You are on page 1of 57

THE IMPACT OF REPUBLIC ACT 10644 OR GO NEGOSYO ACT TOWARDS

PHILIPPINE ECONOMIC GROWTH

Serrano, Mark Niño I.

Setoh, Maria Mika A.

Introduction to Public Administration

Ambassador Marilyn J. Alarilla


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 2

ABSTRACT

Micro, Small, Medium-sized Enterprises (MSMEs) significantly contribute to the growth of the

Philippine Economy and encourage the continuous growth of MSMEs, Republic Act no. 10644

or the Go Negosyo Act was enacted to assist, strengthen and develop the capability of MSMEs as

they thrive in the competitive Philippine market.

The study focuses on the implementation of Go Negosyo Act since its enactment in 2014. The

researchers used qualitative analysis of secondary data gathered from the government and

various articles that covering Go Negosyo. The study shall present the systematic implementation

of the Go Negosyo Act by the assigned government agencies to achieve academic,

entrepreneurial, economic and administrative goals that should recognize the strategies of the

government, the structures & policies embedded, and frameworks involved in order to put the

goals of the said law into reality for the benefit of Filipinos.

Keywords: Micro, Small, Medium-sized Enterprises (MSMEs); Developmental State; Go

Negosyo, Entrepreneurship, Economic Growth, Economic Development, Global Value Chain


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 3

PART I

INTRODUCTION

BACKGROUND OF THE STUDY

The Government and Big Corporations are not the only stakeholders that want to partake in the

growth and development of a country. Private individuals had invested their time and money to

establish their own businesses. The number of Small, Medium-sized Enterprises (SMEs) grew

from 492,510 in 1995 to 816,759 in 2011, a 66% growth in general, alongside with this is also

growth of its job creation figures from 2.7 million last 1995 to 3.9 million in 2011 or a

significant 45.7% growth (Mendoza & Melchor, 2011). Over the years, the number of

individuals who had gotten an interest into establishing their own businesses had steadily grown

in the Philippines that 99.57% of establishments in the Philippines are Micro, Small, Medium-

sized Enterprises (MSMEs) while only 0.43% of the establishments are considered as

Large.(Casta, 2018)

MSMEs and the Philippine Economy

SMEs alone comprise the 99.6% of enterprises existing in the Philippines and employs 63.7% of

the workforce of the economy inthe year 2015 (Aldaba, 2016) making it one of the significant

contributors to the national economic growth. However, even in the steady growth of the number

of SMEs in the market and the government policies to nurture private businesses into engines of

economic growth, SMEs still face the same challenges it had before.

The Philippines, as an archipelagic developing country, find difficulty in making quality

education and training, technology and logistics accessible nationwide which makes it an issue
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 4

for SMEs. Aldaba (2012) It laid down issues such as limited access to finance, technology and

skills; incessant information gaps; and difficulties with product quality and marketing.

SMEs are vulnerable against larger firms resulting to massive rates of market entry-and-exit

across to nearly all economic sectors due to the hefty constraints that it faces in the competitive

Philippine market. (Mendoza & Melchor, 2011). Moreover, entrepreneurial ideas require funding

for their working capital requirements.

Adopting new public policy

Public administration as the accomplishing side of government, has roots based on law rather

than the academe. (Greene, 2004) Hence, Go Negosyo was implemented by the DTI through the

passing of Republic Act no. 10644. The enactment of Republic Act no. 10644 or Go Negosyo

Act in 2014 tried to address the challenges that SMEs face. In recent years before the enactment

of the act, the more inclusive term Micro, Small, Medium-sized Enterprises (MSMEs) was

shaped alongside with “Go Negosyo Communities” where academic, business and government

sectors are drawn into a triangle of almost seamless collaboration (Evangelista, 2013). Several

legislations were also done such as Magna Carta for SMEs and Republic Act 9178 or the

barangay Micro Business Enterprise (BMBE) Act.

Public administration is a commonly misunderstood, less visible or have a negative image

(Greene, 2004). Hence, this study aims to create an understanding of Go Negosyo as the

government intervention to help alleviate Filipinos from poverty.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 5

Go Negosyo – a backgrounder

Go Negosyo started as a campaign by Joey Concepcion when he was appointed by former

president Gloria Macapagal-Arroyo as the Presidential Consultant for Entrepreneurship in 2005.

It started from through various Caravans, Negosems (Seminars of Business Building and

Development), multi-media campaigns (Television and the Internet), and even books. Since its

conception in 2005, Go Negosyo has been nurturing this growing number of entrepreneurs that

serve as the soul of MSMEs. Go Negosyo initially aims to create an entrepreneurial climate for

the Philippines: one that would lead to a country of enterprising and progressive Filipinos who

are optimistic and empowered, and who do not rely on dole-outs and are in control of their

destinies1.

Go Negosyo translates as “Go Business” as it encourages the creation and growth of businesses

in the Philippines. It serves as a government intervention that aims to alleviate Filipinos from

poverty through giving them business opportunities that would not only develop them into

entrepreneurs or generate jobs that could provide them income. The empowerment of private

individuals into innovative entrepreneurs and the generation of more jobs in local communities is

what makes this advocacy as an economic strategy that aims for economic growth and economic

development.

RA 10644 aims to be an accessible systematized support pillar of budding entrepreneurs through

the establishment of ‘Negosyo Centers’ that will accommodate the people who are interested in

starting their own business or expanding their marketing reach. The law also enables and
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 6

encourages various government agencies to conduct production and management trainings to

update or upgrade their knowledge and skills keep up with the ever-changing market trends.

under RA 10644, the government shall formulate new policies for the financing of MSMEs such

as the DTI’s Pondo Para sa Pag-asenso (PPP) which is a financing program that is tailored to

the needs the business ("DTI remains committed in pushing for the MSME growth", 2018) ; and

BSP’s Initiatives to Improve Credit Access of Small and Medium Enterprises that mandate all

lending institutions to allocate credit to SMEs which requires all lending institutions to set aside

a portion of their total loan portfolio and make it available for SMEs (at least 6% for small

enterprises and at least 2% for medium enterprises) where erring banks shall face sanctions.

("Bangko Sentral ng Pilipinas - Publications & Research", 2004)

Filipino MSMEs: From Local to Global

“No Man is an Island.” – John Donne

After being appointed in 2005 by former President Gloria Macapagal-Arroyo as the Presidential

Consultant for Entrepreneurship, Joey Concepcion envisioned a movement that would advocate

for a positive and enterprising attitude among Filipinos — a mindset that would help them move

up in life. With the help of like-minded trustees, Go Negosyo was born. (About Us | GoNegosyo.

,2018)

Go Negosyo paved the way to increase a Filipino entrepreneurs’ access to establishing

businesses. It forged partnerships with corporations, academic institutions, non-government

organizations, microfinance institutions, government agencies, and local government units in

order to create linkages that would serve as the support system of the budding entrepreneurs.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 7

“No man is an island” is a widely used proverb in the 20th century although it was coined from

the 17th century poem by John Donne. It is basically interpreted as that human beings do badly

when isolated from others and need to be part of a community in order to thrive. ('No man is an

island' - the meaning and origin of this phrase, 2018). Go Negosyo established a community of

through partnerships and linkages that creates an environment that encourages the birth and

growth of new business to thrive in the Philippine market.

Go Negosyo also wants to reach those who are in rural areas and far flung areas to give them

equal opportunities to start their own income streams. The Philippines, as an archipelago more

than 7,000 diverse islands, logistics remains as one of its biggest challenges. By getting the

support of logistics companies and money transfer institutions through making their services

more accessible and reliable to Go Negosyo entrepreneurs, more people are encouraged to

engage in business.

Going beyond local, MSMEs are also part of the Global Value Chain2. The Philippine

Development Plan 2017 - 2022 underscored the importance of maximizing the capabilities of

MSMEs to facilitate its increased participation into Global Value Chains. Domestic suppliers,

including MSMEs, are encouraged to maximize the benefits of existing free trade agreements

and other cooperative arrangements.

