Philippine Business Environment

PHILIPPINES
BUSINESS
ENVIRONMENT
TOPICS TO DISCUSS
• Investment Climate
• Ease of Doing Business in the Philippines
• Competitive Index
• Other Relevant Business Statistics
• Geographic Location
• Micro Small Medium Enterprise and Entrepreneurship in the Philippines
• Other Topics
OVERVIEW OF PHILIPPINE MSMES
• Magna Carta for Micro; Small; Medium Enterprise

• Enacted by the Philippine Congress in 1991 as RA 6977 and amended by RA
8289 in 1997, and further amended by RA 9501 in 2008.
• A legislation that defines the current national policy to promote, support
strengthen and encourage the growth and development of MSMEs.
• This law is geared towards the development of the Filipino entrepreneurial
spirit by providing business environment conducive for MSMEs
• Micro, small, and medium enterprises (MSMEs) are defined as any business
activity/enterprise engaged in industry, agri-business/services, whether single
proprietorship, cooperative, partnership, or corporation whose total assets,
inclusive of those arising from loans but exclusive of the land on which the
particular business entity's office, plant and equipment are situated, must have
value falling under the following categories:
• By Asset Size
ENTITY ASSET SIZE
Micro Up to Php 3,000,000
Small Php 3,000,001- 15,000,001
Medium Php 15,000,001-100,000,000

• Alternatively, MSMEs may also be categorized based on the number of

employees:
ENTITY NUMBER OF EMPLOYEES
Micro 1-9 employees
Small 10-99 employees
Medium 100-199 employees
SMES STATISTICS
1. Philippines Statistics Authority (former NSO)

2. Loans lent to SMEs
3. Tradeline Philippines
4. Export Assistant Network (EXPONET)
1. PHILIPPINES STATISTIC AUTHORITY
(PSA)
• Formerly the National Statistics Office, primary source of statistics on

Philippines SMEs.
• It is the major statistical agency at the national level responsible in collecting,
compiling, classifying, producing, publishing, and disseminating general-
purpose statistics.
• Statistics on the census of establishments is done every five (5) years.
2. LOANS LENT TO SMES
• All lending institutions are required to lend set aside at least 6% of their total
loan portfolio to small enterprises and at least 2% to medium-sized enterprises.
• The Bangko Sentral ng Pilipinas is mandated by law to monitor this initiative.

3. TRADELINE PHILIPPINES
• It is an online database service that provides product search listing thousands of
manufactured exported Philippines products complete with product specifications.
• Managed by Bureau of Export Trade Promotion (BETP), Tradeline Philippines is
a web-based information system that contains Philippine trade statistics, exporters
and buyers listings, as well as relevant trade information such as trade-related
sites/addresses, product and market profiles.
• It allows the users to contact Philippine exporters, suppliers and local/foreign
buyer details and the products or services they manufacture, provide and export.
http://www.tradelinephilippines.dti.gov.ph/web/tradeline-portal/trade-statistics
4. EXPORT ASSISTANCE NETWORK
(EXPONET)
• It helps the exporters and prospective exporters access information and resolve
specific problems related to exporting.
• It provides information on export seminar schedules, export organizing, export

procedures and documentation, import facilities for exporters, buyer linkages,
export financing and incentives, product raw material sourcing and other
statistical information.
• It also assists those exporters in export-related problems or trade complaints.

DEFICIENCIES OF SME STATISTICS
1. Timeliness
2. Cross compatibility with other countries for cross country comparison
3. Inadequateness
4. Availability
5. Coverage
2015 PHILIPPINES MSME STATISTICS
BASED ON:
1. Number of Establishments
2. Sectoral Distribution
3. Geographical Spread of MSMES
4. Employment
5. Export Contributions of MSMES
1. NUMBER OF ESTABLISHMENTS
DISTRIBUTION OF ESTABLISHMENTS BY ENTERPRISE SIZE

1. NUMBER OF ESTABLISHMENTS
• Based on 2015 statistical data provided by the Philippine Statistics Authority

(PSA), there are 900,914 establishments in the Philippines. Of these, 99.5%
(896,839) are micro, small, and medium enterprises (MSMEs) and the
remaining 0.5% (4,075) are large enterprises.
2. SECTORAL DISTRIBUTIONS
DISTRIBUTION OF MSMES BY INDUSTRY

