Micro, small and medium enterprises (MSMEs) should welcome the Association of Southeast Asian Nations (ASEAN) integration as an opportunity for them to grow.  However,   challenges confronting the sector need to be  addressed  to  strengthen  its role as  key economic growth driver. This is what Regional Director Leon M. Dacanay, Jr.  of the NEDA Regional Office (NRO) 10 said during the 2015 Regional Quality Circles Convention (RQCC) organized by the Mindanao Association for Quality (MAQ) Inc. held on June 25  at the Mallberry Suites, Cagayan de Oro City.

Discussed at the event was the  ASEAN Economic Community (AEC) which seeks to establish a bigger market and freer flow of goods, services and capital services among the ten ASEAN nations through the unification of economic policies including removing tariffs with very few exceptions, and harmonizing regulatory requirements to facilitate the flow of goods, service and investments, among others.  One of the key components of AEC is to enhance the competitiveness and expansion of small and medium enterprises (SMEs) in the region.

Director Dacanay said that the MSME sector is the backbone of the country’s economy as it accounts to  99.6 percent of the total number of establishments.  However, given its sheer size, the sector merely contributes 35.5 percent to the national economy and employs only 65 percent of the labor force. Also, quality of employment in the sector remains low because of  limited skills and low productivity.

He shared that based on the ASEAN SME Policy Index – an analytical tool to track and identify gaps in SME policy development, the  Philippines  score of 3.8 (fifth among the ten nations) was rather modest.  Access to finance, technology and market, and cost of doing business are among the major challenges that need to be addressed to achieve the sector’s potentials and growth-promoting role.

Despite its vulnerability to local and external risks, Director Dacanay said that the country’s MSMEs are seen to benefit more from AEC given the bigger market of more than 600 million consumers, improved technology sharing, and stronger interdependence among SMEs in the region.  All these will result to greater efficiency, higher productivity, and ultimately higher incomes of SMEs, he concluded.