Globalization, as an emerging concept, powered with the fast pacing rise of advancement in

technology, had driven nations to step up to international trade. Fostering good relationships with

your neighbors always have good returns. The Association of Southeast Asian Nations

recognized MSMEs as the backbone of ASEAN economies through the ASEAN Economic
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 8

Community 2025 blueprint. It aims to enhance the market access and internationalization of

MSME’s by extending and developing support schemes for market access and integration into

the global supply chains including promoting partnership with multinational corporations

(MNCs). Together, the ASEAN countries can work together to give more room for MSMEs

through globalizing its products in the international market. With the rise of Globalization, one

cannot grow alone.

Most of public policy is reactive in nature – meaning the policy is formulated as a response to an

existing problem rather than being proactive, which involves trying to handle issues before they

became an issue. (Greene, 2004) The Go Negosyo Act served as the solution of the government

to address the issues in the market whereas there are creative individuals who have the potential

to be successful entrepreneurs and contribute to the local communities hence it was reactive in

nature.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 9

STATEMENT OF THE PROBLEM

This study shall provide an overview on the impact of Go Negosyo Act or RA 10644 to

Philippine Economic Growth after its implementation. This study attempts to answer the

following questions:

1. What are the steps the government had taken to emphasize the focus of economic growth

towards MSMEs;

2. What are the effects of the enactment of the law to the economy of the Philippines; and

3. What are the feedbacks of the MSMEs in response to the policy that was made to answer

its demands?

STATEMENT OF RESEARCH OBJECTIVE

This section of the study shall stipulate the objectives of the study. Generally, the study shall

explore the effects of the public policy that was coursed through to successfully enact the Go

Negosyo Act. Specifically, the objectives of the study are the following:

• To provide an understanding of the structure of the Government as a model and be

patterned to present and future identical projects to contribute in economic growth;

• To develop a theoretical model for legislators and policy-makers in systematizing the

practices and process, if found, during the implementation of RA 10644 that shall seek to

confront bureaucratic problems through real testimonies of real businesses that benefitted

from Go Negosyo.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 10

REVIEW OF RELATED LITERATURE

This chapter shall provide the overview of the development of MSMEs in the Philippines and the

challenges that the entrepreneurs had to face before the enactment of the Go Negosyo Act .

Furthermore, several conceptual and theoretical foundations were also laid out to cater to the

needs of the study which is to create a ground basis on its analysis. The researchers have

gathered different information from scholarly journals and periodicals, newspaper and magazine

articles and academic theses to give a complete and unbiased analysis.

The study, through several sources, were able to gather sufficient related literature to distinguish

new information and studies related to the selected topic.

As the researchers aimed to emphasize the government’s role in developing the economy, the

study primarily focused on the concept of government-market relations in revitalizing Micro,

Small, Medium-sized Enterprises (MSMEs) in the country.

Local Literature

In a descriptive article produced by the Philippine Senate (2012) Micro, small and medium-sized

enterprises (MSMEs) were described as an economic sector playing a very important role in the

Philippine economy. It was noted that MSMEs help in the alleviation of poverty through the

creation of jobs, stimulation of economic development especially in rural areas, serve as the

valuable partners for larger businesses, providers of support services, and play a breeding ground

for new wave of entrepreneurs. In a definition adopted by the Senate (2012), the definition for

Micro, small, and medium enterprises were respective separated by Asset and Number of

Employees. For Micro business, it should have an asset of Php 3,000,000 and comprise of 1 to 9
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 11

employees. For small business, it should have an asset of Php 3,000,001 to Php 15,000,000 and

comprises of 10 to 99 employees. For medium business, it should have an asset of Php

15,000,001 to Php 100,000,000 and comprises of 100 to 199 employees. Most number of

employees garnered were taken by the Wholesale, Retail Trade, and Repair Services while the

National Capital Region (NCR) have the most numbers of MSMEs. It was also noted that most

MSMEs in the Philippines still have problems doing business and weak access to financial

assistance or loans. It was then concluded that MSMEs requires more assistance or support from

the government especially that they have grown to have greater value in the economy in a

globalizing world.

According to Mendoza & Melchor (2014), SMEs or Small, medium-sized entrepreneurs still face

hurdles in their businesses in terms of credit constraints, cumbersome registration, and playing

even with the larger firms. These issues result to high attrition numbers of SME entrepreneurs

considering these impediments. It was not that number of barriers were experienced due to these

factors making the Philippines receive a ‘mediocre’ score compare to its ASEAN counterparts.

Support especially to women entrepreneurs and boosting crisis resiliency were seen as a valuable

answer to these issues.

According to National Economic Development Authority (2017), in its blueprint for 2017 to

2022 economic plan, prioritizing MSMEs were streamlined within the framework of Inequality-

Reducing Transformation (“Pagbabago”). Specifically, in its agenda for Trabaho and Negosyo

plan that focuses on expanding economic opportunities. The framework aims to underline the

Industry and Services that is pursued by integrating these sectors (MSMEs, cooperatives, and

overseas Filipinos (OF) to strengthen the connections toward a more efficient supply and value
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 12

chain. A more efficient and value chain should also be able to compete globally hence it also

aimed to make these sectors globally competitive not only by being heavily dependent to

availability of raw materials, labor and technology but also added support in the establishment of

soft and hard infrastructure – something that the government is addressing through the Build,

Build, Build program.

In a study by Aldaba (2016) with the Go Negosyo Implementation, the signing of the Free Trade

Agreement significantly increased to 64% especially those who have membership in industry

association and firms with an idea about the ASEAN Economic Community (AEC) will most

likely use FTA or a significant of 55%. In an estimate in her Regression Analysis, it was

concluded that out of 939 firms in her study, only 207 or 22% of the firms are taking advantage

of the FTAs in AEC. But with the growth seen, it was expected to increase with the Go Negosyo

Centers in place. Most of the firms in the study using the FTAs are firms that are larger, older,

have foreign partners, exporting, innovative, members of industry associations, & have

knowledge about the AEC. In her recommendation, she noted that MSMEs are still lacking

access to this information, access to finance, technology, skilled workers, supply chain gaps,

network linkages and support & incubation facilities for start-up companies.

Habito (2012) described the wealth gap in the Philippines as ranging to almost 76% or a

comparison of $13 Billion combined wealth of the rest while a $17 Billion combined of all the

richest. And still a significant 24.9% poverty increase was observed despite of Asia having a

greater capacity to reduce poverty considering the growth rate it sustains annually. He

recommended a more focus to SMEs as plausible solution to economic weakness. A focus on

fostering a entrepreneurship culture, SME clustering and associations, nationwide range of SME
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 13

centers, overcome LGU disincentives, expand equity in financing mechanisms, develop

diplomacy for market access, and foster “coopetition” or combined cooperation while in

competition.

According to the data gathered by the Philippine Statistics Authority (2018), a significant drop to

6% GDP growth rate was experienced by the economy, the weakest of the Philippines for the

past 3 years. Net contribution to this downfall is the significant fall of imports against the exports

although a 13.9% increase was seen. This is despite of the goal of the government to achieve a

7% to 8% GDP growth, more optimistic than the Asian Development Bank (ADB) and

International Monetary Fund (IMF) forecast.

Foreign Literature

According to a study done by the British Council (2015) about Social Enterprise in the

Philippines, there are numerous government interventions to support the MSMEs which entails

to the idea of expanding Social Enterprise. The Go Negosyo Act, to advance MSME capability,

laid out policies with the help of other government agencies. This gave MSMEs more access to

finance, trainings and other programs to address the ‘roadblock’ which was primarily caused by

regulatory and fiscal processes of the government. This note, which was derived from Senator

Bam Aquino upon its endorsement last 2014 enabled the speedy enactment of the law. Though it

was established in the study that Social Enterprise is one of the drivers to reduce poverty, the

government still failed to define thru legislation making it hard to institutionalize reforms to at

least recognize the said sector, standardize forms of support that are broadly acceptable which

will play important role.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 14

In addition, a study done by Ishengoma (2018) presented the probability of MSMEs to formalize

their business. Unfortunately, as the study found out, only 14% of businesses in Tanzania were

formalized. Most entrepreneurs in Tanzania who formalize their businesses are usually those

who had gained formal education and older more experienced entrepreneurs. Despite of the

efforts and formal recommendations that structuralist and institutionalist approaches of the

government did to make MSMEs formalize, the study noted that most of the entrepreneurs still

need to acquire and develop several attributes to encourage them to formalize their respective

businesses. This encouragement could only be done through enhancing the training and

developing the entrepreneurs themselves. It did not only target the businesses but the people

behind the businesses thus on human development. Nurturing their development while still in

informal sector, and exposing the same to several opportunities that they could get in formalizing

their businesses helped the entrepreneurs that paved the way for their businesses to expand to a

much bigger market. Ishengoma (2018), as focused on human development, suggests that

policymakers and stakeholders need to empower female entrepreneurs to build the confidence

and risk-taking investment appetite while encouraging their male partners to invest equally in

their families’ social needs and development. This study shows on how State could become a big

help for the SMEs to grow.

