Save the MSMEs

If there is one sector of the economy that is reeling really badly from the effects of the COVID-19 crisis, it must be that of the micro, small and medium enterprises (MSMEs). While it is true that big businesses should not be allowed to fail so as not to strain the financial system, so, too, should the MSME sector be afforded adequate support and protection.

Figures from the Department of Trade and Industry showed that of the 1.42 million registered businesses nationwide, 99 percent belong to the MSME sector, nearly nine-tenths of which are microenterprises. Three out of every five employed Filipinos work in MSMEs, earning them the label the “backbone of the economy.”

However, the COVID-19 pandemic has dealt a severe blow to MSMEs, majority of which are in Metro Manila, Calabarzon, and Central Luzon — areas that suffered the most from the severe lockdown starting in the middle of March and was eased only this month. As these small firms rely mainly on cash flow for their daily operations, their closure during the lockdown led to the piling up of expenses that could not be met — employees’ salaries, rent, suppliers’ credit, and bank loans used for operations.

Government assistance has sadly been slow and lacking, perhaps because of the administration’s need to address other concerns relating to health care, the poor, and the overall economy. Among the assistance extended to the sector were the P120 billion in loan guarantees to badly hit small businesses, and the P1-billion loan fund allotted by the DTI last April to microenterprises (asset size of P3 million and below and up to nine employees) and to small businesses (asset size of up to P15 million and maximum of 99 workers) at an interest rate of only 0.5 percent.

The Department of Agriculture, on the other hand, is taking care of MSMEs in the farm and fishery sector through programs such as the Survival and Recovery (SURE) Assistance Program that extends P25,000 per borrower, interest-free, to small farmers and fishermen affected by the lockdown, and the P200-million fund for enterprise development training, livelihood kit provision, and business counseling to microentrepreneurs.

Some legislators have proposed stimulus programs to revive the economy — including financial assistance to MSMEs — but these ambitious plans seem headed nowhere as their funding sources have yet to be identified.

The fact, however, is that the government cannot rescue the MSME sector all by itself. While the administration has raised more than P1 trillion in local and foreign funding for anti-COVID-19 efforts, much of the money went to health care and financial assistance to the marginalized members of society.

The private sector needs to pitch in. Major mall operators like SM and the Ayalas have already waived rental for the duration of the lockdown for those affected and unable to operate during this period. Banks have similarly provided grace periods for maturing obligations especially of affected MSMEs, with prodding from the Bangko Sentral ng Pilipinas. Others have granted payment holidays or grace periods for credit cards and loan payments. Some banks increased loans to MSMEs, although these are being guaranteed by the government.

One ray of hope for the sector was launched early this month jointly by the DTI, the Association of Filipino Franchisers Inc., Go Negosyo, SM Foundation, Security Bank, and Union Bank. Dubbed “Buyanihan” (a play on the local tradition called “bayanihan,” which engages the entire community to work together to accomplish a difficult task), the project aims to raise awareness on the plight of MSMEs and for consumers to help by patronizing the products of homegrown entrepreneurs.

It is also incumbent upon local consumers to do their part to help local MSMEs survive this crisis. They need a ready market for their products, and that should be us. Filipinos need to vigorously patronize locally made goods, even though the temptation to buy from the likes of Shopee or Lazada is strong owing to the cheap prices of goods mostly sourced from mainland China.

Helping MSMEs by patronizing their products is a patriotic act everyone can do to lend a hand to the beleaguered small entrepreneur sector, the collapse of which would only spread greater joblessness and hollow out the economy some more.