Privilege Speech
On micro, small, and medium enterprises
Sen. Francis 'Kiko' Pangilinan
01 June 2021

Thank you, Mr. Senate President. Thank you, Majority Leader, distinguished colleagues. Maraming salamat for allowing me to take the floor to deliver this privilege speech about micro and small and medium enterprises or MSMEs in the country entitled "Feeding the economic soil by buying Filipino".

Yesterday, the Inquirer's editorial, entitled "Entrepreneurs need help", points out that the longer the recovery from the pandemic, the greater the chance of a so-called "long-term scarring". Kumbaga sa sugat, baka hindi na maalis ang peklat.

This representation would like to share our own observations, diagnoses, and set of treatments, if you will, to help feed the economic soil. Para agapan, habang kaya pa.

More than a year after, the lockdown continues to deliver gutpunches to owners of MSMEs. From the iconic stores to small establishments to home-based enterprises, the Covid-19 pandemic has seemingly spared no one in its devastation of the Philippine economy, especially in urban centers. And as is the case in many instances in calamities, the poorest of the poor are hardest hit.

Merong hindi na naging "open" ang "closed" sign sa paborito nating mga restaurant. Dahil bawal ang operasyon, nagbenta na ng gamit ang mga gym. Kung gaano kahaba ang ating buhok, ganun na rin katagal na hindi tuluyang nakakapagbukas ang mga barberya at parlor, ang mga manikurista, ang mga barbero, ang mga maliliit na karinderya.

With the schools prohibiting face-to-face classes in March last year came the shutting down of many small businesses in the U-belt area -- small businesses that form part of the economic ecosystem that schools generate by their mere operation.

The previously bustling area from España to Mendiola to Recto to Taft has become like a ghost town. Photo-copying shops, bookbinding and second-hand book stalls, dormitories, laundry shops, groceries, and yes food businesses of restos, karinderyas and canteens. All have either closed shop or have intermittently opened. All, meaning, all or those affected by these small operations losing income on a daily basis.

Take the case of Carmen's canteen business.

A day after the announcement of the Covid-19 lockdown, she found herself staring at crates of vegetables, chicken and pork. At tanong niya: "Ubusin ko na lang kaya agad sa isang luto ito?" Syempre, naisip din niya, "Saan kaya kami kukuha ng pamilya ko ng susunod na panggastos?"

Kung di ba naman, umuwi rin isang araw ang mister niya nung mga panahon na yun, para sabihing na-layoff din siya.

Pero di nagpakalumo si Carmen. Sabi niya, kumuha siya ng inspirasyon na lumaban mula sa isang kahon ng sapatos na may nakasulat na: Just Do It.

Ang maliit nilang bakuran ay naging tindahan ng lutong ulam. Sa isang sulok, naglagay ng makina ang asawa niya at nagtahi ng mga pantalong kailangan iksian o habaan. Ang anak nilang nagaaral online ang nagpo-post sa Facebook ng menu for the day para rin sa mga umo-order online.

Nakakaraos naman daw paunti-unti, kahit maliliit na numero ang binibilang nila -- pabente-bente pesos -- ang mahalaga, may pumapasok na pera. May naipapaikot na puhunan. May panggastos kahit kaunti.

Sabi ni Charles Darwin, "It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change". In short, adapt or die. Hindi raw pinakamatibay ang natitira o pinakamatalino, kundi ang pinakamadiskarte.

Tayong mga Pinoy yan. Madiskarte, maparaan. Pero kadalasan, kulang sa oportunidad, kulang sa puhunan. Kung sa pagsasaka, kulang daw sa fertilizer.

Sa farming, may kasabihan, you feed the soil, not the plant. In this case, government must feed the soil that is the Philippine economy so that we can have an economic ecosystem of thriving enterprises.

That is why government must match the Filipino entrepreneur's toughness and adaptability with sound policies and programs that will create the environment for a robust economic recovery.

Saan tayo mag-uumpisa? Sa ilalim. Mas efficient at effective ang magbuhat ng mabigat na bayong mula sa ilalim. Kung sa handle, baka mabuslo o mabutas lang ang bayong dahil sa bigat. At ang fertilizer at pataba, nilalagay din sa ilalim, sa lupa.