Lin and Wu (2004) presented the efficiency of Taiwan SMEs for their utility-orientation because

of their ‘perceived usefulness’ which affected their system usage. This suggests that SMEs

should be exposed more to computers and all benefits encompassing to it. This values the idea

that technology can become useful in growing SMEs. This correlates to the study especially that

this values the BRP as a tool in developing SMEs.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 15

Maleka and Fatoki (2017) examined the constraints that South African SMMEs are facing and

the key role that the government plays in resolving these constraints. Maleka and Fatoki (2017)

recommended that full information of the programs and projects and agencies created by the

government. They recommended strong emphasis to the use of electronic and social media.

Well-trained agents and government officials should be hired to make this campaign awareness

happen. SME owners should be computer literate and go training to educational training. Despite

of the mechanism that the State have provided for the SMEs, most of these SMEs still don’t have

any knowledge about these opportunities. Again, this shows the vital role of the government in

assisting the SMEs to grow.

Business Process Reengineering (BPR), as defined by Grover (1998), came from various

disciplines and business functions. The very idea of managing and improving business processes

came from the continuous process of developing literature that originated from Industrial

Engineering in the years of Fredrick Taylor. This Reengineering involves the use of technology

to initiate innovative ways of working. In the mid-to-late 1980s, redesigning business processes

came with the help rapid rise of advancements in the field of technology as Information

Technology was becoming more and more influential in businesses. Thus the birth of the BPR as

a theory for organizational change.

On the other hand, Paper (2005) presented interdependent components to describe the BPR

approach. According to Paper (2005), these components are necessarily used for ‘top-down’

organizations in order to change and improve its performance. The components are as follows:

Environment (E) considers the environmental factors that could affect the integration of

structural change (from top-management support, risk, disposition, organizational learning,


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 16

teaming, compensation and reward); People (P) considers the human development. It puts into

focus the individuals that make up the workforce - from their technical knowledge, creativity,

and openness to change. The people should be able accept the reforms as it makes its way into

their especially when it comes to the technological knowledge of the workforce. Skills can be

learned if the individual would be open to it and with the advancements in information

technology, organization skillsets should be catching up; Methodology (M) refers to the actual

process or the approach that was approved prior for implementation in order to incorporate BPR

in order to maximize effectivity and complexities that such reforms have considering the

challenges that go hand in hand with the implementation of reforms. It involves both top-bottom

and bottom-top approaches to tackle the traditional practices that are necessary to be reformed;

IT Perspective (I) concentrates on the improvements IT professionals could proffer towards the

reform because IT development is an intervention to the traditional organizational process. IT

has the fundamental role in determining the success or failure of BPR especially its goal is to

satisfactorily serve the clients or customer. Transformative Vision (T) refers to the means of

communicating the philosophy to the entire organization - from the strategic objectives down to

process level. This includes aligning the BPR with the goals of the organization.

Brinkman (1995) laid down the difference between economic development and economic

growth. It can be categorized into three (3) factors: the substantive nature of each process,

structure and form, real world relevance. As to the substantive nature, economic growth can only

be classified with significant adjustments and rise on economic numeric values while economic

development is the effect on the entire economic institutions from the top downward. As to the

structure and form, growth as the repetition of a given structure leads ultimately to an asymptotic

ceiling characterized by a sigmoid growth curve while continued growth with ongoing
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 17

acceleration is development which eventually entails structural transformation. Simply, it puts

that a growth without development is just a substance without a value to stability which, as it

claimed, happens in developing countries.

Lin and Rosenblatt (2012) described the value that global economic growth should not only be

attributed to developing countries. Democratization and maintained sustenance to

underdeveloped economies should also be seen as a pivotal role since global economic growth

can also be attributed to the increasing number of economic relations among countries.

Developing countries contribute to the development of both home-grown academic research and

practical experience in the implementation of their respective economic policies and programs.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 18

PART II

CONCEPTUAL FRAMEWORK AND METHODOLOGY

THEORETICAL FRAMEWORK

As approach to policy analysis, the study chose to use the Systems Theory by David Easton

(1981). The view Easton (1981) provided is a simple illustration in which scientific approaches

towards Political Science is maintained throughout his constructive stage of his development. In

Easton’s (1981) perspective, the whole policy determination process rung through a system. A

system, in Easton’s (1981) framework, can be identified by a network of abstract elements which

conform to a normative interconnection with one another. In this theory, Politics is viewed by the

“authoritative allocation of value”. The allocation is ‘authoritative’ because it enjoys support

from the environment. Allocation will be through depending on the demands from the

environment as well. It foes through the connected social process. Since the system is open, the

output goes back into the environment across the feedback providing new demands. Easton

(1981) further considered that the political system is the one accepts the demands and supports.

The demands enjoying more support forms the decisions and policies. This could be done by

various organizations such as the civil societies, political parties, individuals, politicians,

administrators, leaders and others who have influence in the environment. The process will avoid

backlashes or overburdened. The magnitude of such authoritarian decisions and policies depends

on the value they have on support the environment is giving them. Outputs should weigh more

supports.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 19

The study used the Systems Theory as a framework of policy analysis considering that all

significant dimensions in the environment that generate demands on the political system. This

framework of policy analysis has accepted several considerations: environmental inputs affect

the character of the system, characteristics of the political system affect the content of public

policy, environment inputs affect the content of a public policy, and the effect of the such public

policy in the environment and character of political system as viewed in the feedback. The study

could be made more sensible towards all factors that MSMEs face on the course of creating such

policy. The impact will be assessed in the feedback that the MSMEs can absorb from the

political system.

The researchers further utilized the Business Process Re-engineering (BPR) that should provide

the theoretical analysis in its attempt to measure the performance of the Government in fulfilling

the goals of Republic Act 10644 in looking on the feedback sprung out after its legislation. The

nature of RA 10644 is the provision of structural reforms that should be targeting the MSMEs in

the Philippines and creating an environment that encourages creation of more avenues of

opportunity for the entrepreneurs. It had become possible through the integration of various

practices that were once only found in the private sector before being adopted into public

administration. Since the law intended to empower the local MSMEs as a crucial part of the

private sector, this study chose a theory that can weigh in the government’s pivotal role in

equipping MSMEs.

Reengineering involves the recognition of information technology to enable innovative ways that

would tackle challenges that would come along with the course of business including

information technology to processes. It can also enable a more strategic and competitive
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 20

approach. The institutionalization of process management also includes the redesign of business

processes taken from reforms in management domains to make a process orientation. This

process involves process-based measurement and information system, process-based

organizational structures, process-based management approaches among others. Currently,

numerous organizations are redesigning their processes with great optimism that this will

consume less time and resources therefore achieving maximum efficiency. Grover (1998) argued

that such theoretical approach in Public Administration can be useful in cost-oriented and

income-based organizations as it focuses on reducing the time and labor spent for product

developments, improving the delivery of service for client satisfaction, and making the

organization more attractive to the market.

Paper (2005) presented interdependent components to describe the BPR approach. According to

Paper, an organization should consider the following if would be adopting the change in

processes: Environment (E), People (P), Methodology (M), IT Perspective (I), and

Transformation Vision (T).

Environment (E) considers the environmental factors that could affect the integration of

structural change (from top-management support, risk, disposition, organizational learning,

teaming, compensation and reward). It will be determined if the government had considered

Environmental factors in developing MSMEs in the Philippines.

People (P) considers the human development. It puts into focus the individuals that make up the

workforce - from their technical knowledge, creativity, and openness to change. The people

should be able accept the reforms as it makes its way into their especially when it comes to the

technological knowledge of the workforce. Skills can be learned if the individual would be open
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 21

to it and with the advancements in information technology, an organization skill-sets should be

catching up. It will be determined if

Methodology (M) refers to the actual process or the approach that was approved prior for

implementation to incorporate BPR and maximize effectivity and complexities that such reforms

have considering the challenges that go hand in hand with the implementation of reforms. It

involves both top-bottom and bottom-top approaches to tackle the traditional practices that are

necessary to be reformed.

