2021 Budget To Include ₱2.2B Budget For MSMEs

Written by Marc Adrian

The slowdown of the economy due to COVID-19 has battered Micro, small, and medium enterprises (MSMEs). However, things are looking a little brighter for MSMEs in the coming year as it will get its much-needed funding from 20201’s budget. 

According to the National Expenditure Program (NEP) for 2021 uploaded on the website of the Department of Budget and Management (DBM), the budget allocated is close to half of the proposed budget for the Office of the Secretary of the Department of Trade and Industry (DTI) which is ₱5.35 billion.

The DBM said in an earlier statement that every peso of the ₱4.506-trillion FY 2021 NEP went through numerous budget hearings and consultations with the agencies. They’ve also disclosed the breakdown of the amount for the MSME developments, it’s as follows:

• ₱1.302 billion in maintenance and other operating expenses (MOOE)
• ₱569.720 million in capital outlays
• ₱362.804 million for procurement services.

This program for MSME development is aiming to grant access to greater opportunities that can aid entrepreneurs start-up to sustain, expand, and even internationalize their businesses.  It’s in line with the government’s Medium Enterprise Development Plan 2017-2022.

DTI also has other programs under its sleeves that are made to assist MSMEs, these include the following:

• Exports and Investments Development Program (₱860.192 million)
• Consumer Protection Program (₱555.954 million)
• Industry Development Program (₱489.485 million)
• Consumer Education and Advocacy Program (₱84.200 million).

On top of all these, special provisions for the Micro, Small, and Medium Enterprise Development Council Fund is ₱21.321 million. The council is responsible for reviewing the existing policies of government agencies that affect the growth and development of MSMEs.

Meanwhile, a ₱587.132 million budget is also allocated for the implementation of the Shared Service Facilities. The facilities will be used for projects that aim to improve the quality and productivity of MSMEs. Its implementation shall be primarily based on priority industry clusters identified by the DTI in consultation with key stakeholders.  This will be used for the development of the MSME sector, sourced from 90% of the total penalties collected by the Bangko Sentral ng Pilipinas (BSP) from lending institutions.

DTI’s latest data revealed that MSMEs account for 99.52% of the total 1.003 million business establishments in the country as of 2018.

Textbook definition of micro-enterprises suggests that they are those businesses with total assets worth less than ₱50,000; cottage enterprises with assets worth ₱50,001 to ₱500,000; small with ₱500,001 to ₱5 million; and medium from over ₱5 million to ₱20 million.

In 2019, DTI managed to assist 39% of the total businesses in the country in 2018 through the MSME Development Program. The figures are higher than their 25% target. In actual numbers, the 39% translates to 347,324 MSMEs out of the 200,000 targets, and 688,980 clients assisted by the Negosyo Centers out of the 575,000 targets.

Back in May, however, over 525,000 or 52.66% of MSMEs in the country had to stop operations due to the lockdowns. And in April, the unemployment rate in the country soared to 17.7% according to the Philippine Statistics Authority’s report in June. 

To help MSMEs make it through the economic crisis brought about by the pandemic, the DTI has rolled out its ₱1-billion COVID-19 Assistance to Restart Enterprises (CARES) program, which grants loans to MSMEs. However, the financial assistance program was oversubscribed, this the agency sought additional funding to cater to more beneficiaries. 

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