September 06, 2001
The countrys attention may have
been fixated on the attempts by both houses of Congress in the past weeks to investigate
alleged wide-scale illegal activities by some entities. We find it encouraging that there
are initiatives that focus on the other important legislative function of looking for ways
and means to improve small and medium scale businesses across the country.
We have been recently been furnished
some of these initiatives at the Senate end. Surveying the bills as a package of related
legislative measures for the SME sector, our impression is that take together, these
initiatives attempt to address the key gaps in the entire system of small business
Support for Easy Entry of Small
Business into the Formal Sector. A number of the bills filed seek to enhance
access by enterprises in the lower SME scales to credit and business technologies more
readily available to mainstream businesses. These bills complement and enhance
the KALAKALAN 20 LAW, encouraging the registration of small businesses in the countryside
through tax incentives and relief from government rules and regulations that inhibit the
start-up and expansion of SMEs in the provinces.
The minimum wage law is one particular
area of concern being addressed. Furthermore, registration under these proposed laws grant
even the smaller SME units with juridical personality which is an important element in
their access to credit, business technology and other support from the formal sources,
including government and multilateral programs.
Such bills seeking to liberalize the
requirements for setting up and expanding small business include SB 10 (Sen. Flavier), SB
672 (Sen. Leviste-Legarda), SB 224 (Sen. S. Osmeņa III), SB 1320 (Sen. Recto) and SB 936
Other bills go further by providing for
a value-added services such as business documentation, information, networks and other
forms of support. SB 734 (Sen, Leviste-Leagrda), SB 1164 (Sen. Magsaysay, Jr.) SB 219
(Sen. S. Osmeņa III) and SB 935 (Sen. Villar) put together propose the establishment of
Business One Stop shop (BOSS) Centers that will provide these services across the country.
For sustainability, these centers are proposed to be allowed to charge fees to SME
clients. BOSS Centers may be private or public entities.
Access to Technology. Given the reality
of globalization, SME competitiveness should be leapfrogged. There should be much easier
and cheaper access to technology, equipment and infrastructure and information and
SB 1321 (Sen. Recto) proposes to
provide such access through the establishment of small Business Incubators (SBIs) which
like the BOSS Centers may be either public or private entities authorized to charge fees
for services and facilities made available to SMEs in their respective areas. Business
Incubation Centers (BICs) shall provide the site, facilities, and technical and
secretariat support among others to locators.
Another option is provided by SB 938
(Sen. Villar) with the proposed expansion and strengthening of the Cottage Industry
Technology Center as head agency to provide assistance to and address the production,
technology and skills formation needs of micro and cottage industries. Additional services
laid down include equipment fabrication and
Alternative Credit and Capital Sources
for small Business. Given the Substantial experience in developing economies and across
the Asian region, the proposed Small and Medium Enterprises Securities Exchange (SMEX) Act
of 2001 is provocative as it offers an option for the equity needs of SMEs in the growth
stage. Related proposals include SB 280 (Sen. S. Osmeņa III) and SB 774 (Sen.
Legarda-Leviste) which aim to create the SMEX as an institution which will enable SMEs to
tap the countrys capital market in generating equity funds for their financial
requirements. At the start, the more established enterprises, probably medium-scale units,
are expected to benefit from the proposed system.