Unit 6

Micro, Small and Medium

Enterprise Development
LEARNING OBJECTIVES

1. Understand the role of the Small-Scale

Industry in the entrepreneurial development
of a country
2. Familiarize with the different incentives and
schemes given by the gov’t to SMEs’
3. Discuss the impact of SMEs’ in the
Entrepreneurial Development and its
contribution to the country
 SMALL – SCALE INDUSTRY

There is an growing awareness of the important

role played by small and medium-sized
enterprises (SMEs) in fostering growth, which is
not limited to the simple production of wealth or
resources. It is important to spread new
industries into the countryside and to stimulate
employment. They are more likely to be labour-
intensive, thus providing employment wherever
they are created.
Mallari (2000) stressed that small and medium-
sized enterprises are regarded by the Government of
the Philippines as the cornerstone of economic
development. For instance, the Government has
enacted the Republic Act 8289, also known as the
Magna Carta for Small Enterprises, which aims to
support and strengthen the development of small
and medium-sized enterprises , especially rural and
agricultural enterprises. The sector contributes
about 33% to the country's economic development
and employs about 67% of the workforce.
 MSME Development Plan
1. Philippine Development Plan and MSMED Council’s Micro.
Medium and Small Enterprise Development Plan 2011-2016
a. Business Environment – Help create an enabling environment for
the establishment, development and sustainability of MSME’s.

b. Access to Finance – Help increase MSME’s access to financial

products, services, and support programs.

c. Help increase MSME’s access to domestic and international

markets.

d. Productivity and Efficiency – Help increase the level of

productivity and efficiency of MSME’s`
2. ASEAN Strategic Action Plan for SME Development 2016-
2025.

a. Promote Productivity, Technology and Innovation

Improvements to productivity and technology as the key drivers
for MSME’s to integrate into international production networks.

b. Increase Access to Finance Enhancing both demand and supply

for financial resources through interventions that increase
financial literacy.

c. Enhance Market Access and Internationalization Capacitating.

MSMEs to comply with international requirements to enhance
global trades.
d. Enhance Policy and Regulatory Environment
Alignment of rules and regulations among ASEAN
Member States to promote a harmonized business
enabling environment.

e. Promote Entrepreneurship and Human Capital

Development Equipping entrepreneurs and
employees to better overcome the new challenges of
an integrated ASEAN.
3. Philippine Development Plan and MSMED Council’s Micro, Medium and Small
Enterprise Development Plan 2017 - 2022

Focus Areas Goals

1. Business Environment Business Climate and Access to Finance
2. Business Capacity Human Capital Development and
Technology and Innovation
3. Business Opportunities Access market
The various Incentives Available for Entrepreneurs
Policy Incentives Granted to Local SMEs in the Philippines

Tax
A. Direct Tax (Income Taxation)
Provision of fiscal incentives to all registered Barangay Micro
Business Enterprises (BMBEs)

Exemption from payment of income tax for income arising from

the operations of the enterprise (The LGUs are encouraged to
reduce the amount of local taxes, fees and changes imposed or to
exempt the BMBEs from local taxes, fees and charges)

Provision of fiscal incentives to direct and indirect exporters

including export traders
 Non - Tax
A. Financial
Guarantee and financial facilities

Small Business Guarantee Fund Corporation (SBGFC)

• SME Force – SME Financing for organizationally competent and Excellent Franchise
Business is a franchise development financing facility that will be implemented
with the participation of the franchisor’s organizations.

• FIRST LIGHT – A financing program for the best business ideas that will contribute
to the development of the five (5) priority industries.

• GUIDE – Guarantee Incubation for DTI Endorsed Enterprise is a P100 million direct
lending facility of the Small Business Guarantee and Finance Corporation (SBGFC).

• Small Enterprise Financing Facility (SEFF) – SEFF was established to supplement

the financial system’s resources for small and medium enterprise development
financing
• Rediscounting Facility for Small Enterprise Loans – It is a credit
window where accredited financial institutions (AFIs) may
negotiate their eligible SME loans/credit instrument with SBGFC
AFIs.

• Guarantee Program – This product was designed to encourage

financial institutions to lend to SMEs by providing a guarantee
cover of up to maximum of 90% on the loans of qualified
entrepreneurs.

• Transactional Direct Financing Facility – This is a stopgap

program which immediately addresses the credit needs of SMEs.
Particularly in the export sector.
 WHOLESALE LENDING
FACILITIES
Development Bank of the Philippines (DBP)
• Industrial Support Services Expansion Program (ISSEP) –
promote the construction, expansion or modernization of
plant and related services, including land improvements
related to these.

• Industrial Guarantee and Loan Fund (IGLF) – This may be

availed by enterprises engaged in the manufacturer or
processing of products on a commercial scale as well as
the delivery of services supportive of manufacturing
activities.
RETAIL LENDING FACILITIES

Window III – the centerpiece of DBP’s retail

lending operations. It finances innovations
and socially desirable projects with high
developmental impact. Below are some of the
programs assisted under this.
B. FACILITATION OF
EXPORT/IMPORT
Export assistance network

a. Export Assistance Network (EXPONET) –

services as a trade facilitation office that
provides real and immediate assistance to
existing and potential exports. Below are its
services.
Under the LGU code LGUs may provide fiscal and non-fiscal incentives to
SMEs

Preferential treatment in the procurement of raw materials

SMEs are entitled to a share of at least ten percent (10%) of total
procurement value of goods and services to all government offices.
Exemption from the coverage of the minimum wage law to all registered
BMBEs

Inventors
RA 7459 provide Tax/Duty Exemptions Assistance, Loan Assistance
Program, Testing Analyses, Travel Assistance and accreditation of Inventor’s
organizations.

Provides financial assistance for the preparation of pre-feasibility studies

and business plans for selected technologies to establish not only the
economic viability of adopting/using the technology but perhaps more
importantly to guide our scientists in their R&D to further improve the
technology.
R&D
Department of Science and Technology (DOST)
assists SMEs in the manufacturing sector to attain
higher productivity. DOST through Technology
Application and Promotions Institute (TAPI) fields
consultancy teams composed of industrial
engineers and experts to provide productivity
consultancy services to various firms throughout
the country.
The different scheme through which
incentives are given and How to avail of
those incentives?

5 Government SME Programs You should take

advantage of:
 Negosyo Centers
1. Business registration assistance
Apply for the requisite permits can be very frustrating and
lengthy. Visiting the Negosyo Center will help you make the
registration process simpler so that you can concentrate on a
larger picture of your market.
2. Business advisory services
If you need advice on how to run your company, you can
always consult one of their consultants who can help create a
workable business plan.
3. Business information and advocacy
For those who lack any previous knowledge of running a
company, you will have the chance to discover through seminars
organized by your resident Negosyo Center.
Small and Medium Enterprise
Roving Academy

It is only normal that the number of seminars

arranged by the Negosyo as product of RA 10644, also
known as the Go Negosyo Act, the Negosyo Center
enables more jobs to be generated by helping to boost
the growth of small and medium-sized enterprises. In
order to help you set up your company, the Negosyo
Center has three key services.
Shared Services Facilities (SSF)

Competitions is a paramount factor in the

growth of a business. Unfortunately the
facilities and equipment required by different
companies to keep ahead of competition appear
to be expensive.
Barangay Micro Business
Enterprise

Signed into law in 2003, the Barangay Micro

Business Enterprise (BMBE) Law encourages
the formation of such through incentives and
benefits.
 REPORTERS:

RISHELLE MAE C. ACADEMIA

RONNELYN SAYCON
PHILIP JOHN SALOMON