SMEs eyed to hike GDP contribution

MANILA, Philippines - The Department of Trade and Industry (DTI) is targeting to increase the contribution of small and medium enterprises (SMEs) to the economy by another five percentage points next year by implementing new policies and integrating these firms into the global value chains.

Trade Assistant Secretary Rafaelita Aldaba said the government is looking to grow the SMEs’ contribution to the country’s gross domestic product (GDP) to 40 percent next year from its current contribution of 35 percent.

“What we really want is to increase the contribution of our SMEs to our GDP and also the employment generated. Our SMEs will become the large companies in the future so we need to take good care of them,” Aldaba said.

Aside from accounting for about a third of GDP, SMEs also constitute about a fifth of the country’s exports and about two-thirds of employment generated.

“But like many SMEs in other developing countries, they continue to face challenges such as access to raw materials, capital, skilled workers, and technology. Hence, our efforts are focused on resolving these issues in order to promote healthy and globally competitive SMEs,” DTI Undersecretary Zenaida Maglaya said.

Maglaya said enabling SMEs to participate in regional and global production networks would provide them not only export markets but also access to newer technologies.

“Our SMEs can serve as suppliers of outsourced parts or services that have increasingly grown in sectors such as automotive, machineries, electronics, garments, and food,” she said.

To promote SMEs’ participation in the global value chains, Maglaya said the government would need to continuously adapt and adjust industrial policy towards industry upgrading and productivity improvement.

She said the implementation of trade facilitation policies such as fast and efficient customs and port procedures as well as well-functioning transport, logistics, finance, communication, and other business and professional services to move goods could promote engagement in global value chains.

“Complementary policies are needed to intensify and effectively implement SME programs to improve competitiveness. Policies and programs covering both agribusiness industry and manufacturing parts and components sector should address fundamental constraints to SME growth and development such as access to finance, access to technology and skilled workers, education and skills training, supply chain gaps, network linkages strengthening, high cost of transport and logistics, adoption of green practices, and providing research and development support and incubation facilities for start-up companies,” Maglaya said.