IT Perspective (I) concentrates on the improvements IT professionals could proffer towards the

reform because IT development is an intervention to the traditional organizational process. IT

has the fundamental role in determining the success or failure of BPR especially its goal is to

satisfactorily serve the clients or customer.

Transformative Vision (T) refers to the means of communicating the philosophy to the entire

organization - from the strategic objectives down to process level. This includes aligning the

BPR with the goals of the organization.

These components will be determined on how the law was construed to resolve the demands that

the MSMEs initiated in the system. The components will now become the determinants on the

feedback that the system will absorb towards a new wave of support to the political system.

Having BPR as the key solutions that may satisfy the demands of the MSMEs, it will be

perceived as the layout for a success to the whole Philippine environment. With these, the study

will focus on the growth that BPR had given through the act.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 22

CONCEPTUAL FRAMEWORK

Guided with the components of Paper (2005), the study focused on having them as variables in

determining the success of the government to measure the impact of RA 10644 towards

economic growth. Using these components, we can determine the success or failure of the Go

Negosyo Act and perhaps recommend what should be done to improve it. The components

applied were detailed in Figure 1 as shown below.

Figure 1. Applying the BPR Components to the Government as prescribed by Paper (2005), perceived model of the
government on the enactment of Go Negosyo Act

The study will use all the components that suggested by Paper (2005). It will be used to describe

the government in realizing the process done in the system to achieve the demands of the

MSMEs. The study will provide a descriptive understanding of the Environment (E) that the

government have dealt with to equip the MSMEs the necessary skills for it to be able to compete

or cooperate with the existing market. The study also would also determine the approach that

used to develop the People (P) or the workforce and provide an understanding of the

Methodology (both Political and Legal) in the required processes that the Government had
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 23

undergone to have the law. In addition, since the Go Negosyo Act also recognizes the use of

Information Technology (IT) in developing client-oriented platforms for the benefit of the

MSMEs and wanted them to close coordinate with the government, the study also focuses on the

IT Perspective (I) of the key experts to frame the law hence making the interlinkage of different

government institutions if necessary. The Transformative Vision (T) will also be assessed using

the various promotion strategies used by the Government such as the print and web publications,

advertisements, seminars, workshops, and media coverage etc. that helped to structure the law

and provision of support and services. This is all in the hopes that the vision for the Filipino

MSMEs to prosper and play a much bigger role in society will be realized.

With this understanding, we then apply the Systems Theory as reference to our analysis.

Considering the layout provided by Easton (1981), the government, as part of the Political

System, will be assumed part of the Political System which will absorb the demands and

supports coming from MSMEs. Illustrating the chosen policy analysis, the public policy in the

image of the Go Negosyo Act then will be analysed by reviewing the process it had gone through

and determining its effect on the growth of the Philippine Economy through determining its

effect in the environment. To illustrate this concept, please refer to Figure 2.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 24

Figure 2. The Conceptual Framework of the study based on the model of Systems Theory by David Easton (1953).

The illustration should show which processes Go Negosyo had gone through and its vitality to

the existing environment. It is hypothesized that the act has significant impact at least to the

economic growth of the Philippines, especially that MSMEs, as true with the focus of this study.

MSMEs comprise a large percentage of the private sector thus to the economy as predetermined

in the introduction and the Review of Related Literature. Although the main goal is to transmute

this growth to development, as theoretically preferred by the policy, the scope and limitations of

this study show the shortcomings of the study to integrate such ideal concept. The focus instead

is on the growth which is one of the prerequisites to economic development in which future

researchers can base on.

SIGNIFICANCE ON INTERNATIONAL RELATIONS AND FOREIGN SERVICE

This study attempts to contribute its findings to the framework of the Philippine Foreign Policy.

By highlighting the how beneficial and crucial MSMEs are to Philippine Economic Growth in

general, it could add justification on how the government should be prioritizing MSMEs too as it
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 25

engages in bilateral, regional and global relations specifically in international trade. By assisting

MSMEs to grow out from their existing static and informal set-up, it is predetermined that

further development to MSMEs can make significant impact to economic development.

As the Philippines is ready to be a more globally competitive interdependent economy in the

world, it would be better to device a specific focus for the economy and highlight them as vital

part of the Philippine Foreign Policy.

RESEARCH METHODS

Given the monumental challenges of the study due to time constraints and unavailability of

primary contact persons, the study collected Secondary Data from the various sources; online

journals, economic statistics, news articles, online websites of involved agencies and of the

MSMEs, and other sources found have significance in determining the impact of the Go Negosyo

Act in order to put into account the efforts made by the government to assist the MSMEs.

The study mostly used data from 2010 and 2016 Philippine Economic growth since they are the

only available data we can find. Deemed it necessarily be attributed that there a limitation of the

study because of the limited time that the researchers have in the conduct of research. Instead,

the study used the data from Philippine Senate describing the economy last 2010 and a data from

the DTI website describing the 2016 data for MSME sector. This will be the point reference of

presenting comparison to determine the significant impact of the law.

The study follows a qualitative particularly descriptive research design. A qualitative approach in

determining economic growth would be sufficient to trace the impact of the policy. This is will
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 26

also determine the level of significance that the policy has towards the Philippine Economy in

general. Although the objective is to track the significant growth, given that the mutually

exclusive relations between the policy and the economic growth can be well established through

a quantitative approach, the study will instead on the implications on the economy in general.

Given that the study leans towards a more scientific yet general approach, with consideration to

the limitations that the research has, the study will instead open conceptual foundations of such

topic. A qualitative research design can introduce such conceptual foundations to work on.

And since the research is interpretative in its epistemology, the study focuses on the analysis of

the Secondary Data collected. This will go through a line of reasoning towards interpreting

available resources to establish such conceptual foundations. This approach is already

determined by the fact that it goes through a qualitative research design.

Ontologically, the research is purely subjective depending on the available resources to be

presented in the next part of the study. Further following the qualitative design, the study will be

described purely incorporating meaning to data.

The study was done with communication to the MSME Council, to Department of Trade and

Industry (DTI) to be exact since the act made it the prime actor that will implement the law to its

very nature. However, no primary data was collected directly from the DTI due to difficulty to

reach them and the inability to immediately establish necessary communication to understand its

implementation. The study also considers the participation of various government agencies as

determined from the secondary data collected from DTI. As the study progressed in the conduct

of research, the researchers had considered that a focus on developing the communications of

various key sectors. However, the limitation that the study has shown significant shift of
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 27

paradigm from looking on its success through its implementation to generally construing a

concept out of the general impact of the policy to the Philippine Economy.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 28

PART III

REPORT FINDINGSM CONCLUSION AND RECOMMENDATIONS

PRESENTATION AND ANALYSIS OF FINDINGS

INPUTS: Demands of MSMEs

Philippine MSMEs sector has a pivotal role in the Philippine economy. This was notes by the

Philippine Senate itself last 2012. As further noted, MSME Sector help to lessen poverty by

creating jobs adding accumulative number to the workforce. The sector also to accelerate

economic development in rural and far-flung areas. MSMEs serve as valuable partners to bigger

entrepreneurs as suppliers and providers of several support services. Yet despite of this

recognition, it was also noted that MSME as a sector share an insignificant value added to the

economy. The DTI also determined a share of 35.7% value added to the economy coming from

MSMEs as compared to higher contributions compare to our ASEAN neighbors: Indonesia with

53.28%m Vietnam with 39% and Thailand with 37.8%. According to the 2010 data, there were

a total of 777,687 business enterprises in the Philippines. 99.6 percent were MSMEs with

774,664 establishments while 0.4 percent were large enterprises with 3,023 establishments.

Micro enterprises comprised 91.6 percent with 709,899 establishments of the total number of

MSMEs while small and medium enterprises accounted for 8 percent with 61,979 establishments

and 0.4 percent with 2,786 establishments respectively. As to the industry distribution and share

per region, you may refer to the charts as follows. A line graph showing the development of

Gross Domestic Product (GDP) in the Philippines from 1969 to 2013. This data will show the

data that can describe the MSMEs before the enactment of the law.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 29

Figure 4. The 2010 data of distribution of MSMEs in the Philippines per industry.

