THE PHILIPPINES
Policies and Approaches to
Promote Innovation in SMEs
Raul C. Sabularse
Deputy Executive Director, PCIERD
Philippines
THE PHILIPPINES
OUTLINE OF PRESENTATION
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About the Philippines
Philippine SMEs
SME Development Agenda
DOST Initiatives
Conclusion
THE PHILIPPINES
Population (2004)
Family Inc (US$) (2000)
GDP Growth (%)
Export (US$) (2003)
Import (US$) (2003)
82.7 M
1,500
4.4
2.952 B
3.274 B
Philippine SMEs
Large
Medium
Small
Micro
1$ = Php 50
Source: SMED
Asset
(Php M)
Employment
> 100
> 200
> 15 – 100
100 – 199
> 3 – 15
Up to 3
# Firms
%
Large
2,958
0.36
Medium
2,923
0.36
Small
61,762
7.61
Micro
743,949
91.67
TOTAL
811,592
100.00
10 – 99
1-9
Importance of SMEs
• creates employment
• source of investment and revenue
• boosts personal wealth and talent
– Outlets for the talents of enterprising people
– Catalyze innovations and dynamism
– Stimulate personal savings
• promotes community stability
– less harm to the environment than large companies
– Raise level of people participation in the economy
• vital engine of economy
– Earn foreign exchange
– Stimulate growth in rural areas
– Expand domestic markets/penetrate non-traditional markets
Critical Needs
• Appropriate technologies
• Technical manpower training
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Products standards and testing facilities
Appropriate packaging and product labeling
Access to information
Access to capital
• Financial, personnel & business management
• Access to markets
• Sustainable raw material supply
• Better/more efficient transport facilities
Total & integrated approach
SALES
Finance
SME
Training
Advocacy
Product Devt/
Technology
Marketing
INVESTMENT
JOBS
SME DEVELOPMENT AGENDA
Objective:
To increase the contribution of SMEs to the economy by
pushing enterprises to higher levels through a
convergence of assistance
- PRODUCT/TECHNOLOGY DEVELOPMENT
- SKILLS TRAINING
- FINANCIAL
- MARKETING
PRODUCT/TECH DEVT
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DOST R&D Institutes
Product Development and Design Center
Packaging R & D Center
Packaging Institute of the Philippines
Technology and Livelihood Development
Center
TRAINING
• Technical Education and Skills Development
Authority
• Cottage Industry Training Center
• Phil Trade and Training Center
• Dept of Labor and Employment
• Fiber Industry Development Authority
• Technology and Livelihood Development
Center
• Dept of Science and Technology
DOST S&T STRATEGIES
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Niching and Clustering
Address Pressing National Problems
S&T Human Resources Development
Support to SMEs
Accelerate Technology Transfer and
Utilization
Build and upgrade S&T Infrastructure
Strengthen Government-Industry-AcademeCivil Society and International Linkages in
S&T
Improve S&T Governance
Promote and Popularize S&T
DOST INITIATIVES for SMEs
 SMALL ENTERPRISE TECHNOLOGY
UPGRADING PROGRAM (SETUP)
 TECHNOLOGY INCUBATION FOR
COMMERCIALIZATION
(TECHNICOM)
SETUP
Technical assistance package to SMEs
• Appropriate technologies
• Products standards and testing
• Packaging and product labeling
• Access to information
• Linkaging and networking
Priority Sectors
• Food processing
• Gifts, toys, house wares, handicrafts, fashion
accessories, natural fibers and dyes
• Horticulture (Cut flowers, fruits and high value crops)
• Marine and aquatic resources
• Metals and Engineering
• Furniture
Interventions
Provision of Technology
• Technology needs assessment, sourcing
and installation of technology
• Seed fund for technology acquisition
• Human resource development
• Productivity consultancy and technical
advisory services
Interventions
Product Standards and Testing
• Assist BPS develop standards
• Product testing
• Enhancement of national and
regional DOST testing
laboratories
• ISO accreditation of testing
laboratories
Interventions
Packaging and Labeling
• Development of functional package
designs and identification of
alternative packaging materials
using local resources
• Development of
appropriate labels
for food products
Interventions
Database Management and Information
System
• List of available technologies
• List of S&T experts
• Directory of testing laboratories
with testing services offered
• Networking with other databases
Interventions
INTER-AGENCY DESIGN AND
ENGINEERING ASSESMENT (IDEA) Team
1. Assess equipment requirement of firm
2. Establish efficiency indicators, maintenance and
troubleshooting guidelines for equipment
3. Identify accessories to enhance equipment efficiency
4. Train local experts on trouble shooting, material/energy
balance, among others
5. Introduce concepts to ensure quality, uniformity and
efficiency of operations
Interventions
Linkaging and Networking
• Raw material sourcing
• Marketing
• Financing
• Equipment design and fabrication
TECHNICOM
Technology Generation
Commercialization
BRIDGING THE GAP
Stimulate technological innovation
Strengthen SMEs to adopt results of R&D
Increase private sector investment in R&D
Maximize benefits from R&D investments
TECHNICOM
To fast track the commercial application of
technologies developed by the S & T community
• business plan preparation
• IP protection
• negotiation and licensing
• commercial prototype
• pilot scale production
• training and consultancy
MARKETING
• SME Database
• Trade Fairs/Exhibitions
– Provincial Trade Fair
– National Trade Fair
– Manila F.A.M.E.
• Buying and selling mission
– Domestic Fairs
– Int’l Fairs Buyer-supplier matching
• Permanent display showrooms
Business Counseling
• Business Counselors (BCs) provide consulting and
advisory services to SMEs
– How to prepare a business plan
– How to market products better
– What training courses to take
• 60 BCs at SME Centers
• Over 100 Volunteer BCs
– FINEX (Financial Executives of the Phil)
– MAP (Management Assoc of the Phil)
– PICPA (Phil Institute of Certified Public Accountants)
FINANCE
• SME Unified Lending Opportunities for
National Growth (SULONG)
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Venture Capital
Initial Public Offerings (IPO)
Bonds
Advances from clients
SULONG
Qualified Borrowers
• all industries except imported goods, liquor, cigarettes, and extractive
industries.
• at least 60% Filipino-owned
• not more than P100 M assets
Requirements
• Debt/Equity Ratio of at most 80:20
• positive income for the preceding year/s
CONCLUSION
We have been trying to push the
economy from the top. But to move the
economy faster,
we also need
to push from
the base.