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Micro businesses in the Philippines

Summary

Micro businesses in the Philippines can be defined according to the size of assets, size of equity capital, and number of employees. A typical micro business is one that employs nine (9) people or fewer, with assets of Php 3 million and below.

In the Philippines, about 90% of all businesses are categorized as micro businesses. These consist of enterprises engaged in industry, agribusiness and or services, whether single proprietorship, cooperative, partnership or corporation. Their total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, have value of not more than Php 3 million.

Of all micro businesses, about 46% are involved in the wholesale, retail and repair business; 27.6% are in the accommodations and food service; 13.5% are in manufacturing; while 12.5% are engaged in other service categories.

I. Brief history

The emergence of the micro business enterprise in the Philippines can be traced back to when the Philippine Congress enacted the RA 6977 in 1991, or the Magna Carta for Micro, Small and Medium Enterprises or MSMEs. It was amended by Republic Act 8289, and later amended by RA 9501 in 2008. The law is geared towards the development of the Filipino entrepreneurial spirit by providing a conducive business environment for MSMEs.

The full texts of RA 6977, RA 8289, and RA 9501 can be found on the Philippines SME Toolkit page on the Magna Carta for Micro, Small and Medium Enterprises.

'''II. Recent developments'''

·      The year 2016 sees great promise in the advancement of micro business development. In recent news, Sen. Bam Aquino was announced his intention to pass two (2) bills on MSMEs within a year.

These are:

(1) the Small Business Tax Reform Act, which aims to give MSMEs a three-year operation period before imposing taxes; and

(2) the Philippine Startup Bill, which seeks to provide a viable environment for startups.

·       President Rodrigo Duterte has announced during his SONA last July 25, 2016 that he vows to carry out the following during his term:

a.     Improve the Ease of Doing Business ranking of the Philippines

b.     Cut processing times and streamline requirements by:

- Addressing bottlenecks in business registration and processing

- Streamlining investment applications processes

- Integrating the services of various government offices

·          DTI Region 10 has held the ‘Negosyo Konsumer at iba pa’ for MSMEs and consumers last August 17-19, 2016 in Cagayan de Oro City. The activity included the launching of a fabrication laboratory; innovation technopreneurship; the Negosyo Center in the region; an E-Commerce forum; and a host of trainings for various business types.

'''III. Difference of the Microbusiness from SMEs'''

Here is a quick guide to properly differentiate a micro business from other types of businesses:

In terms of assets:

Micro Business: assets of 3,000,000 and below

Small Business: assets ranging from 3,000,000 to 15,000,000

Medium Business: assets ranging from 15,000,000 to 100,000,000

Large: assets 100,000,000 and above

In terms of number of workers:

Micro business: Less than 10 workers

Small business: 10 to 99 workers

Medium: 100 to 199 workers

Large: 200 employees and up

“ThinkMicro” Model

In recent months (3Q 2016), a resolute move to empower micro businesses through an active eco system of support through funding, logistics and creative guidance has begun to take place in the Philippines. The move challenges everyone to consider the micro business model as a viable business option, and empowers aspiring entrepreneurs to pursue their business goals with the support they need. It gives due emphasis to the microbusiness model and how it can grow into a strong and stable enterprise that generates a steady stream of income, enough for it to expand as a world-class conglomerate while staying in the micro model.

It challenges the status quo to #thinkmicro, as the current hashtag relating to this school of thought suggests.

The move is both a nod and a push toward greater influence to earlier efforts of business advocates with similar intentions. Among them, the Go Negosyo and DTI’s Kapatid campaign; Josiah Go’s mentoring programs; and PLDT’s SME Nation ‘Ka-Asenso’ campaign.

References

a.     //www.senate.gov.ph/publications/AG%202012-03%20-%20MSME.pdf

b.     http://businesstips.ph/small-businesses-in-the-philippines/

c.     http://www.forbes.com/sites/theyec/2012/08/15/are-you-building-a-small-business-or-a-startup/#4a0a463114f9

d.     https://www.quora.com/Whats-the-difference-between-a-startup-and-an-SME-small-medium-enterprise

e.      http://philippines.smetoolkit.org/philippine/en/content/en/6887/RA-9501-Magna-Carta-for-Micro-Small-and-Medium-Enterprises