Figure 5. The 2010 data of distribution of MSMEs in the Philippines per regions.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 30

Figure 6. The 1969 to 2013 data of distribution of GDP of the Philippines.

Making business in the Philippines is a challenge. This understanding is one of the things that

hampers the development of MSMEs in the Philippines. Habito (2011), a lecturer from Ateneo

de Manila University and Brain Trust Incorporated, suggested on empowering SMEs in the

Philippines. Habito (2011) stipulated that Philippines is behind from all its ASEAN neighbors

because of several key points which he had taken from Asian Development Bank (ADB) report

last 2007. First is the fact that Philippines has Tight Financial Situation because of its poor

revenue performance. Second, Philippines has inadequate power and transportation

infrastructures especially in Mindanao. Third, the Philippines has governance concerns making

investors not have confidence to the government itself. Lastly, Philippines has small & narrow

industrial base since its economy is firmly concentrated to few oligarchic families. To further

expand the economy, Habito (2011) linked his suggestion to empower the SMEs in the

Philippines. Rafaelita M. Aldaba had her initial studies about the lack of access of Small,

Medium-sized Entrepreneurs (SMEs) to finances needed to initially build a business. Victorino

Abrugar (2013) stipulated 6 points why Filipinos were hampered to have a business. First,
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 31

Business processes and licensing permits are so complicated and inconvenient. Second, Taxation

is hassle especially Business Taxes. Third, Employment secures a more stable income forcing

Filipinos to look for a job instead. Fourth, Filipinos lack initial capital to start a business. Fifth,

Filipinos also do not have a capacity to start business since they lack technical skills. And lastly,

Filipinos think they cannot take any support from anyone especially from those surrounding

them.

Before the enactment of Republic Act 10644 of Go Negosyo Act last 2014, the Philippines

already has a framework for the SMEs before. In 1992, Republic Act 7459 or the Investors and

Incentives Act were enacted to incentivize commercialize new inventions. It also provides

Inventions Development Assistance Fund. Republic Act 6977 was also enacted last 1991 which

was eventually amended last 1997 through Republic Act 8289. This act was also called as the

Magna Carta for Small Inventions Development Assistance Fund and amended by Mana Carta

for Small Enterprises. This act aims to promote, support, strengthen and encourage SMEs in the

Philippines. This created the Small and Medium Development Council (SMED) which was

composed by the following:

• Secretary of Trade and Industry as Chairman

• Director General of the National Economic and Development Authority;

• Secretary of Agriculture;

• Secretary of Labor and Employment;

• Secretary of Environment and Natural Resources;

• Secretary of Science and Technology;

• Secretary of Tourism;
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 32

• The Chairman of the Monetary Board;

• Chairman of Small Business Guarantee and Finance Corporation;

• Chairman of the small and medium enterprises promotion body which the President shall

undertake to establish under this Act

• Three (3) representatives from the private sector at large, all Filipino citizens, to represent

Luzon, Visayas and Mindanao,

• one representative from the small and medium enterprises sector to be appointed by the

President;

• a representative from the private banking sector to serve alternately among the Chamber

of Thrift Bank; the Rural Bankers' Association of the Philippines (RBAP); and the

Bankers' Association of the Philippines (BAP)

• Cabinet-rank ex officio members of the Council shall designate an undersecretary or

assistant secretary, and the chairman of the Monetary Board or his representative, as their

permanent representative in case they fail to attend meetings of the Council.

In this act also created the Bureau of Small and Medium Business Development within the

Department of Trade and Industry. Republic Act 9178 of Barangay Micro Business Enterprises

(BMBEs) Act of 2002 was also enacted to equip the Barangays in catering the needs of the

SMEs. Small Business Guarantee and Finance Corporation (SBGFC) was created to help finance

the SMEs in the Philippines.

Despite of the efforts to equip the SMEs in the Philippines, the government failed to create more

entrepreneurial atmosphere due to lack of Comprehensive and Concerted Agenda for SMEs in

the country. Habito (2011) further noted several key factors that were not yet met to develop the
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 33

SMEs. First, the lack of General Environment to foster environmental culture, streamline

government processes, and too distinct treatment for micro and small businesses in the country.

Second, the unresolved overarching concerns for the SMEs which comprise of (1) foster efficient

SME clustering and maintenance of associations, (2) lack of SME resource centers nationwide,

(3) lack of government-wide concern, and (4) overcome LGU disincentives due to bureaucratic

processes and red tape. Third, there is a weak financing for SMEs. This is due to the need of

expanded equity financing mechanisms, bond market mechanism for SMEs, education about the

credit information system which barred entrepreneurs to have access to loans for capital, and

weak strengthen credit guarantee system because of weak capacities of SBGFC. Third, there is a

lack of technological support. Department of Science and Technology (DOST) to strengthen or

promote DOST programs, create a common Research and Development facilities, to reach the

International quality system and standards, needs to facilitate access & usage of Information and

Communications Technology (ICT), need to innovate proprietary technologies. Fourth,

accessibility to Raw Materials and inputs. Integrate Industry study through Development Bank of

the Philippines (DBP) and DTI, linkages to other SMEs and productivity improvement on power

and water sectors. Lastly, the inaccessibility to markets come with the big factor due to lack of

development on diplomatic environment for market access, lack of domestic market assistance,

ICT access in every barangay, and foster competition with cooperation or “coopetition”.

Aldaba (2012) conducted a research about the inaccessibility on funds needed by SMEs to

increase their capital. Because of their limited track record, limited acceptable collateral, and

inadequate financial statements and business plans, they were barred to have access to necessary

funds especially from the banks. This was considered the most difficult constraint to SME

growth. Government financial institutions have their own financing schemes. However, private
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 34

banks are still reluctant to lend money to SMEs because of their general repugnance of their

operations in accepting bigger or even smaller accounts. This includes lack of knowledge on

processed in lending to SMEs. Banks continuously pointed out their insufficiencies and lack of

any basis on their credit information to determine creditworthiness of the borrowers. Banks were

also concerned on the viability of MSMEs as borrowers. Slow loan processing, short repayment

period and hardships of loan restructuring, high interest rates, and lack of start-ups.

Aldaba (2012) further recommended several policies to improve MSMEs access to financial

necessities of SMEs. First, Aldaba (2012) presented a Credit rating information and asymmetric

information since it is important to resolve the high-risk profile firms needed to establish

assurance. This credit information was part of the absence of track records, information

asymmetries, shortage of assets and collateral & insufficient management skills. An

implementation of Credit Information Corporation must be pushed through or a central credit

system to improve overall availability of credit information. Second, changing the perspective of

banks to a more conventional approach to SME lending is also important to alter the traditional

mentality of banks and introduce adoption of SME lending. A banking model that can address

these issues is necessary to advance SME capabilities. This renewing of banking model can also

make banks offer and cross sell multiple products, strengthening the mart and adopt

segmentation or product development. Such product is currently being tried through the CARD

Bank.

From all these inputs, we can determine the demand of the MSMEs in the economy of the

Philippines. This is despite of the recognition to them for the significant value they placed for the

SMEs. This was a realization after several pressures from the private sector, think-tanks and
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 35

various international financial institutions put a perspective on the Philippines’ failure to further

increase the viability of MSMEs through addressing their demands.

PROCESS: Taking the MSME demands

This is not until 2013 came and a politician aspiring in the person of Paolo Benigno “Bam”

Aquino IV and Cynthia Villar aspired for a Senatorial seat and used them as a platform during

election. Through this campaign promise to eradicate poverty through empowering the youth,

women and the MSME sector, the Go Negosyo Bill borne out. Senate Bill No. 2046 or the Go

Negosyo Bill was pushed through as the one that will respond to the “urgent need to create more

jobs” which was done through “easier for businesses to start-up and succeed” as regarded by the

Senator once elected. It was an easy done process since the Senator was also the chairman of the

Senate Committee on Trade, Commerce and Entrepreneurship.

It is important to note that Philippine politics run through the understanding that all measures to

be pushed through will depend on who occupies the seat in Malacañan Palace, or the Presidency.

