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STRENGTHENING CAPABILITIES OF PHILIPPINE SMEs FOR DOING BUSINESS WITH EU COMPANIES. Prof. Melito Salazar, Jr. & Prof. Quintin Tan. Session Flow. 1. The Overall Situation of Philippine SMEs 2. Identifying the Philippine SMEs and needs 3. Characteristics of the Filipino Entrepreneur

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strengthening capabilities of philippine smes for doing business with eu companies

STRENGTHENING CAPABILITIES OF PHILIPPINE SMEs FOR DOING BUSINESS WITH EU COMPANIES

Prof. Melito Salazar, Jr.

&

Prof. Quintin Tan

Chamber of Commerce of the Philippines Foundation, Inc.

session flow
Session Flow
  • 1. The Overall Situation of Philippine SMEs
  • 2. Identifying the Philippine SMEs and needs
  • 3. Characteristics of the Filipino Entrepreneur
  • 4. Philippine SMEs needs at national and firm level
  • 5. Strengthening SMEs

Chamber of Commerce of the Philippines Foundation, Inc.

the state of philippine smes

The State of Philippine SMEs

Umbrella of Support

Chamber of Commerce of the Philippines Foundation, Inc.

legal and institutional framework
Legal and Institutional Framework
  • The Magna Carta for Small Enterprises
    • Defines SMEs
    • Creates the SMED Council
    • Stipulates mandatory lending to SMEs
    • Sets up four guiding principles for SME development

-minimum set of rules and simplification of procedures and requirements

-encouragement of private sector participation

-coordination of government efforts

-decentralization

Chamber of Commerce of the Philippines Foundation, Inc.

other relevant laws
Other Relevant Laws

Barangay Micro Business Enterprises Law

Special Economic Zones Act

Clark and Subic Special Economic And Freeport Zone

Tax Reform Act

Omnibus Investment Code

Less Developed Areas Act

Local Government Code

Chamber of Commerce of the Philippines Foundation, Inc.

institutional framework
Institutional Framework
  • The SMED Council
    • Department of Trade and Industry
    • National Economic Development Authority
    • Department of Labor and Employment
    • Department of Science and Technology
    • Department of Agriculture
    • Department of Environment and Natural Resources
    • Small Business Guarantee and Finance Corporation
    • Monetary Board of the Bangko Sentral ng Pilipinas
    • 3 Private Sector representatives from Luzon, Visayas and Mindanao
    • Secretariat: DTI Bureau of Small and Medium Enterprise Development

Chamber of Commerce of the Philippines Foundation, Inc.

dti sme core group
DTI SME Core Group

BSMBD – coordinates SME policies, programs, projects

SBGFC – financing services

Philippine Trade Training Center- development and implementation of SME training

Product Development and Design Center of the Philippines- product development initiatives

Cottage Industry Technology Center (technologies)

The Regional and Provincial offices of DTI – provide services to SME associations and SMEs

Chamber of Commerce of the Philippines Foundation, Inc.

other support institutions
Other Support Institutions
  • Other Government agencies (DOST, DOLE, DA, DENR and DILG)
  • Local Government Units
  • Private Sector
    • Chambers of Commerce and Industry
    • Professional Organizations
    • Business Sector organizations
    • Other NGOs

Chamber of Commerce of the Philippines Foundation, Inc.

smed council definition of smes
SMED Council Definition of SMES*

Micro – P3 million Assets and up to 9 employees

Small – not exceeding P15 million Assets and up to 99 employees

Medium – not exceeding P100 million Assets and up to 199 employees

*January 2003

Chamber of Commerce of the Philippines Foundation, Inc.

2006 sme statistics
2006 SME Statistics

Philippine SMEs are 7.6% of total establishments and account for 33.2% of employment.

25, 347 Philippine SMEs are in the National Capital Region, 7,319 in Calabarzon, 5,338 in Central Luzon, 4,156 in Central Visayas and 3,213 in Western Visayas

Philippine SMEs are mainly in Wholesale andRetail Trade (373,721), Manufacturing (105,083) and Hotels and Restaurants (97,936).

Chamber of Commerce of the Philippines Foundation, Inc.

understanding the filipino entrepreneur

Understanding the Filipino Entrepreneur

2006 Global Entrepreneurship Monitor (GEM) Research Consortium

Chamber of Commerce of the Philippines Foundation, Inc.

significant findings
Significant Findings
  • Four out of Ten Adult Filipinos engaged in business
  • About half are in early-stage entrepreneurial activity (TEA)
  • 19.7% (9.5 million) comprise the country’s established businesses.
  • Mindanao has the highest TEA at 73% while Northern Luzon has the lowest at 30%.
  • Most of the businesses (53.3%) are in consumer-oriented with 35% of established in extractive.

Chamber of Commerce of the Philippines Foundation, Inc.

more findings
More Findings

Motivated by necessity (54%) and opportunity motivations (37%).

Face stiff competition (75%), lack novelty (71%), lack new technology (67%), not employing (63%) and not exporting (77%).

Only 8 out of 100 have discontinued a business in the past 12 months.