Data from the DTI showed that of the 1.42 million registered businesses nationwide, 99 percent belong to the MSME sector, nearly nine-tenths of which are microenterprises. Halos lahat na. Three out of every five Filipino works in MSMEs, tatlo sa bawat lima, earning them the label the "backbone of the economy." Kasama ng mga nagpapakain sa atin, sila ang gulugod ng ating ekonomiya.

Kaya nang nag-pandemya, sila rin ang pinakatinamaan. A February 2021 survey by ADB found that an average 73.1 percent of MSMEs were forced to close their businesses a few weeks after the outbreak and the lockdown measures implemented. Ang pinakaapekatado, ang maliliit, 76.4 percent, at ang nasa services, food, resto, hotel, 72.7 percent. Imagine: pito sa bawat sampung maliliit na negosyo ang nagsara.

According to the Philippine Statistics Authority, MSMEs make up 25 percent of the country's total exports revenue. This makes our entrepreneurs ambassadors for the country representing hardworking and talented Filipinos. Mahusay talaga ang mga kababayan natin.

Ganyan ang small businesses. They also provide significant contributions to local economic activity. As they operate and grow, they create jobs and inject capital into the community which, in turn, help support other local businesses. Ito yung sanga-sangang maliliit na negosyo na bahagi ng ecosystem halimbawa nung sa Ubelt.

Alam natin na mas walang burukrasya, mas malaya ang mga MSMEs na maging creative and innovative for new products and services.

But with the challenges they face, it will not simply take a village, but collective institutional action to help our MSMEs overcome. Our proposed solutions include one: Boost our "Buy Pinoy, Buy Local" campaign to promote locally-produced, locally-made, and locally-assembled products.

We must also help MSMEs leverage digital technology to mainstream and promote businesses even with the work-fromhome restrictions, tulad ng anak ni Carmen na ina-upload sa Facebook ang menu ng kanyang nanay.

Ang sabi nga eh, hindi na raw kailangan ng Google, kung Pilipino ang pinag-uusapan, kasi pag nakasubok ka ng gawang Pinoy, the search is over. Ganyan kagaling ang mga Pinoy.

Sa bawat pagtangkilik ng produktong Pilipino, ay may tinutulungan tayong magsasaka, mangingisda, manggagawa, maliliit na namumuhunan at pamilyang Pilipino.

Kaya naman during our deliberations of the 2021 budget, we pushed hard to include provisions in the budget that would give preference by government agencies to the use of local materials, raw materials, and other supplies.

We introduced Special Provision Number 8 in the DTI budget during the period of amendments, which our chairman Senator Angara adopted, that will be preference for locally-made and locally-assembled products among companies registered with the BOI and the PEZA.

Sadly, we have yet to hear from the concerned government agencies as to the approval of the implementing rules for Special Provision Number 8. In the meantime, the local industries are perplexed as to the propensity to favor Chinese imports for PPEs and other products.

Earlier this month, the Confederation of Philippine Manufacturers of PPE said that their manufacturing capacity was not maximized as the government continued to import personal protective equipment, or PPEs. As a result, close to 4,000 workers lost their jobs. Halos apat na libo na pamilya ang nawalan ng hanapbuhay dahil hindi natin tinangkilik ang PPE na gawa ng ating mga local na manufacturers. Local businesses are job creators, pero magsasara sila kung walang bumibili ng mga produkto.

Pero bakit nangyari ito? Hindi ba't nasa batas na dapat buy Pinoy first?

According to Section 4 (t) of Bayanihan 2, PPEs are provided to those that need protection by the national government through the DOH: "Provided, that preference and incentives shall be given to medical safety products that are locally manufactured." Andyan na, nakalagay na. Di na kailangang i-memorize, kailangan na lang gawin.

Kaya dito, ang kailangan ay magkaroon ng patakaran ang gobyerno ng preferential purchasing for locally-made products. Base sa records mismo ng DBM-Procurement Service, bilyonbilyong piso ang halaga ng mga PPEs tulad ng face masks, face shields, testing kits, at kasuotan na ang na-import natin mula sa China habang naka-tengga ang ating local na industriya na handang-handa naman i-manufacture ang mga ito.

