You might be familiar with the term “MSMEs,” or micro, small, and medium enterprises, but do you know just how crucial this particular business segment has become in today’s economy? Following our recent roundtable discussion with experts from DTI and BPI, we have gotten a more nuanced appreciation for this evolving category in the Philippines.
To better understand the role of MSMEs in the nation’s financial recovery, here are some of our most interesting findings from that discussion.
“Micro” makes up most of MSMEs
It is quite revealing that, according to PSA Statistics, MSMEs account for about 99.5% of all operating businesses in the Philippines. Perhaps more telling, around 89% of these are “micro businesses,” meaning those with an asset size less than P3 million (as outlined in the Magna Carta Public Act 6977).
In short, the Philippine economy is, by a vast majority, supported by micro businesses ranging from sari-sari stores and eateries to photographers and web designers. To elaborate even further, these statistics are all solely based on businesses that are registered with the government. Beyond that, we can only imagine just how “macro” the micro enterprise segment of the Philippines truly is.
A “K-shaped” recovery for MSMEs
Given the vast range of businesses that fall under the MSME umbrella, it can be assumed that not all industries will recover equally from this pandemic. As BPI Direct BanKo president Jerome Minglana stated, “Some industries will go up, but there will be industries that will continue to go down.”
During the roundtable discussion, we discovered that the overall initiatives led by both government and private institutions to boost MSMEs are just as diverse as the segment itself. Not only do banks like BPI now offer easy-access loans to businesses of all sizes, they also provide personal financial advice in the form of webinars and consultations.
This latter form of aid is just as crucial because many business owners at this juncture need to rethink their businesses entirely. And since sole proprietors especially tend to mix their personal and business finances, money management is all the more essential in overcoming this global pandemic.
“We really need to be creative in order to service this segment,” concludes Minglana, whose BanKo takes on a more personable approach to business banking.
A young and creative future
Among the many sectors covered by the MSME blanket, the creative sector is certainly one to look out for in the coming years. “There are a lot of things that can be done by our young generation in this sector alone,” encourages DTI’s Bureau of Small and Medium Enterprise Development Director, Jerry Clavesillas.
With continuing trends in digital transformation and remote work, it is no surprise that more and more freelance artists and creative professionals are setting up shop. These entrepreneurs can already expect a solid client base from within the MSME segment, as new businesses would often require services such as logo design, web development, and content production.
In the overall spirit of creativity, we can also expect new kinds of businesses and entirely new industries to emerge from this pandemic. As BPI Business Banking acquisition head Gac Pagulayan says, “COVID is the father of invention.” We can expect big things to come from the more digitally-native next generation.
Needless to say, there is real and transformative power circulating around MSMEs. For aspiring entrepreneurs who might be reading this, know that there is a wealth of material and resources readily available to help you along your business journey.