Chamber of Commerce of the Philippines Foundation, Inc.

more findings14
More Findings
  • Only 34% have dealings with banks.
  • Only 17 who receive remittances use them to finance business
  • Only 1% are non-owner investors

Chamber of Commerce of the Philippines Foundation, Inc.

professionals entrepreneurs views
Professionals & Entrepreneurs’ Views

Financing most major concern.

Need to improve formal and informal education and training towards entrepreneurship and technological infrastructure

Chamber of Commerce of the Philippines Foundation, Inc.

smes ripe to do business
SMES: Ripe to do Business
  • Export-oriented Philippine SMEs
    • Golden Shell Awardees
    • MPEX participants
    • Philippine Trade Training Center trainees
    • Availees of Product Development and Design Center of the Philippines services
    • Participants to shows of the Center for International Trade Expositions and Missions
    • Members of Chambers of Commerce
    • Those already doing business with EU companies

Chamber of Commerce of the Philippines Foundation, Inc.

slide17
Domestic Market Philippine SMEs
    • Members of the Sector Chambers
    • Clients of the Bureau of Domestic Trade and bureau of Small and Medium Business Development
    • Clients of Planters Development Bank

Chamber of Commerce of the Philippines Foundation, Inc.

potential business relationships
Potential Business Relationships

Philippine SMEs as subcontractors

Setting up of common service facilities

Financial linkages

Technology transfer

Food service and information techonogy sectors

EU companies as consolidators

High value products from EU

Chamber of Commerce of the Philippines Foundation, Inc.

facilitative environment for philippine smes to do business globally

Facilitative Environment for Philippine SMEs to do Business Globally

Chamber of Commerce of the Philippines Foundation, Inc.

government support
Government Support

Establishment of stable macro-economic growth

Liberalized trade environment

Increased access to financing

Collective support systems to reduce transaction costs

Facilitate and develop infrastructure for standardization and quality improvement of SMEs

Chamber of Commerce of the Philippines Foundation, Inc.

other support programs
Other Support Programs

Dissemination of information on foreign markets

Aggressive export promotion abroad

Incentives for product design development, especially those utlizing local materials

Reduction of bureaucratic red tape

Chamber of Commerce of the Philippines Foundation, Inc.

what sme owners and managers must do to be prepared for doing business globally

What SME owners and managers must do to be prepared for doing business globally

Chamber of Commerce of the Philippines Foundation, Inc.

have an environmental mindset

Have an Environmental Mindset

Chamber of Commerce of the Philippines Foundation, Inc.

align products and processes with standard nomenclature and tools of international trade

Align Products and Processes with Standard Nomenclature and Tools of International Trade

Chamber of Commerce of the Philippines Foundation, Inc.

slide25
Assure that customer needs and requirements fully understood and translated into correct product specifications and standards.
  • Align with international quality standards, ISO 9000 series.
  • Continuous benchmarking

Chamber of Commerce of the Philippines Foundation, Inc.

improve quality

Improve Quality

Chamber of Commerce of the Philippines Foundation, Inc.

build up capability to choose utilize and develop technology

Build up capability to choose, utilize and develop technology

Chamber of Commerce of the Philippines Foundation, Inc.

actualize productivity

Actualize Productivity

Chamber of Commerce of the Philippines Foundation, Inc.

slide29

Competitive and continuous improvement mindset of entrepreneurs

Quality and productivity work culture

World class technologies

Benchmarking

Innovation and agility

Partnership

Use of information techonogies

Chamber of Commerce of the Philippines Foundation, Inc.

fully utilize e commerce

Fully Utilize E-Commerce

Chamber of Commerce of the Philippines Foundation, Inc.

deal with recurring hr issues

Deal with Recurring HR Issues

Family Related Difficulties

&

High labor Turnover

Chamber of Commerce of the Philippines Foundation, Inc.

preparing philippine smes
Preparing Philippine SMEs
  • Help the Philippine SME entrepreneur to deal with all the issues raised earlier- environment, quality, etc.
  • Help them to be familiar with EU business practices
  • Help them put together factual track records
  • Help them get their products and processes to meet EU standards
  • Help them get a working knowledge of EU market
  • Help them hone skills in negotiations.
  • Help them revise business plans to incorporate EU business dealings
  • Help them by ensuring the EU companies are acclimatized to the Philippine Business Environment

Chamber of Commerce of the Philippines Foundation, Inc.

the chamber of commerce of the philippines foundation will help
The Chamber of Commerce of the Philippines Foundation will help:

1. Advocate for a Philippine business environment conducive for Philippine SMEs to do business with EU companies and vice-versa.

2. Provide information through seminars and resource persons

3. Conduct training on needed skills, i.e. negotiation and planning skills.

4. Facilitate business matching

5. Provide business mentors

Chamber of Commerce of the Philippines Foundation, Inc.

may the philippine smes and eu companies harvest the fruit of our efforts

May the Philippine SMEs and EU Companies Harvest the Fruit of Our Efforts!

Chamber of Commerce of the Philippines Foundation, Inc.

maraming salamat thank you

Maraming Salamat!Thank You!

Chamber of Commerce of the Philippines Foundation, Inc.