FULL TEXT: President Aquino on innovation, inclusiveness at the APEC SME Summit

MANILA, Philippines - President Benigno Aquino III on Tuesday delivered the keynote speech at the opening of the Asia-Pacific Economic Cooperation Small and Medium Enterprises (APEC SME) Summit at the Green Sun Hotel in Makati City.

The president's speech focused on innovation and inclusiveness as the path to a "better future."

LIVE: APEC 2015 meetings in Manila

Read the full speech here:

Every year, the leaders of the 21 member-economies gather in a single place to chart the future of the Asia Pacific. As President, it has been my privilege to take part in these gatherings over the past five years—and each time, I cannot help but be impressed by what APEC has been able to achieve. APEC is unique in that it does not produce binding commitments. This only means that we are not confined by certain limits: leaders can think out of the box; discussions can be more freewheeling. Some might think that this is an obstacle to productivity. They would be mistaken. When we come together in APEC, we are united by the desire to bring stability, security, and prosperity to our peoples. We work together; we cooperate; and we have done so much towards this end.

A number of significant commitments towards realizing free and open trade and investment among member economies find their seeds in the discussions that have taken place in APEC. Because this is first and foremost an economic forum, these commitments would not have materialized without the help of the private sector, which is why we are all here in this SME summit. It is an acknowledgment that we will never be able to bring about transformation solely by revising policy or by working on the level of institutions. No—positive change takes place on the ground, and requires the partnership of men and women like you.

This was a belief—an advocacy—very close to the heart of my mother, former President Cory Aquino. My mother became president after witnessing how an empowered Filipino people reclaimed democracy for our country. After her presidency, she would pursue the empowerment of our countrymen through a different means: working in microfinance to enable poor Filipino entrepreneurs to take hold of their own destinies, which has contributed to reducing poverty levels.

In a very real way, my mother’s belief has been translated into our inclusive growth agenda. From the beginning, we have never been content to simply grow the economy and wait for the benefits to trickle down to our people. On the contrary: we believe that the Filipino people are our strongest competitive advantage and our most important resource. By pouring massive funds into health, education, and other social services, we have empowered our countrymen to participate more fully in economic growth.

Of course, if we are investing in their potential and in their abilities, then why should we not invest in their dreams as well? In 2013, micro, small, and medium enterprises (MSMEs) comprised over 99 percent of all business enterprises in the Philippines and account for 63.7 percent of total employment. These statistics alone would be reason enough for government to support the sector, but we see far beyond the numbers. For us, these statistics represent Filipinos opening doors of opportunity for so many other Filipinos. Imagine the growth of these small businesses once wider markets are available to them, and once they become more efficient at running their businesses. Imagine further how many millions more Filipinos would receive gainful employment. We went beyond imagining: we put it into motion.

Through the Access of Small Enterprises to Sound Lending Opportunities, which has the acronym of ASENSO, which means progress in Tagalog, over P153.1 billion has been released to over 174,000 enterprises from 2010 to 2014. The implementation of the Magna Carta for MSMEs has likewise played a significant role in microfinance. By requiring banks to allocate ten percent of their total loan portfolio for credit to MSMEs, over P427 billion has been lent to Filipino entrepreneurs as of June 2015.

We want to ensure that they do not just have access to capital—but that they are able to maximize it. Our Department of Trade and Industry pioneered the establishment of Shared Service Facilities, or common production centers for MSMEs. 1,305 SSFs have been put up around the entire archipelago as of September this year, to meet the needs of a variety of sectors. For example, 13 MSMEs in Kalibo, the Province of Aklan are making use of 60 handlooms in a SSF in order to meet the high demand for abaca cloth products coming from countries as far away as France and the USA. Meanwhile, 6 MSMEs in Diffun, the Province of Quirino have likewise moved beyond just producing gifts and souvenir-type products to producing fresh and dry vegetable noodles from squash and carrots, among others. And, in a number of municipalities in Ifugao, over 750 coffee growers are making use of an SSF with equipment like coffee hullers and pulpers. This has allowed them to more than quadruple their production: from 230 packs, to just under 1,000 packs a month. Their market has expanded drastically, with sales increasing sixfold: from P10,000 to P60,000 a month.

