TRADE AND COMMERCE

“Strengthening SME Competitiveness in The Global Market”, August 24, 2004

PHILIPPINE CHAMBER OF COMMERCE AND INDUSTRY (PCCI) PRESIDENT MS. NOEMI SALUDO, PCCI-NCR VICE PRESIDENT ANGELITO E. COLONA, PCCI-NCR REGIONAL GOVERNOR ZACARIAS F. QUINTIN, other PARTICIPANTS AND GUESTS, A PLEASANT EVENING TO ALL OF YOU.

I AM HONORED TO BE the keynote speaker tonight in WRAPping UP TWO VERY SIGNIFICANT AND FRUITFUL DAYS of CONDUCTING THE 12TH AREA BUSINESS CONFERENCE OF THE PCCI, ALSO KNOWN AS THE METRO MANILA BUSINESS CONFERENCE 2004 (MMBC 2004).

I commend you for what you have achieved here in gathering our business leaders and representatives of small and merdium enterprises (smes) AND COOPERATIVES AND HOLDING THESE FORA to be able TO DISCUSS and THrEsh out the VERY IMPORTANT ISSUES AND TRENDS CONFRONTING OUR smes TODAY. to underscore, THESE DISCUSSIONS FURTHER THE PROMOTION and DEVELOPMENT OF OUR SMEs AND bring us up to date ABOUT ALL THESE ELEMENTS OF DEVELOPMENT.

SMEs ARE VITAL TO THE GROWTH OF OUR ECONOMY. ASIDE FROM MAKING UP 99.6 PERCENT (ALMOST 100%) OF TOTAL FIRMS, THEY CONTRIBUTE 32 PERCENT TO TOTAL GROSS DOMESTIC PRODUCT (GDP) AND GENERATE 70 PERCENT OF ALL EMPLOYMENT. THEY also CONTRIBUTE 32 PERCENT OF THE VALUE ADDED TO THE ECONOMY AND constitute 60 PERCENT OF EXPORTERS.

It would thus be in the country’s best interest to sustain a competitive sme sector because it is a source of stable and productive jobs. In the long run, enhancing the competitiveness of this sector is crucial to poverty reduction.

As we all know, the country cannot afford to be isolated from the rest of the world. We are in a globalized setting wherein competitive pressure squeezes out inefficiencies and businesses must continue to improve the value for money of todays’ consumers. AS in darwinism’s survival of the fittest, competition breeds quality. thus, A VIBRANT SME SECTOR PROVIDES A STRONG DOMESTIC SUPPLY BASE FOR GLOBALLY-COMPETITIVE INDUSTRIES.

This truth could not be more relevant and urgent now with THE EMERGENCE OF CHINA AS A MAJOR PLAYER IN THE WORLD MARKET. worldwide events taking place point to a MOVEMENT TOWARD CLOSER ECONOMIC INTEGRATION THROUGH MULTILATERAL, REGIONAL AND BILATERAL ARRANGEMENTS (AS A MEMBER OF the ASEAN for example, the philippines encourages trade WITH OTHER ASEAN COUNTRIES UNDER THE ASEAN INDUSTRIAL COOPERATION SCHEME WITH CHINA, JAPAN AND INDIA). these HAVE INCREASED both the OPPORTUNITIES AND THREATS FACED BY LOCAL PRODUCERS WHO HAVE TO CONSTANTLY IMPROVE EFFICIENCY AND PRODUCTIVITY TO SURVIVE AND PRESERVE THEIR NICHE IN THE DOMESTIC/AND OR EXPORT MARKETS.

The question that we have to ask therefore is, what can we do TO enhance sme competitiveness and to give our smes THAT EDGE AND THAT FIGHTING CHANCE IN THE GLOBAL ECONOMY?

SMEs, LIKE ALL businesses in our country face challenges SUCH AS stiff global competition, limited access to technology AND financing, and the high cost of doing business.

GOVERNMENT’S RESPONSE IS THE NATIONAL SME DEVELOPMENT PROGRAM. THE GOAL OF THIS PROGRAM IS TO INCREASE THE CONTRIBUTION OF SMEs AS A PRIMARY ENGINE OF GROWTH AND TO SPUR PHILIPPINE SMEs to be at par or better than the performance level of comparable asian enterprises in terms of value added, employment, number of establishments and export volume.

To achieve this, the program intends to expand ENTERPRISES BY migrating ABOUT 80% OF OUR SMEs concentrated in the services sector (or those micro industries and small enterprises with asset size of less than P1.5 million, and between P1.5 - P15 million, respectively) towards the manufacturing sector.

Different strategies of the program enables an environment conducive to this expansion. Enterprise-level Strategies provide comprehensive & focused support to enhance managerial & technological capability and Provide business opportunities for development of new ideas that promote diversification of the industrial structure. Sector-level Strategies Promote sustained operations through directed sector services and Develop & promote services that support industrial linkages between local SMEs and leading industries. more importantly, Broad-based Level Strategies Improve access of SMEs to financing, Promote an enabling business environment, Improve implementation of SME policies and regulations and Improve access to programs and capacity-building for institutions.

These strategies have already been put to work through some programs already in place SUCH AS the sme unified lending opportunities for national growth (or sulong) and SME Long Term Development Plan, to name a few.

THE PHILIPPINE EXPORT DEVELOPMENT PLAN FOR 2002-2004 IDENTIFIED THE SO-CALLED “10 REVENUE STREAMS,” EXPORT PRODUCT GROUPS THAT ARE DEEMED POTENTIALLY COMPETITIVE. THESE INCLUDE MOTOR VEHICLE PARTS, IT-RELATED SERVICES, MICROELECTRONICS, MARINE PRODUCTS, FOOD PRODUCTS, ORGANIC PRODUCTS, HOME FURNISHINGS, CONSTRUCTION MATERIALS, GIFTWARE AND HOLIDAY décor, AND WEARABLES.

These REVENUE STREAMS should continue to be supported and given priority. The government must manage its limited resources to industries in which it will derive more income. but we have other industries which are not so competitive but are doing okay and are facing apprehension with competition from china. in the case of garments in which we have excellent designs and good quality, we can provide the needed support in terms of access to financing, to be able to upgrade technology such as laser cutters, and access to training for the workers which would upgrade productivity levels. the end result would be that their excellent designs and better quality would be able to rival that of China's.

To further these DOMESTIC PRODUCTS’ ACCESS INTO FOREIGN MARKETS government conducts MARKET PROMOTION ACTIVITIES through SELLING/ INVESTMENT MISSIONS HELD BOTH IN THE COUNTRY AND ABROAD. THE GOVERNMENT also ENSUREs THAT THESE PRODUCTS ARE OF THE BEST QUALITY by conducting QUALITY TESTS and ALIGNing these WITH INTERNATIONAL STANDARDS.

With these in mind WE THUS CHALLENGE YOU, BUSINESS LEADERS and sme advocates TO HELP STIMULATE OUR DOMESTIC DEMAND. by adhering to these programs that stimulate business activities and promote competition, the sme sector, hand in hand with the government will be the main driving force of the economy in providing employment opportunities and providing consumers with quality goods and services that will ultimately link the country to the global economy.

Let us pursue these programs with greater vigor by full coordination among key support agencies, particularly the DTI, DOST, DBP, Land Bank, SBGFC, IGLF, NABCOR, among others.

Let us keep in mind that Governments do not create wealth but small and medium enterprises do.

I want to thank you for your time and I look forward to a productive and prosperous year ahead!

Good Evening.

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