity, technology, and innovation

↘ Increase access to finance

↘ Enhance market access and internationalization

↘ Enhance policy and regulatory environment

↘ Promote entrepreneurship and human capital development


Focus Areas Goals

Business Environment Business Climate

Access to Finance

Business Capacity Human Capital Development

Technology and Innovation

Business Opportunities Access to Market


• Business Climate

↘ simplify, standardize, and harmonize MSME-related rules and regulations at the local and

national levels

↘ encourage MSMEs to tap the opportunities in macroeconomic policy, infrastructure

development, and trade deals

↘ Program: Negosyo Center – business assistance that facilitate registration and capacity

building needs of MSMEs in every province, city, and municipality in the Philippines


• Human Capital Development

↘ expand and strengthen the human resources capacity of MSMEs through mentoring, group

training, and online training

↘ Program: Kapatid Mentor Me Program – Coaching and mentoring program where successful

large corporations guide micro and small enterprises on different aspects of business

operations


• Access to Finance

↘ streamlining and simplifying loan processes for MSMEs

↘ incentivizing financial institutions to reach MSMEs

↘ equipping MSMEs with knowledge and enticements to avail of formal financial services

↘ Program: Pondo sa Pagbabago at Pag-asenso (P3) (Funds towards change and development)

– microfinancing program that seeks to provide an alternative to widespread informal lending

practices by 2.5% monthly interest versus 20% of the more populat “5-6” lending.


• Access to Technology and Innovation

↘ support linkages between MSMEs and large corporations

↘ develop more inclusive businesses and social enterprises

↘ establish feasible domestic economic zones for MSMEs

↘ provide affordable, cost effective, and accessible innovative technologies

↘ Program: Shared Service Facilities – provides machinery, equipment, tools, and skills for the

common use of MSMEs in business agglomerations

↘ Program: Small Enterprise Technology Upgrading Program (SETUP) – enables firms to

address their technical problems through technology transfer and interventions to boost their

productivity and competitiveness.


• Access to Market

↘ strengthen value and supply chain linkages

↘ provide timely, accurate, and inexpensive market matching available for MSMEs

↘ Program: Go Lokal! – retail concept store showcasing quality and innovative Philippine

products in selected retail partners

↘ Program: One Town One Product Next Gen – provides a package of public-private assistance

that enables communities to determine, develop, and promote products or services rooted in its

local culture.

Business Climate Business Facilitation

Regulatory Framework

MSME Development and Business Servicing

Fiscal Policy

Monetary Policy

Exchange Rate Policy

Trade Policy

Investment Policy

Competition

Policy

Monitoring and

Evaluation

Fiscal Incentives

Labor Productivity

and Labor Relations

Business Innovations

Infrastructures

Hard Infrastructures

Soft Infrastructures

Business Model (DTI)

• Providing business ideas that new entrepreneurs can readily

adopt to start a business (e.g., direct selling, franchising)

• Driving factors of entrepreneurial intention

↘ Financial Capacity

↘ Education

↘ Government Support

DOLE Programs

Youth Entrepreneurship Act

• Bureau of Working Conditions (BWC) Work Improvement

in Small Enterprise (WISE)

• NWPC ISTIV Bayanihan Program

• DILEEP Livelihood and Emergency Employment Program

• Special Program for the Employment of Students (SPES)

• Youth Entrepreneurship Support (YES)

• Youth Education – Youth Employability (YE-YE)

In-Aid Programs for Entrepreneurship

Earning Differentials

• In--aid programs related to employment increases

likelihood of being employed

• In-aid programs related to entrepreneurship is statistically

insignificant in increasing entrepreneurial tendencies, but

it reduces likelihood of being unemployed.

• Since in-aid programs already bring about an increase

likelihood of employment, the programs must make

entrepreneurship more enticing by the provision of an

entrepreneurial ecosystem (from education to government

funding and support) that would encourage the youth to

become entrepreneurs.

Some Empirical Findings:

Summary and Implications

• Moreover, the various entrepreneurship programs of the

government must have wider breadth and scope to reach

the youth while they are still in school.

↘ the ABM strand of the Senior High School program of the DepEd is a good avenue for the

government to market and implement its entrepreneurship programs, which should incorporate

strong partnership with the industry.

Some Empirical Findings:

Summary and Implications

• Traditionally: Human capital can be enhanced by

strengthening the linkage between firms, educational

institutions, and organizations.

↘ Education as investment in human capital

↘ Training and manpower development through technical education

↘ Importance of HR availability in investment location decision

↘ Importance of HR availability to produce for the global market

↘ HR and training requirements to compete in the global market

↘ Role of Government – provision of educational services, regulation of educational services,

financing educational services, promoting HRD

On promoting inclusive trade and growth

On promoting inclusive trade and growth

• Alternative Perspective: Human resource development

means the enhancement of the abilities of an individual in

forming various forms of human wealth that can be used in the

productive and distributive activities of an economy.

• These forms of human wealth include social capital, human

capital, and knowledge capital (Tullao, 2018).

↘ Social capital refers to qualities of individuals in interacting with others which are useful in the

development of work attitude, teamwork and other people skills.

↘ Human capital refers to motor, intellectual, and productive skills that can enhance an

individual’s employability and increase his lifetime income.

↘ Knowledge capital constitutes higher levels of knowledge and competencies which leads to the

growth of the research and development capabilities of a state as well as the creation of new

innovations.

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For collaborations and other inquiries,

you may email me at:

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