Ramon M Lopez, Secretary, Department of Trade and Industry (DTI): Interview

Interview: Ramon M Lopez

What kind of government support and intervention could unlock the potential of micro-, small and medium-sized enterprises (MSMEs)?

RAMON M LOPEZ: DTI has been engaged over the years in establishing a number of initiatives aimed to drive the competitiveness of the country’s MSMEs. These were centred on training through programmes like the Roving Academy, a series of seminar-type trainings targeted at MSMEs; and through equipment provision with programmes like Shared Service Facilities, which provide common services and equipment for MSMEs aimed at enhancing productivity and improving the output quality of these enterprises. In the last two years the Go Negosyo Act was signed to provide support in establishing programme centres across the country, targeting all cities and municipalities. These centres will cater to aspiring students, would-be entrepreneurs or existing micro-entrepreneurs to access counselling and assistance with the different stages of a business life cycle. We envision that each centre will provide MSMEs with access to market information, in particular regarding companies within their area and their supply chain requirements, so a firm can act as a supplier to them; access to financing through partnerships with micro-finance institutions, rural banks or any other institutions that cater to MSME financing without collateral requirements; and access to mentoring, with DTI providing business counsellors at every centre in partnership with business associations and NGOs.

How can MSMEs gain access to broader markets?

LOPEZ: A major enabler for market access will be to place MSMEs in mainstream commercial establishments for exposure and as an incentive for them to raise the standards of their products. One example of this is the Go Lokal programme. Although trade fairs have been useful exposure tools in the past, their foot traffic potential is limited. Being placed in a commercial establishment will increase the quality of displays and products from MSMEs, as they will be competing in a modern mainstream market against mall products, both local and imported. This way, not only will market access be improved, but innovation can be harnessed to improve the marketability of their products. We must first generate local demand for community-based MSMEs in order to have a ready market. Once MSMEs transition into the commercial space, the ecosystem itself will act as an enabler for them to level up and prepare products that cater to a broader market. This will also be the initial stage for them to eventually capitalise on export pathway programmes that provide assistance in exporting their products and making them more competitive for international markets. Another major way in which market access can be enhanced for MSMEs is through some level of government intervention. For instance, government procurement programmes can be improved to incorporate MSMEs into their portfolios by allocating a percentage of the procurement budget to these firms.

In what ways can the business environment be developed to be more inclusive for MSMEs?

LOPEZ: Inclusiveness can be achieved by encouraging large businesses to make MSMEs part of their value chain as suppliers. For example, large agro-industrial firms can work with agricultural MSMEs by grouping the smaller businesses into cooperatives and integrating their produce to supply the needs of large corporations. Although the concept is not new, we aim to popularise it and deploy it with as many companies as possible to increase awareness about inclusive business models. This framework creates a sustained market for MSMEs to cater to; big businesses would not make these purchases out of charity, but would also benefit by getting their raw materials in a more efficient and cost-effective manner. Matching of large corporations and MSMEs will be strengthened as they find significant synergies from increasing local content production.