MSMEs or micro, small and medium enterprises are businesses that differ from corporations or conglomerates yet are a major cog in the Philippine economy.One must also bear in mind three words that characterize MSMEs single, small and local. SMEs are often single proprietorship and sometimes the owner may also be the sole employee. It may also apply to producing one product or providing only one kind of service.
"Small" in the context of MSMEs in the Philippine setting refer to businesses whose workforce number between 10 and 199 and their assets range from P3 million to P10 million.
MSMEs are typically local
MSMEs only operate or serve clients within their locale and smaller businesses tend to operate from one's own home or they do not have a formal office building or establishment to run their operations.
One may think an MSME are "small-time" businesses such as sari-sari stores and the like. But this may also include manufacturing, trading, import-export, retailing, rental and service companies, among others. In essence, MSMEs are created by anyone with the initiative and drive to start a business.
MSMEs are different from what is called "informal" or "underground" economy in the sense that they are legitimate as they are formally registered by the government, most notably to the Department of Trade and Industry (DTI) and the Securities and Exchange Commission.
According to the Asian Development Bank (ADB), MSMEs are the backbone of economies in Asia and are considered its driving force. In the Philippines, MSMEs comprise around 99 percent of businesses in the country.MSMEs play a key role in developing the Philippine economy. They create job opportunities. The DTI said these businesses alone have managed to generate over 5 million jobs or 62.4 percent of the country's employment.
As a result, many Filipinos have a regular-paying job where they can earn a living, give them purchasing power, and this in turn contributes to the economy. However, the drawback is that they do not offer higher wages compared to corporations, which does not give them the chance to hire skilled labor. This in turn, helps reduce poverty.
Disclaimer: This content may only be used for educational purposes only