This understanding run through the idea of Pangulo Regime by Remigio Agpalo (1999) which

was firmly based on the high regard towards the President as being the father figure of the

country. This was further substantiated by the fact that legislators tend to practice Turncoatism to

favor the bandwagon towards the seat in Malacañan. This idea was established by Yuko Kasuya

in his book Presidential Bandwagon published last 2008. This politics run through because of

the existing patron-client relationship fueled by a practice of Pork Barrel politics for decades

which make the legislators assure share from the budget or allocation of tantamount number of

projects, often lump-sum, to their respective regions or power base where they can continue their

respective legacies (through establishing long standing Political Clans) or assured win every
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 36

election. It is not a doubt that this politics was run by Political Clans and Elites being the

‘Building Blocs’ of politics in the Philippines, as coined by Teehankee (2018).

During the first years of President Benigno “Noynoy” Aquino III’s term, the administration

enjoys the confidence of huge number of members of the Congress. This confidence still carried

on even after the 2013 midterm elections. The president still enjoys huge margin to take any

legislative agenda of the President. And considering that Senator Bam Aquino is not just member

of the majority but also the nephew of the President, this was an easy swift to push through this

legislation. Having both the number and the surname, the bill was sealed already passed as it

gone through the process.

The composition of the 16th Congress was all in favor to the President’s party, the Liberal Party,

along with the party bloc it has created with the Nacionalista Party through the slogan of “Daang

Matuwid” bearing the anti-corruption and pro-market stance of the administration. It should be

noted that the Congress even though Majority was not members of the Liberal Party can be

considered majority depending on their declared alignment to the President’s prerogative or their

respective party’s affiliation with the administration’s party. The following data will show the

demographics of the affiliation of the Congress, Senate and House of Representatives

respectively, to identify how the Go Negosyo Bill was easily enacted without any hindrance from

any party or members of the Congress.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 37

Figure 7. The composition of the Philippine Senate during the 16th Congress.

As seen in the above presented figure that the Senate was comprised by 22% from Nacionalista

Party members and 17% from Liberal Party members. Since the two have perceived alliance

during this period, we can consider them members of the majority bloc in the Senate. This

majority also includes several Independent candidates ran under the “Daang Matuwid” ticket of

the President during the 2013 midterm elections or aligned themselves part of the majority bloc

during the 16th Congress. These personalities include: Francis Escudero, Lito Lapid, Sergio

Osmeña III, and Grace Poe. Members from other parties also aligned themselves part of the

majority bloc or also ran under the “Daang Matuwid” ticket of the administration are as follows:

Sonny Angara from Laban ng Demokratikong Pilipino (LDP), Miriam Defensor-Santiago from
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 38

People’s Reform Party, Loren Legarda and Tito Sotto from Nationalist People’s Coalition or

NPC, Aquilino “Koko” Pimentel III from Partido ng Demokratikong Pilipino-LABAN (PDP-

LABAN). The United Nationalist Alliance (UNA) party lead the banner of the minority bloc.

Considering this composition, the enactment of the Go Negosyo Bill has a luxurious number to

push forward in the Senate.

Figure 8. The composition of the House of Representatives during the 16th Congress.

While in the House of Representatives, 39% from the Liberal Party, 7% from the Nacionalista

Party and 13% form the Nationalist People’s Coalition (NPC) make up the key parties forming

the majority bloc or almost 59% of the chamber. This is also along with the several key allies of

the Liberal Party coming from Partylists (Akbayan Party for example) and a few that identify
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 39

themselves as part of the majority. This makes up 86.6% of all total members of the chamber that

was considered majority.

Having Mark Villar, member of the Nacionalista Party and a known advocate of SME

development as embodied by his mother’s (Cynthia Villar) legislation for entrepreneurial

legislative platform (through the Villar Foundation in forging SME development particularly in

their local base Las Piñas City), as the chair of the House Committee on Trade and Industry

made the Go Negosyo Bill as one of the priority bills at this time. The House Bill no. 4595 was

easily enacted through the House of Representatives.

It was established that both the Senate and the House of Representative was united for the

President’s agenda. And since Bam Aquino’s measure was also aligned to the economic agenda

of Malacañan and was also a member of the President’s clan, the Go Negosyo Bill easily paved

through these chambers. July 15, 2014, Go Negosyo Act was enacted and signed by the

president. December 19, 2014, the Implementing Rules and Regulations was then created to

correspond to the implementation of the law. The law has become one of the landmark

legislations of the 16th Congress. Senator Bam Aquino has the full credit in the passage of it.

OUTPUT: The redefining MSMEs in the Philippines

Indeed, the government’s objective—to help the poor and common households not only in

increasing their income but, more importantly, in building business equity for the marginalized

sectors of society—is evident in the law. However, while the law heralds the existence of these

opportunities which appear to be within reach; the focus of public education on such

opportunities is still found wanting.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 40

In consideration to the benefits afforded by the government to MSME are intended to benefit the

lower half of the social stratosphere, it is both practical and necessary for the government to

make this information prevalent and accessible by taking the law to the street level. We must

note that despite the proposed benefits, it is only when they were reaped by the people that the

spirit of the law is realized. Enabling such programs and creating access to business incentives is

one thing. Making the public take on an entrepreneurial disposition is another.

The Go Negosyo Act tried to resolve key demands raised before the enactment of the law. The

legacy that the law may be seen in this legislation is the fact that it created no distinction between

Micro business to Small and Medium-sized businesses. This is to answer one of the initial things

that was brought as an issue. One of the landmark point as well is the creation of Go Negosyo

Centers wherein MSMEs can have communication and request for technical assistance with the

government and to other MSMEs as well. This was the answer to the “coopetition” concept

initial introduced and to the technical and technological assistance the government could bring to

the MSMEs.

Furthermore, we can analyze how the government responded as perceived through the Business

Process Re-engineering that was discussed initially in this paper. This is to take note key plans

and provisions of the act.

Environment (E)

It is good to note that the government focused on empowering the MSMEs through streamlined

banner towards gearing the MSMEs as basis on the expansion of inclusive growth of the

economy. Aside from the Philippine Center for Entrepreneurship in Mandaluyong, one of the
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 41

purpose why Go Negosyo Centers were built is to create an environment for MSMEs and

empower their capabilities and ensure more technical and technological advises. The perceive

development of ICT assistance can also be attributed to the existence of the Go Negosyo Centers.

Currently there are 103 centers in Luzon, 42 in Visayas, while 39 in Mindanao. Considering that

the policy made an environment vital both for the MSMEs and the government to have

communication, it already created a space for continued development of MSMEs in the country.

The government aimed to increase number of centers to cater more MSMEs nationwide.

Several programs were also introduced to further alleviate the environment for the MSMEs. This

includes the following:

• Kapatid Agri Mentor Me Program (KAMMP) – the program wherein aiming to sustain

and improve the Agri-business in the country. Agricultural Industry and practitioners

roam around the country to serve as mentors to leader of cooperatives and associations.

• Kapatid Mentor Me (KMME) – the programs focusing on mentoring MSMEs nationwide

to improve their businesses through weekly coaching and mentoring by business owners

and practitioners. This was held in all Negosyo Centers nationwide.

• Women Summit – an annual event to empower women on engaging to MSMEs

• Youth Summit – an annual event to empower youth on engaging to MSMEs

• Digital Summit – an annual event aiming to integrate new technological opportunities for

MSMEs to tap on to improves their respective businesses.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 42

People (P)

The focus of that this policy had brought is the re-orientation of the personnel of DTI in gearing

them more towards a more comprehensive communication to MSMEs. Go Negosyo Centers

forced DTI and all other personnel to be more MSME-oriented to ensure that they can deliver the

services they needed. DTI employed a good number of people which knows how to run the

program for the MSMEs.

Through the act, the SMED Council was reshaped and new members for the council were added.

The composition of the new MSMED Council was enumerated below:

Small and Medium Enterprises Development (MSMED) Council. – The members of the Council

shall be the following:

• The Secretary of Trade and Industry as Chair;

• The Secretary of Agriculture;

• The Secretary of the Interior and Local Government;

• Three (3) representatives from the MSME sector to represent Luzon, Visayas and

Mindanao with at least one (1) representative from the microenterprise sector;

• One (1) representative from the women sector designated by the Philippine Commission

on Women;

• One (1) representative from the youth sector designated by the National Youth

Commission; and

• The Chairman of Small Business Corporation.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 43

MSMED Advisory Unit:

• The Secretary of Science and Technology;

• The Governor of the Bangko Sentral ng Pilipinas;

• The President of the Land Bank of the Philippines;

• The President of the Development Bank of the Philippines;

• The Director General of the National Economic and Development Authority;

• One (1) representative from the labor sector, to be nominated by accredited labor groups;

• A representative from the private banking sector to serve alternatively between the

chamber of thrift banks, and the Rural Banker’s Association of the Philippines (RBAP);

• A representative of the microfinance nongovernment organizations (NGOs);

• A representative of the University of the Philippines-Institute for Small Scale Industries

(UP-ISSI); and

• The President of the Credit Information Corporation.