2. SECTORAL DISTRIBUTIONS
• Majority of the 896,839 MSMEs in 2015 are in the wholesale and retail trade;
repair of motor vehicles and motorcycle industries with 417,094 business
establishments; accommodation and food service activities, 119,037;
manufacturing, 113,949; other service activities, 56,904; information and
communication, 35,171; and, financial and insurance activities, 34,384. These
industries accounted for about 87.0% of the total number of MSME
establishments.
3. GEOGRAPHICAL SPREAD OF MSMES
DISTRIBUTION OF MSMES BY REGION
3. GEOGRAPHICAL SPREAD OF MSMES
• Majority of the MSMEs in operation in 2015 can be found in the National

Capital Region (NCR), with 190,166 business establishments; Region 4-A
(CALABARZON), 131,011; Region 3 (Central Luzon) with 100,880; Region 7
(Central Visayas) with 53,218; and Region 1 (Ilocos), 47,996. These top five
(5) locations accounted for about 58.4% of the total number of MSME
establishments in the country.
4. EMPLOYMENT
DISTRIBUTION OF ENTERPRISES BY TOTAL EMPLOYMENT

4. EMPLOYMENT
• MSMEs generated a total of 4,784,870 jobs in 2015 versus 2,981,819 for the
large enterprises. This indicates that MSMEs contributed almost 61.6% of the
total jobs generated by all types of business establishments that year. Of
these, 29.4% or 2,285,634 jobs were generated by micro enterprises; 25.3%
or 1,968,452 by small enterprises; and 6.8% or 530,784 by medium
enterprises.
• By industry sector, MSMEs in the wholesale and retail trade; repair of motor
vehicles and motorcycles generated the most number of jobs with 1,707,103
in 2014 followed by MSMEs in manufacturing, 764,184; accommodation and
food service activities, 666,254; education, 273,838; and financial and
insurance activities, 230,137.
4. EMPLOYMENT
• Majority of the jobs are generated by MSMEs in the National Capital Region
(NCR) with 1,471,465 jobs; followed by MSMEs in Region 4-A
(CALABARZON), 676,201; Region 3 (Central Luzon), 484,084; Region 7
(Central Visayas), 324,780; and Region 11 (Davao), 234,716.
5. EXPORTS CONTRIBUTION OF
MSMES
• MSMEs account for 25% of the country’s total exports revenue. It is also
estimated that 60% of all exporters in the country belong to the MSME
category. MSMEs are able to contribute in exports through subcontracting
arrangement with large firms, or as suppliers to exporting companies.
BUT WHO ARE THESE SMES EXACTLY?
• Basically SMEs are operated by an ENTREPRENEUR/S.
• They are the economic agent who unites all the means of production, labor, land,
resources and capital;
• Person who initiates, organize, manage and control the business;
• They are not born, they are made right from the childhood;
• The environment around the entrepreneur makes an entrepreneurs. Those
environmental factors are:
Technology
People
Ex. Online Business, Social

Networking
Instagram
Entrepreneur
Ex. Online Business

Grocery
Store Owners
Ex. Sarisari stores,

wholesaler, dealers,
convenient stores,
supermarket etc.
Noisy
Neighbor;
Teachers,
Classmates and
Friends;
Ex. Selling products, services

etc.
Relatives or any
of the family
member who
run a business
Ex. Family Business

