I wish to thank the Canadian Executive Service Organization-Philippine Business Project, or CESO-BAP, for inviting me to this Partners Forum and Launching of the "Parallel Paths to Success" video documentary which highlights the successful work of CESO-BAP in developing our country’s Small and Medium Enterprises (SMEs).

Canada was one of the first few countries to extend assistance to the Philippines after the People Power Revolution and we are glad that, up to now, it is still supporting us in many ways, the more recent of which is the CESO-BAP business advisory services to our SMEs.

The CESO-BAP, as we know, is being funded by the Canadian International Development Agency, or CIBA. Canadian Official Development Assistance to the Philippines, as of year 2005, already totaled $25.65 million.

The business advisory services that CESO-BAP renders to SMEs beneficiaries in such areas as marketing, products technology, production practices, and organization and marketing systems are certainly laudable.

I understand that, as of March this year, you have already served 166 clients in the Visayas and Mindanao. Most of those in the Visayas were involved in handicraft-making, while those in Mindanao were engaged in agribusiness.

Thank you very much for supporting our efforts at good governance and private sector development.

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The function of entrepreneurship has evolved significantly and is now seen as an indispensable component in the global economy – generating employment, growth and international competitiveness.

Entrepreneurship is critical to increasing Philippine competitiveness as new products, services, and processes increase efficiency, thereby improving the competitive strength of the economy as a whole.

Recent data available shows that MSMEs in the Philippines have a significant presence as they account for 99.6% of the total number of establishments here, and comprise 70% of the total workforce nationwide.

The MSME sector, despite its numbers, accounts for only 32% of value added to the economy. Large enterprises, on the other hand, contribute 68% to value added, yet they consist only 0.4% of the total number of establishments in the country.

The Philippine MSME sector, until two or three years ago, was confronted with a wide-range of structural fiscal and non-fiscal issues and challenges, such as limited access to finance, technology and market, and insufficient management skills.

To address these problems, the government came up with a National SME Development Plan in partnership with local government units (LGUs) and alliances with national government agencies (NGAs), business support organizations (BSOs), and nongovernmental organizations (NGOs).

Recently, in January this year, the President named the Director General of the Presidential Management Staff Cabinet Oversight Official for MSME Development, underscoring the high priority accorded to the sector.

The SME Development Plan was launched in 2004, and aims to make the SME sector the key shaper of the country’s economic growth by 2010. It is a six-year strategic development plan geared towards building the capabilities of both Philippine SMEs and SME support organizations.

The Plan is intended to provide relevant services and assistance to SMEs to enhance their competitiveness and thereby significantly increase their contribution to the country’s economic growth.

In particular, the Plan projects to increase the SME sector’s gross value added contribution to 40% of the aggregate by 2010. It also intends to make the sector a major contributor to export growth, with exporting SMEs achieving a 16% annual growth rate in export sales and to generate at least one additional employee per SME (approximately 0.8 million).

The Plan adopted a three-pronged strategic approach, focused at providing support to individual enterprises, identified growth or priority industries and evolving an operational and regulatory environment more conducive for SMEs to set up, operate, and succeed.

On the enterprise level, two strategies have been identified. The first aims to provide SMEs access to comprehensive and focused support for enhancing managerial and technological capabilities, tapping business opportunities, and becoming competitive in the local and international markets.

The second strategy, on the other hand, is geared towards providing support for identifying business opportunities through the development of business ideas that promote the expansion and diversification of the country’s industrial structure.

On the sector level, two strategies have likewise been identified. These involve strengthening support to growth industries that are active in the international markets in order to sustain and enhance their competitiveness and improve their access to the domestic market; and the provision of support for the development of industrial linkages between MSMEs and leading Philippine companies.

We are now in the third year of implementation of the Plan with considerable accomplishments to speak of. For the period January 2004 – February 2007, the SME Unified Lending Opportunities for National Growth (SULONG) releases amounted to about P96 billion, benefiting 47,198 SMEs and generating about 462,143 new jobs.

On the other hand, under the microfinance program, including DSWD’s Self-Employment Assistance – Kaunlaran (SEA-K) program, partner microfinance institutions of the government have released about P64.12 billion to 2.57 million active microfinance clients, generating some 1.03 million new jobs for the period July 2004 – February 2007.

Our business development services are composed of a standardized set of generic and specialized services in any business life cycle that MSMEs can avail of. These include information support, capacity building, market access, financing, and product and technology development.

Considerable info materials and training modules in these areas have been produced – trade opportunities, list of incentives, business requirements, business plan development, franchising forum, trade business management, buyer-supplier matching, financing access identification, financing clinics, access to credit lines, to name a few.

As of 2006, fully operational and streamlined SME finance units were established in eleven (11) anchor banks (2 thrift banks and 9 rural banks). We have partnered with 48 rural banks and 2 thrift banks in Cebu, Leyte and Negros which served over 50,000 MSMEs and carried a total loan portfolio of P914.7 million.

Also in 2006, the Bureau of Domestic Trade (BDT) assisted 551 SMEs through market matching, generating P10 million in initial sales. The annual National Trade Fair (NTF) held in Metro Manila, which served as the culmination of the assistance provided by various agencies to enterprises with potential markets outside of the regions or provinces where they were based, generated total sales of P82.62 million for 194 participating SMEs.

President Arroyo has repeatedly called for the elimination of red tape in the bureaucracy and reducing the cost of doing business as one of the ways of enticing investments. Business licensing is a priority area for reform.

A number of LGUs successfully instituted reforms in their business permits and licensing systems and reported corresponding increases in revenues from tax collection, as well as an increase in the number of business establishments.

For instance, in Region III, DTI, in partnership with the Central Luzon Coordinating Council and the Provincial and City/Municipal Investment Promotion Units, adopted the "Streamlining Project on the Business Processes of Critical Government Frontline Agencies" as a flagship program. It has resulted in considerable reduction in turnaround time of business registration, issuance of sales promotions permits, issuance of Land Use Conversion Certificate for priority projects of 5 hectares or less, issuance of Environmental Compliance Certificate and the Mayor’s Permit.

One-Stop Documentation Centers set up in Subic and Clark have reduced turnaround time in the issuance of export documents to 10 minutes. Similarly, the One-Stop Shop in Cabuyao, Laguna in Region IV, further streamlined its processes and systems resulting in the elimination of illegal fixers, improving tax collection, and attracting more businesses to locate in the area.

The positive results of this initiative have also been experienced in the cities of Ormoc and Bacolod in the Visayas and in at least six cities in Mindanao (Tacurong, Koronadal, Malaybalay, Ozamiz, Oroquieta, and Zamboanga).

Under the SME Development Plan, the government has paid deeper attention to the provision of more focused business development services to SMEs.

In line with efforts to upgrade the SME Centers, Globe Telecommunications provided broadband internet access and computers to ten SME Centers. Similarly, the Market Encounter Goes to Manila (MEGMA) Foundation provided high-grade computers to 60 SME Centers and entrepreneurship multimedia instruction materials to SME Centers nationwide.

We have also partnered with the Philippine Center for Entrepreneurship (PCE), headed by Presidential Consultant Joey Concepcion, mostly in the conduct of MSME advocacy programs. The PCE is currently holding a series of Go Negosyo Caravan nationwide which started in Cebu, to look at present business opportunities as well as to further encourage entrepreneurship amongst the people.

The government has made considerable initiatives to make the SME program as effective as it was envisioned to be. And, with the support extended to us by various organizations such as the CESO-BAP and the Canadian government, there is no way we could fail.

Thank you very much and good day.

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