The scaling down of the composition made the MSMES council make programs and policies

easily without consulting or communicating to several contact persons. It should also be noted

that Secretary for Interior and Local Government was also included to the list. The Secretary of

Science and Technology and Director General of National Economic Development Authority

was inserted as just member of the Advisory Unit. The addition of Rural Bankers Association of

the Philippines, microfinance NG, UP-ISSI, President of Credit Information Corporation,

President of Land Bank of the Philippines, President of the Development Bank of the

Philippines, and the Governor of BSP to the Advisory Council made a difference in trying to

address the financial issue was a great impact.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 44

The inclusion of a representation of women and the youth also made a huge difference

considering that the Go Negosyo focuses on the equipping and developing women in

entrepreneurship. This representation can make significant impact to the progressive policies and

up-to-date trends that youth and women can attribute to policy-making.

For the Go Negosyo Team, the lead team remains to be Joey Concepcion, the one who initiated

the program last 2005, continue to pursue the program despite of regime change. Although he

made to the government through Gloria Macapagal-Arroyo, he still served as the team leader

until today. Furthermore, professionals were made part of the project to ensure that the goals of

the law will be achieved, which was listed below:

Merly M. Cruz - Adviser on MSME Development

Ginggay Hontiveros-Malvar - Adviser on Agripreneurship and Sulu and Marawi Projects

Josephine Romero - Adviser to the ASEAN BAC PH Chair

Bettina Quimson - Adviser on ICTS

Aeron Christian R. Morado - Head of Programs, Media, Communications & Marketing

Media Team:

• Awduenli Viana - Media Officer

• Rhoanne Torres - Writer for TV

• Shiela Marie Incendencia - Videographer / Editor

• Mari Victorio Milanes - Videographer / Editor

• Communications Team:
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 45

• Jarielle Andrea Reyes - Communications and Special Projects Officer

• Czarina Arien Llagas - Digital Media Producer

• Bert Fernando - Graphic Designer

• Melanie Regalario - Writer

• Shyn Soteo - Communications and Special Projects Associate

Marketing Team:

• Paul Anthony De Guzman - Marketing Officer

• Eva Pasagui - Marketing Associate

Programs Development Team:

• Gianina Napo - Programs Development Officer

• Maria Giliza Gonzales - Programs Development Officer

• Jas Nito - Programs Development Officer

• Miguel Lopez - Programs Development Officer

• Miracle B. Lansang - Programs Development Associate

• Jennelaine J. Dingalan - Programs Development Associate

• Haron Ar Rashid S. Dima - Programs Development Associate

• Mark Eugene E. Eudela - Programs Development Associate

• Marie Ching D. Tan - Programs Development Associate

• Elyzzah F. Siongco - Programs Development Associate

• Ednyl Esguerra - Programs Development Associate

• Claire Intervalo - Programs Development Associate


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 46

• Aimee Diane Tidalgo - Programs Development Associate

• Ces Ariane Alvarez - Programs Development Associate

Administration and Finance Team:

• Sophia Ramos - Finance and Administrative Manager

• Lea Afable - Accountant

• Arlene Ignacio - Administrative Assistant

• Jonalyn Legaspi - Administrative Assistant

• Remar Mahilum - Accountant

• Ana Rose Viana - Accounting Associate

• Regalado Mangila - Administrative Assistant

• Aldrin Castillo - Liason Staff

Such set-up can only be seen in a corporate set-up in which, in this project, was adopted by the

government to fulfill the goal in assisting the goal of the Go Negosyo Act. This is to note that

such comprehensive manpower on the government direct side was non-existent before the act

was legislated.

Methodology (M)

The increase number of advertisements, presence of several media programs and improved

websites made the methodology of the Go Negosyo implementation easy. This methodology was

a private practice which aimed to increase the number of clients. The client-minded perspective

of the Go Negosyo Team and the government agency made the process to integrate the

philosophy comprehensive.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 47

One can be noted that the existence of a fresh and accessible presence in the world wide web

made the method easier and desirable. If one can observe, the format of the website was

interactive unlike with other government websites. Such interactive and comprehensive website

can make more MSMEs to be enticed with the idea that the team is trying to sell. Its presence in

Social Media also made a difference since the digital world is more interactive through Social

Media. The @letsgonegosyo Instagram account has currently 7,506 followers and posting on

day-to-day basis. Like other organizational account in the private sector, the account even made

several interactive posts like posting inspirational quotes about business, updated news about Go

Negosyo, and even birthday greetings to their executive heads. In twitter, @letsgonegosyo has

6,231 followers and was marked account. It posts almost the same frequency same as its

Instgram account. Its Facebook account has almost 1 Million Followers and more updated posts

compare to its Instagram and Twitter accounts. It even has interactive posts about its caravans,

programs and activities including interactive pictures. The use of interactive graphic materials

can also add up to the hype alongside with its use several in-the-trend applications such as

Lazada and Shopee in selling products. It even has YouTube account having 5,487 subscribers

and posts videos depending on the activities it has and even post inspirational videos. Its

increased social media presence made a difference making the government attract not just

MSMEs but also the youth that it tries to catch in as “client” to their mentorship.

The team also tapped in the traditional media like television and radio. It currently runs a radio

program titled “Go Negosyo sa Radio” which was being aired on DZRH 666 kHz and Radio

Natin FHM every Wednesday, 2 o’clock in the afternoon. By the fact that it tries to reach as

many “client” made greater difference in the implementation of the program.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 48

IT Perspective (I)

The fact that it has the Secretary of Science and Technology s member of the MSMED Council

and the annual conduct of Digital Summit greater chance for the Go Negosyo Act reach its

potentials. The benefit that such technological perspective was taken to account was already a

monumental start for the act. This enables MSMEs to tap in more technological advancement for

their own benefit.

The Digital Summit aims to develop and integrate more digital approach in developing the

MSME practices. The fact that the emphasis is on how technology can be helpful in the

comprehensive realization of the act can become vital in exploring more technological

innovations.

Transformative Vision (T)

The vision for a more transformative view towards the development of the MSMEs can be vastly

seen. The presence of several awards can instill and even create a competitive spirit among

MSMEs to achieve greater successes as perceived by the act. When the Philippines hosted

ASEAN Summit, the Go Negosyo also used this opportunity to create more competitive spirit to

transpire its legacy. This was ASEAN Business Awards or ABA.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 49

FEEDBACK: the significant effects to Economic Growth

The best and only indicator to look on the significant effect of Go Negosyo Act will be realized

through looking at the Gross Domestic Product of the Philippines from its implementation to its

actual enactment. Below is the line graph which illustrates the growth of the Philippine Economy

from 2010 to 2017.

Figure 9. The GDP of the Philippine from 2008 to 2017.

From this perspective, it can be argued that the economic growth of the Philippines is constantly

moving upward. This GDP can attribute to expansion of MSMEs in the Philippines. According

to the data, the growth of number of establishments of MSMEs grew. For basis of the figures,

please see the data shown as follows:


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 50

Figure 10. The distribution of establishments by enterprise size.

If we can compare to 2010 data, a growth of 1.17% was shown for number of establishments for

businesses in the Philippines. 99.57% of businesses are all MSMEs, maintained from 2010 data.

Large businesses still at 0.4% of shares but a growth of 1.31% was seen in the past 6 years. A

significant drop of 89.63% from 91.6% last 2010 number of percentage for the micro businesses.

But a significant growth for small and medium-sized business, from 8% last 2010 to 9.50% to

2016 for small businesses while from 0.4% last 2010 to a constant 0.4% last 2016.

While for the industry distribution, there has also been little significant changes in the

development of MSME sector. A chart was also taken to describe the development of MSME

sector in the Philippines as follows:


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 51

Figure 11. The distribution of MSMEs by industry sector based on 2016 data.

