EDITORIAL: Post-pandemic Rehabilitation Reality Check on MSMEs

The Philippines employs two criteria in defining MSMEs or Micro, Small, and Medium Enterprises: employment and asset size. In the area of employment, an enterprise is considered small if it has 10-99 employees, medium with 100-199 employees, and large if it has 200 or more employees. On the other hand, an enterprise is categorized as micro if it has less than 10 employees, and up to P3 Million in assets, including even those with only P100.00 in capitalization.

Our policymakers’ focus on MSMEs to be the engine for post-pandemic rehabilitation sounds rational considering that MSMEs comprise 99% of our registered enterprises. However, the policy is flawed because it fails to consider and reconcile with our poverty data profile. The Philippine Statistics Authority (PSA) reports that 87% of MSMEs belong to the Micro Enterprise category. In 2021 the same agency reported a 23.7% poverty incidence among our basic sectors - which actually comprise the micro enterprise segment. (Note: Bicol’s has a poverty incidence of 27%).

In economic terms, micro-enterprises refer to the informal and subsistence economy. They are those engaged in almost hand-to-mouth livelihood: small farmers and fishermen, backyard animal raisers, sidewalk shops, food stalls, grocery stores, ambulant vendors, and related economic chores. Officially they are within the government’s classification of micro-enterprises, and therefore appears to be included in the assistance policy. Structurally, however, most of them are incapable of hurdling the bureaucratic system and requirements of government implementing agencies.

This needs a re-calibration of our policies, especially implementing rules and regulations. The government may increase support to the large, big, small, and medium enterprises, but it must also attend to the factual reasons why there are perpetual orphans of progress and development.

As to a post-pandemic strategy there must be a purposive capacity enhancement program to educate and train our marginalized groups in applied entrepreneurship suited to their limited educational and financial capabilities. Our rural folks must be economically literate, they must learn practical and working knowledge of the rural economy, and how they can participate and benefit from the system. They must be taught how to diversity or convert their customary livelihood into profit and growth-oriented business. We must help to organize self-sustaining local market systems and prevent destructive neighbourhood competition. Value and supply chain concepts must be localized. Implementing agencies must innovate in their service delivery schemes.

If we want to rebound and rebound better we must minimize the gaps between the formal and the informal sectors, between the SMEs and the Microenterprise operators. If our bureaucracy cannot do this perhaps private training and development institutions can. It is the only and best option to move forward - because POVERTY IS THE REAL PANDEMIC.