• Entrepreneurship is the result of the interaction and assimilation of different
social and environmental factors.
• An Entrepreneur must be:
– See Opportunities
– Risk Takers
– Accept Responsibility
– Makes Money
– Wants to be Rich
– Independent
– Own Boss
– Maintains Control
ROLE AND IMPORTANCE OF MSMES
• MSMEs play a major role in the country's economic development through their
contribution in the following: rural industrialization; rural development and
decentralization of industries; creation of employment opportunities and more
equitable income distribution; use of indigenous resources; earning of foreign
exchange (forex) resources; creation of backward and forward linkages with
existing industries; and entrepreneurial development.
• They are vital in dispersing new industries to the countryside and stimulating
gainful employment. A country like the Philippines where labor is abundant
has much to gain from entrepreneurial activities. MSMEs are more likely to be
labor-intensive. Thus, they generate jobs in the locality where they are situated.
In this sense, they bring about a more balanced economic growth and equity in
income distribution.
• MSMEs are quick in assimilating new design trends, developing contemporary products, and
bringing them to the marketplace ahead of the competition. MSMEs tend to be far more
innovative in developing indigenous or appropriate technology, which may be grown later
into pioneering technological breakthroughs.
• They are able to effectively increase the local content or the value added in final goods that
are processed and marketed by large manufacturing firms.
• MSMEs are notably skillful in maximizing the use of scarce capital resources and are able to
partner with large firms by supplying locally available raw materials in unprocessed or semi-
processed forms.
• Also, MSMEs can act as the seedbed for the development of entrepreneurial skills and
innovation. They play an important part in the provision of services in the community. They
can make an important contribution to regional development programs.
MSMES CONTRIBUTION TO ECONOMY
• MSMEs contribute to the creation of wealth, employment, and income generation, both in rural and
urban areas, thus, ensuring a more equitable income distribution.
• They also provide the economy with a continuous supply of ideas, skills, and innovations necessary
to promote competition and the efficient allocation of scarce resources.
In the last five years, the MSME sector accounted for about 99.6% of the registered businesses in
the country by which 63% of the labor force earn a living. Around 35.7% of the total sales and
value added in the manufacturing come from MSMEs as well.
2017 PHILIPPINE ECONOMY
• Gross Domestic Product (GDP) grew by 6.5 percent in the second quarter of
2017 and 6.4 percent in the first half of the year. Manufacturing, Trade, and
Real Estate, Renting and Business Activities were the main drivers of growth
for the quarter.
•
• Among the major economic sectors, Industry recorded the fastest growth at 7.3
percent. Services slowed down to 6.1 percent compared with its 8.2
percent growth posted in the same quarter of the previous year. Meanwhile,
Agriculture recovered with 6.3 percent growth from 2.0 percent decline in the
previous year.
• Net Primary Income from the Rest of the World (NPI) grew by 8.6
percent compared with the 6.1 percent growth recorded in the same quarter of
the previous year. As a result, Gross National Income (GNI) posted a growth
of 6.8 percent.
• With the country’s projected population reaching 104.5 million in the second
quarter of 2017, per capita GDP grew by 5.0 percent. Meanwhile per capita GNI
and per capita Household Final Consumption Expenditure (HFCE) grew by 5.3
percent and 4.4 percent, respectively.
TIME FOR AN ENTREPRENEURIAL REVOLUTION:
Know the DTI’s 7Ms Way of Uplifting Micro, Small, and Medium Enterprises (MSMEs)
• MINDSET CHANGE– Help you embrace the right and positive entrepreneurial attitude that will carry you through your
vibrant entrepreneurial journey.
• MASTERY– Teaches you to master the know-how of entrepreneurship, from what you need to set up a business, basic
rules of spotting market opportunities, finding your product positioning and differentiation, product development, market
development, basic business finance and plan preparation, as well as developing a system for continuous innovation.
• MENTORING– Provides you with continuous business guidance in partnership with the private sector members like Go
Negosyo, PCCI, PFA, AFFI, and FFCCCII.
...CONT.
• MONEY–They give you access to funding through DTI’s P3 microfinance program—in cooperation with
SB Corp.—or connect you to micro finance institutions (MFIs) to help you out with financing, whether
you’re setting up a business or if you want to expand.
• MACHINE– They equip you not only with the must-have knowledge on equipment and right tools to
ensure quality production under the Shared Services Facility (SSF) program, you can also use these to level
up your production and increase productivity. With innovation, you and your fellow entrepreneurs can
produce more products more efficiently.
• MARKET ACCESS– Help you promote your products through provincial and national trade fairs, OTOP
(One-Town, One Product) shows, retail store concepts in major malls, and the internationally-recognized
FAME exhibits. They can also link your business to big companies or to government so that you can supply
them with your products on a continued basis.
• MODELS OF NEGOSYO–Gives you different business ideas to help you get into business, from
traditional enterprises to direct selling and franchising. They also teach you livelihood skills like baking,
soap-making, etc.
THANK YOU!!!

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PHILIPPINES

• Magna Carta for Micro; Small; Medium Enterprise

ENTITY ASSET SIZE

Micro Up to Php 3,000,000

Small Php 3,000,001- 15,000,001

Medium Php 15,000,001-100,000,000

• Alternatively, MSMEs may also be categorized based on the number of

1. Philippines Statistics Authority (former NSO)

• Formerly the National Statistics Office, primary source of statistics on

• The Bangko Sentral ng Pilipinas is mandated by law to monitor this initiative.

• It provides information on export seminar schedules, export organizing, export

• It also assists those exporters in export-related problems or trade complaints.

DISTRIBUTION OF ESTABLISHMENTS BY ENTERPRISE SIZE

• Based on 2015 statistical data provided by the Philippine Statistics Authority

DISTRIBUTION OF MSMES BY INDUSTRY

• Majority of the MSMEs in operation in 2015 can be found in the National

DISTRIBUTION OF ENTERPRISES BY TOTAL EMPLOYMENT

Ex. Online Business, Social

Ex. Online Business

Ex. Sarisari stores,

Ex. Selling products, services

Ex. Family Business

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