REDEFINING MSMEs. Trade Secretary Alfredo Pascual delivers his speech at the launch of the Philippine Fintech Festival and SME Financial Empowerment Program at Shangri-La The Fort Manila in Taguig City on Friday (Aug. 12, 2022). Pascual shared the agency's initiative to tweak the classification of micro, small and medium enterprises amid changes in business operations due to digitalization. (PNA photo by Kris Crismundo)

MANILA – Department of Trade and Industry (DTI) Secretary Alfredo Pascual said there is an ongoing initiative to tweak the definition of micro, small and medium enterprises (MSMEs) amid changes in the way entrepreneurs do business because of digitalization.

“We are trying to come up with a better way of defining MSMEs,” Pascual said at the launch of the Philippine Fintech Festival and SME Financial Empowerment Program in Taguig City on Friday.

He said as entrepreneurs embrace digital technology, they could now do business with fewer people and could operate with fewer assets.

“With technology, you don’t need too many people to be paid and you don’t need a lot of hard assets to do things. It used to be that MSMEs are defined either by (the) number of employees, total assets, or total revenues,” he added.

The Philippine Statistics Authority (PSA) classifies an enterprise as micro if it has less than 10 employees with assets of up to PHP3 million; small, if it has 10 to 99 employees and with assets of PHP3,000,001 to PHP15 million; and medium, if it has 100 to 199 employees and assets amounting to PHP15,000,001 to PHP100 million. Exceeding these criteria, an enterprise is considered as a large enterprise.

Pascual added that by using the “old measures” in identifying MSMEs, the “real extent of the size of the business” is not being captured, which is vital in crafting policies and programs related to providing financial access to MSMEs.

The DTI’s financing arm alone, Small Business (SB) Corp., has a clientele of about 48,000 borrowers who are being served either directly or through partner lending institutions.

“There are million(s) of these enterprises. We cannot do it alone in DTI though our Small Business Corp. We need the participation of the private sector,” Pascual said.

Aside from financial access, the trade chief also urged the private sector to help MSMEs in adopting digital technology.

With this, the Monetary Authority of Singapore (MAS), the International Finance Corp. (IFC), and the United Nations Development Program (UNDP) launched in the Philippines the SME Financial Empowerment Program for MSMEs in Asia and Africa.

The MAS will run the SME Financial Empowerment Program here in partnership with DTI and Digital Pilipinas, a private sector-led movement that advocates technological adoption in industries, cities, and regions.

The MAS, IFC, and UNDP launched the SME Financial Empowerment Program last month to build foundational digital financial literacy skills for MSMEs, as well as help them understand cross-border financial services.

The institutions believe that these skills will help MSMEs thrive during post-pandemic recovery. (PNA)