Focus on SMEs to shield RP from war shocks

The Philippines should intensify its present programs at strengthening domestic enterprises, particularly small and medium enterprises (SME), to cushion the impact of a disruption in foreign trade if America’s war on Iraq does not end in a quick victory.

The call was made by Employers Confederation of the Philippines (ECOP) president Donald Dee after the United States declared war on Iraq despite a global protest against pre-emptive strikes to what US President George Bush Jr. called a rogue state that harbors terrorism.

The export-import segment of the economy is expected to face greater threat during an international conflict. The same impact does not apply to domestic industries that source their raw materials and sell end products to the domestic market.

"We expect no disruptions to local industries during the US-Iraq war. We have a big domestic market of 80 million Filipinos. The government should therefore concentrate its development efforts at building a strong domestic economy anchored on SMEs," Dee suggested.

He pointed that the P10 billion in lending facilities for SMEs announced by President Arroyo for this year should immediately be used to spark economic activities in the rural areas. Moving fast to set into motion the programs for SMEs, will not only save country from inevitable shocks of a war involving the US, but also help solve the country’s acute problem on unemployment and mass poverty.

The lending program should not be limited to the borrowing needs of existing SMES. It should be expanded to include returning overseas Filipino workers (OFW) who may have to be evacuated from the war zone.

The idea, the export leader explained, is to help OFW returnees set up livelihood or business projects in their hometowns. Besides creating jobs for themselves, they also create new jobs for the rural poor.

The assistance should also expand from the outreach programs of the usual government agencies assisting SMEs and those of private business organizations. Local governments may come in and identify areas of business where the OFWs can came in and marketing assistance.

Thailand had adopted a similar strategy of perking up its domestic industries when it was hit hard by the Asian financial crisis way back in 1997. As a result, it has again overtaken the Philippines in the region’s growth rate last year.

Dee further revealed that employers and organized labor have arrived at a tacit agreement to ride the present storm as one. For its part, employers groups led by ECOP have made commitments not to resort to retrenchments and closures during the hard times. Organized labor led by the Trade Union Congress of the Phils. had agreed to suspend its demands for higher wages.

The healthy labor-management situation in the country makes the local climate for domestic industries to move faster forward. – Abe Belena, Philexport News and Features