Lack of regulatory support renders MSME laws futile

CEBU, Philippines - The government need not craft new laws that would cater to the needs of the micro, small and medium enterprises (MSMEs) in the country, as existing laws are already enough if religiously implemented.

This according to Rey E. Calooy, president of the Filipino Cebuano Business Club Inc. (FCBC), adding that laws such as the Magna Carta for MSMEs and the Barangay Micro Business Enterprise (BMBE) have provisions that would serve the MSMEs well.

He added that the development of MSMEs would help solve some social issues such as urban migration and squatting in the urban areas.

The Magna Carta for Small Enterprises, or Republic Act No. 9501, was signed into law by President Gloria Macapagal-Arroyo on May 23, 2008. The law promotes entrepreneurship strengthening development and assistance programs to MSMEs. Among the salient provisions of the law are strengthening of MSME Development Council and a 10-percent mandatory allocation of credit resources—eight percent to micro and small enterprises and two percent for medium enterprises—for a period of 10 years.

RA 9178 or the BMBE Law on the other hand is aimed at promoting the establishment of BMBEs by providing incentives and benefits. This encourages micro enterprises especially in the countryside to register their businesses with the local government for them to gain access to government funds, among others.

Despite the provision on credit resources, however, Calooy said credit remains elusive to MSMEs.

“MSMEs still find it hard to access financial aid from banks and even from government financial institutions. Banks are still unfriendly to small companies due to high transaction costs. There are laws but these are not yet well-implemented,” he told The Freeman.

In a separate interview, Department of Trade and Industry Cebu Provincial Office Program Management Division Chief Elias Tecson said implementing rules and regulations for RA 9178 and RA 6977 are already in place.

He said the DTI-Cebu continues to disseminate information on the benefits of the provisions of the laws to MSMEs. Implementation however, especially with regard to the BMBE law remains to be at the hands of the local government units.

“Some LGUs such as Cebu City and Mandaue City have already registered barangay micro enterprises. Some however have not started implementing the laws in their (municipalities,)” he said.  

If well taken-cared of, MSMEs would be able to help the countryside urbanize itself and be able to provide jobs to people in the rural areas. This will encourage them to stay and not leave for the city to look for “greener pasture,” Calooy said.

Due to the lack of machineries, MSMEs are more labor-intensive and employ 70-percent of the country’s labor force. In 2008, MSME generated 3.3 million jobs while large companies generated only 1.6 million jobs.

Micro enterprises are those with not more than P3-million in asset. Small companies on the other hand are those with P3-million to P15-million in asset while medium enterprises are those with P15-million to P100-million in asset.

FCBC, created on March 6, 2008, envisions itself to be a credible and effective MSME organization that will catalyze growth and become a strong pillar of the Philippine economy. It aims to promote business opportunities among its MSME-members, among others.