The World Bank is pushing for greater access to financing by micro, small and medium enterprises (MSMEs) to ease the integration of small businesses into the global value chains, in the face of an increasingly inward-looking trade environment.
Speaking at the recently concluded National Export Congress, World Bank Group operations officer for trade and competitiveness Roberto Martin N. Galang cited the move among developed economies toward strengthening domestic manufacturing and away from investing in production facilities in less-developed countries like the Philippines.
As the world economy slows down, Galang said that this has also created a new normal in the trade and exports, which are the usual drivers of growth.
He said that Philippine trade may be suffer in competitiveness since it has not yet joined the Trans Pacific Partnership (TPP), unlike Malaysia and Vietnam. TPP countries, led by the United States, account for 40 percent of the world economy.
SME development is the next big thing but we need to innovate and the World Bank is ready to help,” Galang said. “We still have lots of work to do like improving informal payment schemes and connectivity. We need to create a different ecosystem so SMEs can participate in GVCs..
Philippine Exporters Confederation president Sergio Ortiz-Luis said that although exporters have lower contribution now to the country’s GDP, the volume of exports have actually grown. The challenge is that neighbors in ASEAN are growing faster.
Ortiz-Luis proposed the setting aside by government of a 20-billion financing to help the micro small and medium enterprises via an “out of the box” financing package.
“Enabling SMEs for international markets therefore make economic and policy sense. With their contribution to the economy, their development and expansion has increasingly been recognized as major instruments for creating employment and eradicating poverty,” he said.