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Micro small and medium-sized enterprises (MSMEs) in the Philippines comprise

99.6% of total registered business establishments , employ about 60% of the total
Philippine work force, contribute 35% to the gross domestic product, yet, these
enterprises continue to face poor access to finance. MSMEs are vital to the country’s
economic growth in terms of equitable distribution of income, employment generation and
disperse economic activities in the countryside. They are a potent force in the war against poverty
and a key to achieve inclusive growth. Hence, challenges faced by SMEs in relation to their
development, competitiveness and access to finance in particular are pressing
economic problems that the Government should addressed.

The Magna Carta for MSMEs defines MSMEs as any enterprise with 10 to 199
employees and/or assets valued from P3 million to P100 million. According to MSME
Development Plan

The Philippines has approximately one million MSMEs, and close to 60% of these
enterprises are located in Luzon Island. With the widespread presence of MSMEs in the
non-urban and rural areas,

face more stringent financing conditions and higher interest ra tes compared to large
businesses, and find themselves even more at a disadvantage when attracting
alternative sources of finance

when seeking bank credit, SMEs continue to face more stringent financing conditions
and higher interest rates compared to large businesses, and find themselves even more
at a disadvantage when attracting alternative sources of finance Therefore, it is vitally
important for Philippines economic success to have fully functioning support measures for SMEs.

data from the Department of Trade and Industry show that SMEs represent 99.6% of total registered
enterprises, contribute 35% to the gross domestic product, and employ about 70% of the total
Philippine work force.

They help ensure a more equitable distribution of income, disperse economic activities to the
countryside and are considered a potent force in the war against poverty.

Hence, these enterprises are important in terms of income and employment generation, gender and
youth empowerment through their diverse business participation, and their widespread presence
in the non-urban and rural areas.

Fostering these firms’ contributions can ensure that benefits of growth are shared more broadly.
This calls for a renewed policy focus to level the playing field for SMEs across all dimensions of
the business environment, and in the area of access to finance in particular.

Yet, when seeking bank credit, SMEs continue to face more stringent financing conditions and
higher interest rates compared to large businesses, and find themselves even more at a
disadvantage when attracting alternative sources of finance.

http://www.sgv.ph/financial-reporting-a-challenge-to-smes-by-sherwin-v-yason-november-10-
2014/

file:///C:/Users/Queenie/Downloads/C09803324_62056.pdf

http://www.philexport.ph/c/document_library/get_file?uuid=ca09521f-f2b2-4412-9de7-
88d076fe5706&groupId=127524
https://www.oecd.org/cfe/smes/Financing%20SMEs%20and%20Entrepreneurs%202017_Highli
ghts.pdf

https://www.adb.org/sites/default/files/publication/182532/adbi-wp564.pdf

https://www2.deloitte.com/content/dam/Deloitte/sg/Documents/financial-services/sea-fsi-digital-
banking-small-medium-enterprises-noexp.pdf