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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
MSME Development Plan (2017-2022)
• 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
MSME Development Plan (2017-2022)
Focus Areas Goals
Business Environment Business Climate
Access to Finance
Business Capacity Human Capital Development
Technology and Innovation
Business Opportunities Access to Market
MSME Development Plan (2017-2022)
• 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
MSME Development Plan (2017-2022)
• 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
MSME Development Plan (2017-2022)
• 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.
MSME Development Plan (2017-2022)
• 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.
MSME Development Plan (2017-2022)
• 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.
MSME Development Plan (2017-2022)
• 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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