There has been a little change on the distribution of MSMEs by industry sector. Wholesale and

retail Trade and Repair Services still holds the largest share regardless of its drop from 49.7%

last 2010 share to 46.13% last 2016. Financial and Insurance now becoming a trend and making

way as a contributing factor in industry. Accommodation and Food Services also shows increase

from 12.5% last 2010 to 13.13% last 2016. If you can also observe, the demographics show that

the change on this share possibly can be attributed to the huge amount of new micro businesses.

The new business trend probable Financial and Insurance businesses and Accommodation and

Food Services.

One of the figures that we also have seen last 2010 is the regional MSME development. It is

significant to view on how what specific regions need to be tapped on to the goals of Go

Negosyo Act. It’s been established that the National Capital Regions always have the highest

value-added share when it comes to MSME sectoral development. But it is also important to note
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 52

what can the government do more to spread the information about MSMEs. It can be noted

initially that Go Negosyo centers are all concentrated so far in Luzon. The data as follows will

show the significant value of these centers to the development of MSMEs in each region.

Figure 12. The distribution of MSMEs per region based on 2016 data.

There has been a significant increase on the number of MSMEs in CLABARZON and a

significant raise in other areas other than the Luzon regions. If you can observe, the increase

significantly raised on the areas of Central Visayas, Davao Region, and Western Visayas, where

most of key Go Negosyo Centers can be found (Cebu City, Davao City and Iloilo City). The

increase in micro businesses mostly can be found in CALABARZON which we can assume that

the increase in number of micro businesses most like came from CALABARZON. It should be

noted that there are key Go Negosyo Centers in Cabuyao (the largest in Laguna), Bacoor, Cainta

and key areas in Batangas.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 53

Although there is a fluctuation on the data and numbers, it is still not mutually exclusive that

these changes were directly attributed to the Go Negosyo Act. However, these reforms can

stimulate the beginning of a boom towards the MSME sector. It is important to note that the aim

of the act is to make its services nearer to many entrepreneurs as possible. As soon as the number

of centers did not reached to poverty-stricken areas, we cannot yet assume that there could be a

direct significant impact from the enactment of the law.

As to the funding, several banks have already created a way to make MSMEs have access to

available funds. One of which is the BDO’s SME Loan in which reasonable interests and more

accessible for the SME, for the meantime. Difficulties on Credit Information system is still

prevalent but, considering that the National Identification Law was already enacted, it can help

make a system to answer this problem. This way, MSMEs can have more funds to take on for

business development, R&D of technological advancement and more business opportunities

ahead. Access to it can now be made easier considering the accessibility of government

assistance are now easier, through Go Negosyo centers.

CONCLUSION

This part of the study will present the conclusion depending on the data gathered. This

conclusion will purely base on the qualitative perspective on the numerical data between 2010

MSME sectoral statistics as against to the 2016 MSME statistics.

The Go Negosyo Act or the Republic Act 10644 was a result of an increase number of researches

and pressures coming from different sectors; from the think-tanks, concerned academicians and

practitioners, and even the international financial organizations. This makes us good to note that
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 54

the importance of non-state actors in shaping public policies. From a Neoliberal perspective, it is

a great foundation for more political development and more optimism to well-versed public

participation.

In response to these demands, the political system absorbed them through a strong opportunity of

a market-based policies of a President yet playing the traditional ways of dealing elitist politics.

This drive that the congress has taken became a great platform and timing for the enactment of

such act. And since the President controlled both chambers, business thinking politicians have

taken this as an advantage to develop a mechanism to increase productivity among MSMEs.

Reservations are still at hand when it comes on the way elites and clans control the politics.

The output of such politics has resulted to massive changes on the MSME sectors. And through

incorporation of private practices, through Business Process Re-engineering, have shifted the

perspective on once a sleeping opportunity to a more proactive sector. The effort of the MSMED

Council to spread the centers can be pivotal in realizing the goal of the act.

The significant impact of the law to the economic growth of the Philippines is yet to be

determined. Further data are needed to ensure the impact of the law. And the very fact that the

centers are still on its way to vital regions of the country, the study cannot provide strong

conclusion yet. However, having the law as the foundation is already a good investment in the

future, especially the proactive actions the government is taking which now uses different tools

to spread the information.


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 55

RECOMMENDATION

The government needs more help from all stakeholders. This is to ensure that the goal of the law

will be realized. One fact should be realized, information drive still needs to go beyond the

internet and Go Negosyo Centers. Though it was a good start, the government needs to remember

that those who needed this most can be found not in the urban areas but in the far-flung areas

who does not have access to internet, inefficient infrastructures and facilities to provide

necessary services that such law requires, and these areas does have high illiteracy rates. Non-

state actors are now needed to take the government to more an action. However, if the

government continue to show oppression of dissent by rolling over the opposition, taking more

strength through the arm forces, and use traditional yet unconventional way to govern, non-state

actors will not have any confidence to take an action of even participate to such measures.

Like to what the government had done in this policy, it is necessary for the government to listen

and partake opinions and perspectives coming from the opposing side to ensure sound and

responsive public policy. In this way, it can ensure more supports and legitimize future actions of

the political system. This will make the environment more stable open for more opportunities.
The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 56

REFERENCES

• (n.d.). Retrieved from https://www.senate.gov.ph/senators/sen16th.asp

• 16th Congress of the Philippines. (2018, August 17). Retrieved from

https://en.wikipedia.org/wiki/16th_Congress_of_the_Philippines

• About Us. (n.d.). Retrieved from http://www.gonegosyo.net/about-us/

• Aldaba, R. (n.d.). The Philippines in the electronics global value chain. Production

Networks in Southeast Asia, 108-137. doi:10.4324/9781315406787-6

• Aldaba, R. (2012). Small and Medium Enterprises' (SMEs) Access to Finance:

Philippines. Retrieved from https://dirp3.pids.gov.ph/ris/dps/pidsdps1205.pdf

• ASEAN Economic Community. (n.d.). Retrieved from https://asean.org/asean-economic-

community/

• Bangko Sentral ng Pilipinas - Publications & Research. (2004). Retrieved from

http://www.bsp.gov.ph/publications/media.asp?id=354&yr=2004

• Brinkman R. (1995) Economic Growth versus Economic Development: Toward a

Conceptual Clarification, Journal of Economic Issues, 29:4, 1171-1188, DOI:

10.1080/00213624.1995.11505746

• Casta, A. (2018). MSME Statistics. Retrieved from

https://dti.gov.ph/businesses/msmes/msme-resources/msme-statistics

• Cielito F. Habito, Ph.D. Professor of Economics & Director, Ateneo Center for Economic

Research & Development Ateneo de Manila University Presentation. - ppt download.

(n.d.). Retrieved from https://slideplayer.com/slide/6350692/


The Impact of Republic Act 10644 or Go Negosyo act towards Philippine Economic Growth 57

• DTI remains committed in pushing for the MSME growth. (2018). Retrieved from

https://www.dti.gov.ph/about/updates/9861-dti-remains-committed-in-pushing-for-the-

msme-growth

• Easton, D. (1981). An Approach to the Analysis of Political Systems. Political System and

Change. doi:10.1515/9781400854462.23

• Global Value Chains (GVCs). (n.d.). Retrieved from

http://www.oecd.org/industry/ind/global-value-chains.htm

• Greene, J. (2004). Public Administration in the New Century: A Concise Edition.

Wadsworth Publishing.

• Grover, V., & Kettinger, W. J. (1998). Business process change: Reengineering concepts,

methods and technologies. Hershey (US): Idea Group.

• Lin J.Y. & Rosenblatt D. (2012) Shifting patterns of economic growth and rethinking

development, Journal of Economic Policy Reform, 15:3, 171-194, DOI:

10.1080/17487870.2012.700565

• 'No man is an island' - the meaning and origin of this phrase. (2018). Retrieved from

https://www.phrases.org.uk/meanings/no-man-is-an-island.html

• Paper, D. and Chang, D (2007), The state of business process reengineering: a search for

success factors; Total Quality Management & Business Excellence. Logan (USA):

Routledge

• Philippines GDP 1960-2018 | Data | Chart | Calendar | Forecast | News. (n.d.). Retrieved

from https://tradingeconomics.com/philippines/gdp