1. Regional Operations Development Group 7F New Solid Building 357 Sen Puyat Avenue Makati City SME Development The BIG PUSH for

2. The BIG PUSH for SMEs: A Framework MSMEs Using the Cluster-based Industry Development Strategy JOBS EXPORTS I NVESTMENTs MSMEs

3. SME plus Development (for Inclusive Growth) Who to help? In the order of priority:  Clusters (existing)  Micro and Small  Poor Areas  Ready market for products  Production Oriented What help? Govt to provide access to: Specialized Services M arkets M aterials E quipment (SSF) F inancing Infrastructure & Logistics Training Action Steps: 1.Identify the Clusters 2.Assess each cluster and the kind of assistance needed 3.Execute based on assessment and program schedule per cluster

4. I. Product Development & Market Promotion

5.  National Industry Cluster Capacity Enhancement Project (NICCEP) Product Development & Market Promotion JICA-DTI Project (2012-2015)  Industry Cluster Development project using value chain approach  Promotion of Green Economic Development (ProGED) GIZ-DTI Project (2013-2015)  Phl Traceability for Revitalized Agricultural Competitiveness Enhancement (PTRACE) UNIDO-DTI Project (2013-2015)  Market System Development (OTOP Stores, TFs)

6.  To facilitate increase in the contribution of the selected priority industry clusters to the national economy particularly in terms of o creation of jobs, o development & strengthening of SMEs, o increase in value-adding, o improvement in the business environ, more importantly impact on the poverty. GOALS and OBJECTIVES  Enhance the capacity of selected industry clusters throughout the country to plan, implement, facilitate service delivery, evaluate projects, and improve industry competitiveness.

7.  Fostering Innovation among SMEs in industry clusters II. Shared Service Facilities Locally Funded Project, 2013

8.  To complement existing assistance package to the MSMEs in the areas of technology, product development and packaging;  Enable the MSMEs to leapfrog several steps in the product development and execution stages by bringing the Shared Service Facilities within their reach… o for certain processes requiring equipment or machinery, e.g., retort and packaging, mechanical/kiln driers, dye vats, etc. GOALS and OBJECTIVES

9.  A common service facilities or production centers for certain processes to give MSMEs access to a better technology and more sophisticated equipment to accelerate their bid for competitiveness; help them graduate to a next level where they could tap a better and wider market and be integrated in the global supply chain (prioritizing MSEs in 555 towns/cities)  Project Cost (PhP M)-700.00  Cooperators-DOST, Academe, LGUs & private organizations  Timeframe-2013  Target Beneficiaries - 86,221 Micro, SMEs PROJECT DESCRIPTION

10. What assistance will we need here?  Developing criteria for selection of what cluster to help  Technology to provide  Technical Assistance from Development Partners for SSF recipients done

11.  Rural Micro-Enterprise Promotion Project (RuMEPP) IFAD-DTI (2006-2013) III. Equitable Financing and Credit Assistance  Risk-based Lending of the Small Business Corporation in partnership with FINEX and GDIs, (e.g., Venture Capital)  Microfinancing in partnership with private MFIs, (e.g., CARD MRI)

12. MSE Finance in Brief...  Microfinance loan is up to P150,000 while small enterprise finance is from P1 million up to P3 million;  Phl microfinance is healthy and better left alone (S/CPaderanga);  Phl SE finance has remained flat (2001-2010) – the challenge of the “missing middle” while the SMEs are most critical to value-added and jobs;

13. MSE Finance in Brief... Source: Young Global Leaders (World Economic Forum) Size of Available Capital Number of Firms Figure 1. Number of Firms by Size vs. Available Capital Size of Capital “The Missing Middle” Small-Medium Capital Micro Finance <$5,000 Large Capital >$2,000,000 “...developing the financial sector and improving access to finance are likely not only to accelerate growth but also reduce inequality and poverty.” World Bank Report

14. Triggers to small business borrowings?  The use of Cluster-based Industry Development Strategy will boost the credit worthiness of SMEs linked to the value chain;  The provision of technology (through SSF) in the priority industry clusters will spur the growth of SMEs;  Access to trainings and specialized services to enhance competitiveness of SMEs in the priority industries.  Credit enhancement of government to private financing institution.

15.  “Entrepreneurial Revolution!” IV. Micro Enterprise Development Project Government leaders to take the lead… o directly or indirectly in the creation of the Entrepreneurship Ecosystems o In providing the environment that nurtures and sustains entrepreneurship.  Supporting Start-Ups and Youth Entrepreneurs

16. Good day!

18. Rural Micro Enterprise Promotion Program 1.Microfinance Credit and Support (MCS), which involves the provision of microfinance to rural micro enterprises nationwide; 2. Micro Enterprise Promotion and Development (MEPD), which entails providing rural micro entrepreneurs primarily in the target 19 poor provinces. 3.Programme Management and Policy Coordination (PMPC), which calls for financing activities to ensure that the target micro enterprises benefit from a well managed programme. RuMEPP has three components, namely:

19.  Leadership Entrepreneurship Ecosystems Elements of  Culture  Capital markets  Open-minded customers “All four elements combined turbocharge venture creation and growth. In isolation, each is conducive to entrepreneurship but insufficient to sustain it.”

20. Micro-Enterprise Development Framework Financing and Marketing Assistance 609 Towns LRED INCDUSTRY CLUSTERING RuM EPP Sustainable Business Development Promotion Capability Building, Provision of SSF (Tools & Equipment) (A Proposal focused on Poor Areas)

21. Source: Ronald Chua, Paul Mosley, Graham Wright, et.al., Microfinance, Risk Management and Poverty: Impact Assessment, 2000 Other Non-Poor Vulnerable Non-Poor Moderate Poor Extreme Poor Destitute POVERTY THRESHOLD Most Microfinance Clients Economically Inactive Economically active Clients of conventional formal financial institutions DEMAND FOR MICROFINANCE Convergence of PIs: DSWD, DOLE, DEPED, CHED, DA, DAR, DENR, DOST,