1. Policies and Approaches to Promote Innovation in SMEs Raul C. Sabularse Deputy Executive Director, PCIERD Philippines THE PHILIPPINES

2. OUTLINE OF PRESENTATION About the Philippines Philippine SMEs SME Development Agenda DOST Initiatives Conclusion THE PHILIPPINES

3. Population (2004)82.7 M Family Inc (US$) (2000)1,500 GDP Growth (%) 4.4 Export (US$) (2003)2.952 B Import (US$) (2003) 3.274 B THE PHILIPPINES

4. # Firms% Large2,9580.36 Medium2,9230.36 Small61,7627.61 Micro743,94991.67 TOTAL811,592100.00 Asset (Php M) Employment Large> 100> 200 Medium> 15 – 100100 – 199 Small> 3 – 1510 – 99 MicroUp to 31 - 9 1$ = Php 50 Source: SMED Philippine SMEs

5. 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 Importance of SMEs

6. Critical Needs Appropriate technologies Technical manpower training 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

7. SALES INVESTMENT JOBS SME Product Devt/ Technology Marketing Finance TrainingAdvocacy Total & integrated approach

8. 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 SME DEVELOPMENT AGENDA

9. DOST R&D Institutes Product Development and Design Center Packaging R & D Center Packaging Institute of the Philippines Technology and Livelihood Development Center PRODUCT/TECH DEVT

10. 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 TechnologyTRAINING

11.  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-Academe- Civil Society and International Linkages in S&T  Improve S&T Governance  Promote and Popularize S&T DOST S&T STRATEGIES

12.  SMALL ENTERPRISE TECHNOLOGY UPGRADING PROGRAM (SETUP)  TECHNOLOGY INCUBATION FOR COMMERCIALIZATION (TECHNICOM) DOST INITIATIVES for SMEs

13. Technical assistance package to SMEs Appropriate technologies Products standards and testing Packaging and product labeling Access to information Linkaging and networking SETUP

14. 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 Priority Sectors

15. 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

16. Product Standards and Testing Assist BPS develop standards Product testing Enhancement of national and regional DOST testing laboratories ISO accreditation of testing laboratoriesInterventions

17. Packaging and Labeling Development of functional package designs and identification of alternative packaging materials using local resources Development of appropriate labels for food productsInterventions

18. 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 databasesInterventions

19. 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 operationsInterventions

20. Linkaging and Networking Raw material sourcing Marketing Financing Equipment design and fabricationInterventions

21. BRIDGING THE GAP Technology GenerationCommercialization  Stimulate technological innovation  Strengthen SMEs to adopt results of R&D  Increase private sector investment in R&D  Maximize benefits from R&D investmentsTECHNICOM

22. 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 TECHNICOM

23. 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 showroomsMARKETING

24. 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) Business Counseling

25. SME Unified Lending Opportunities for National Growth (SULONG) Venture Capital Initial Public Offerings (IPO) Bonds Advances from clients FINANCE

26. 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/sSULONG

27. 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. SMEsCONCLUSION