Editorial

by ERNESTO T. SOLIDUM

Focusing On MSME’s For ASEAN 

Integration 2015

Kapihan Sa Aklan on March 15, 2014 discussed the topic, “SME’s – Aklan Strength on Asean Business Integration”. The venue is Carmen Hotel located in the heart of Kalibo. The guests were Ms. Amelia Rentillo, Pres. Hugod Aklan Producers Assn.; Ms. Rosalinda Regalado, Senior Specialist DTI; Mr. Blas M. Solidum, Prov’l. Statistics Officer, PSA and Ms. Rudelyn Panadero, Senior Statistician PSA. Other guests were 15 members of SME’s engaging in garments and textiles, food processing, handicraft and novelty items. 

Ms. Rentillo said that Small and medium Enterprises (SME’s) are primary movers of growth for prosperity and stability. It is for this reason that Hugod Aklan welcomes this expanded facility for goods and services. Aklan SME’s is composed of 26 cooperatives and organizations and have joined Aklan Credit Surety Fund of Bangko Sentral ng Pilipinas disclosed Ms. Rentillo.

Atty. Allen S. Quimpo cited the report of Dr Rafaelita M. Aldaba, Senior Research Fellow, Philippine Institute for Development Studies that SME’s is behind impressive growth up to 99 percent of their economies. This holds true for China, Indonesia, Malaysia, Singapore, Thailand, Vietnam and the Philippines. This is export–oriented, 16 to 31 percent of total and providing employment to 60 percent of the workforce.

According to Mr. Blas Solidum, the four offices which are: DA-BAS, DOLE-BLES, NSCB and NSO with passage of RA 10625 or Philippine Statistics Act of 2013 are merged into one: Philippine Statistics Authority (PSA). The Agency is mandated to conduct periodic socio-economic surveys done either on individual households/establishments or randomized sampling method. Statistical findings invariably serve as basis for formulating policy guidelines in government programs and projects. It can also be used by private parties as a tool for development especially in preparing feasibility studies. Based on 2012 survey; the total domestic trade of Aklan reached 45,000 MT valued at P12 billion. 

Those interested to acquire data and info about a specific subject, Ms. Panadero suggested to the concerned individuals to send in their letter request. Except for comprehensive data that require certain fees, majority are handed out free.

Constraints Facing SME’s:

There has been unprecedented growth of Aklan SME’s for the past decade due to government intervention programs (mainly through DTI) especially Magna Carta for SME’s that offer financial assistance. The Agency is tapped for technical assistance, export marketing and SME development. There are 4 classifications which are: micro – 1 to 9 workers, small – 10 to 99, medium – 100 to 199 and large – more than 200. In the Philippines, the total employment generation is 62 percent while value added is 35 percent. 

Constraints

a) Scarcity of raw materials – Typhoon Yolanda destroyed agriculture, fisheries and forest products resulting to the disruption of manufacturing output. Raw materials such as saba bananas, ginger, coconut, camote, cassava, nitto, bamboo, piña/abaca and rattan are in short supply forcing entrepreneurs to temporarily stop or buy them at higher prices; 

b) Financing – A larger proportion is unable to tap external financing from banks and other credit sources. Formidable reason is that banks require SME’s to submit audited financial statements for the last 3 years and other documents; 

c) Technology and skill – Majority of SME’s lacks the technology to compete in the global market. Global competitiveness is the ability of industries to generate world class products and services in a cost effective manner that allows them to sustain and even increase market share. Many are not knowledgeable about modern technology and employ low level skills; 

d) Infrastructure – Suppliers of raw materials encounter difficulty in transporting their products to market since roads are passable only in good weather. Remote barangays of Libacao and Madalag are isolated during typhoons and floods. Transport cost is definitely staggering if not prohibitive; and 

e) Market environment – clothing apparels made of pure piña or piña combination with silk target a specific although upscale market – for corporate and casual wear. Processed foods and novelty items like ladies bags and shoes and personal accessories could be saleable in the Asean market provided products adhere to quality standards and prices are reasonable.

Comments: 

There was a time in American history when Negro slaves were used in agricultural production like corn, wheat and cotton. It was backbreaking task and not very profitable. Much of the rich farmland lay idle and people suffered pangs of hunger and deprivation. However, spark of life came with the invention of farm machines particularly the cotton gin invented by Eli Whitney. With industrialization, machines could plow, plant, cultivate, harvest and processed cotton in less time for the consumers market. Mechanized looms took over the textile industry that included cotton, silk and synthetic fibers like nylon and polyester.

Silk originated from China where it is produced from silkworm that feeds on mulberry leaves. The cocoon is harvested, dyed in different colors and fibers manually extracted. Eventually, they were set in mechanized looms that turned out bales of cloth in just a few hours. 

Our Asean neighbors are very successful on this enterprise that the Philippines inadvertently failed to join the economic bandwagon. Result: growing army of unemployed 3.3 million, underemployed – 10.9 million and 1.0 million each year’s nothing significant or impressive ever came out to modernize the industry. 

The industry languished for years due to government neglect and plagued by diseases notably mosaic and bunchy top of abaca. 

The probability of mechanized piña loom weaving is discounted since individual fibers have low tensile strength when stretched and twisted. Moreover, the fine texture and softness are so fragile that it could only be done by hand. Perhaps the Bureau of Agricultural Research and state agricultural universities can genetically develop a variety of pineapple or abaca suitable for mechanized loom weaving. 

If not possible, our desire to compete in the lucrative Asean textile market presently dominated by Indonesian batek and RTW’s from Thailand, Malaysia, China and Vietnam cannot succeed. Today, almost all RTW’s displayed in Boracay, Divisoria and megamalls come from these countries.

On the problem of availability and sustainability of raw materials, it is best for the manufacturers to tie up with agricultural cooperatives. Under this set-up commercial plantation of raw materials like bariw, ginger, pineapple, saba bananas, and others. could be undertaken at a contracted price. 

The Philippine economy looks bright with 2014 GDP forecast of 6.5 – 8.0 percent. Implementation of the Manufacturing Roadmap like inclusive growth, creation of quality jobs and higher spillover affected to MSME’s must be on focus. /MP