The participation of private sector partners has likewise helped to realize the same kind of success in specific sectors. The Nestlé Experimental and Demonstration Farm in Davao has helped local coffee farmers move up the value chain in terms of quality. They have produced seven new high-quality coffee seeds, which have a high yield, are resistant to pests and diseases, and are adaptive to different local coffee-growing regions. One of our largest and most popular fast food chains, Jollibee, has a Farmer Entrepreneurship Program that allows small farms to sell produce like onions, tomatoes, and bell peppers directly to institutional markets. There’s also the partnership that our Technical Education and Skills Development Authority has with Coca-Cola in training women entrepreneurs who own and operate small stores called sari-sari stores, which are small, neighborhood stores. Not only do they learn bookkeeping, inventory management, product selection, etcetera; they are also taught how to make the most of their increased income.

We also have the SME Roving Academy, which travels around the country, conducting training seminars in marketing, product development, and financing, among others, to help them to become more competitive. Perhaps one of the most significant areas in which government is educating MSMEs is that of Doing Business in Free Trade Areas, which helps them get relevant market information and avail of preferential tariffs. We have also institutionalized these efforts through the Go Negosyo Act of 2013, which has the goal of promoting ease of doing business and facilitating MSME’s access to services. 113 Go Negosyo centers have been launched nationwide, precisely to facilitate this.

These kinds of interventions are especially important today, given what APEC has been able to achieve throughout the decades. For example: an increased volume of trade through the lowering of tariffs. In 1989, average tariffs were pegged at 17 percent; these fell dramatically to around 5.2 percent in 2012. On the other hand, from 1989 to 2013, the total regional trade of the Asia Pacific region has increased sevenfold—outpacing the rest of the world, and likewise boosting trade among member economies.

We want Filipino MSMEs to be able to participate more in that trade: we want to help them make the most of the vast market that regional economic integration provides. In fact, we want to achieve the same for all SMEs across APEC member-economies. If MSMEs can be strong drivers of inclusive growth in the Philippines, we believe that the same is true for all of APEC. Just take a look at the numbers: SMEs account for over 97 percent of enterprises, generate more than 50 percent of employment, and account for up to 50 percent of GDP in the Asia Pacific. That is why the Philippines has chosen to make fostering SMEs’ participation in regional and global markets a priority of APEC 2015.

Initiatives already exist for the benefit of SMEs, namely the APEC Crisis Management Center, which assists them in coping with economic crises; and the APEC SME Innovation center and the APEC Start-up Accelerator Network, which promote entrepreneurship and innovation. Training in business continuity planning is likewise available, to help SMEs minimize disruptions to their businesses in the event of calamities.

These are well and good. At the same time, having seen how empowering our countrymen to succeed in their businesses leads to the creation of even more opportunities for other Filipinos, the Philippines is determined to lead efforts to spur the growth of APEC SMEs.

Throughout the year of our hosting of APEC, we have broadened our scope and given intensified attention to innovation, entrepreneurial development, business resiliency, finance, and capacity-building for MSMEs. Significant commitments have been made through the Boracay Action Agenda to Globalize MSMEs, which will focus on priority actions in trade facilitation, trade finance, e-commerce, and institutional support to help MSME’s go global. The Iloilo Initiative likewise puts MSMEs front and center by promoting dialogue among MSMEs, large businesses, and policy makers; and promoting MSME’s participation in global value chains and international trade, among others.

The Philippines has also proposed the establishment of an APEC Trade Repository, which is envisioned to be an online reference on the trade and tariff regimes of APEC member-economies, which would be invaluable resource to MSMEs and other businesses.

Today’s SME Summit is another excellent example of the way we are working together to realize the vast potential of your sector. Taking innovation as a central theme, the speakers you will be hearing today are a testament to the fact that the best ideas and the most innovative solutions to the problems we face, may come from the smallest enterprises, from nonprofit institutions, and even, hopefully, from government.

This is the basic principle that underscores the inclusive growth agenda of our administration, one we have sought to uphold in our hosting of APEC: that, whether we live in the Philippines, Korea, Papua New Guinea, Mexico, Russia, or any other member-economy, each and every citizen has a paramount contribution to progress. Each and every one has the capacity to bring about positive change. And, whether we lead governments or businesses, when we work hard to ensure that every person is empowered to realize that inherent capacity, we are creating drivers of growth. We are enabling partners who will work with us, towards realizing the stability, security, and prosperity to which we all aspire.

Thank you, and may you have a productive and meaningful summit.