Malinaw ang nakasulat sa batas, pero mismong local manufacturers pa natin ang nagmamakaawa para ipapatupad ito. Saan pa tayo kukuha ng tulong at lakas? Hindi ba mula sa isa't isa, sa kapwa nating mga kababayan? Last year, it was revealed that DBM contracts procuring millions of PPEs were mostly from Chinese companies. Ano ba ang meron sa China na wala sa ating mga lokal na industriya at masyadong addicted ang DoH sa mga produkto nito? Why is there a preference for Chinese companies over our local manufacturers?

Pero hindi lang PPEs. Government, with all its purchases, can easily jump-start the economy by buying Filipino. Ito na ang matagal na ring isinusulong ng retired Dean Rene Ofreneo ng UP School of Labor and Industrial Relations.

Sabi niya, sa tantya ng World Bank at ADB, government procurement spending worldwide is equal to 10 to 20 percent of a country's GDP. Put simply: the government is the single largest buyer in the market. Kayang-kaya nitong impluwensyahan ang balangkas at direksyon ng ekonomiya. Mapapadali ang pagbangon ng ekonomiya kung ang pinakamalaking buyer ay tutok at tumatangkilik sa lokal na industriya.

Halimbawa na lamang ang Malaysia. Ang procurement policy nila ay nakadikit sa pagpapaunlad ng kanilang industriya. Kaya naman ang mga sasakyan na ginagamit ng Malaysian government ay yung gawa nila, yung Proton.

Ganun din sa Japan at Korea, mahirap makabili ng non-Japanese at non-Korean products sa bayan nila, mula sa gobyerno nila.

Imagine for a second: if the Philippine government were to ask the two million government employees and military personnel to wear only Philippine-made shoes and garments/textiles, the shoe and the garments and textile industries could be revived and it would create thousands of jobs.

But what is happening is that the supplies and materials being procured by many government offices are usually imported. And this is a problem in that sense.

Ganun na ang nangyari sa bigas at baboy natin. Pero hindi pa huli ang lahat. Buy Filipino. Payamanin ang kababayan nating magsasaka, mangingisda, sapatero, maliliit na mamumuhunan, maging mga gumagawa ng PPE, at kung anu-ano pa.

Pangalawa, hinihiling natin, hindi kaya dapat ma-extend ang Bayanihan 2 para makumpleto ang ayuda para sa mga naghihingalong sektor.

As of April 15, the DBM's Covid Budget Utilization Report showed that of total 259.8 billion allocated under Bayanihan 2, only 93 billion pesos, or 35.9 percent, has been disbursed. Ibig sabihin, matapos ang pitong buwan, ang karamihan ng pondo ng Bayanihan 2 ay hindi pa natitikman ng ating mga kababayan sa gitna ng napakaraming paghihirap at gutom. This is disappointing and unacceptable. Underspending is bad enough during normal times; in the midst of a pandemic, this is totally unacceptable.

The appropriations under the Bayanihan 2 Law will be available until 30 June 2021 only or only one month, as provided for under Republic Act 11519.

One of the hardest hit industries is the transport sector. According to a progress report of the DOTR, the Service Contracting Program has only utilized 40 million pesos of the 5.58 billion pesos. Wala pang isang porsyento ng inilaang budget ang nakakarating sa sektor ng transportasyon habang nanlilimos ang ating mga jeepney drayber, mga drayber ng bus. Siyam na libong drayber pa lamang ang naambunan ng sinasabing programa.

RA 11519, which extended the availability under Bayanihan 2, provides that the budget for programs, projects, and activities, including Service Contracting, shall be available for release and disbursement only until 30 June 2021. Isinulong natin ang Service Contracting Program sa Bayanihan 2 bilang amendment upang masigurong may tuloy-tuloy at tiyak na kita ang mga namamasada sa pamamagitan ng pagbibigay ng fixed fee kada araw o kada kilometro sa kanila. Ngunit sa kabila ng napakalaking budget para rito, nakakalungkot makita ang mga larawan at video nga ng ilang nanlilimos.

Kaya naman hinihiling natin na i-extend muli ang effectivity ng Bayanihan 2 upang mabigyan ng tulong hindi lamang ang mga drayber, pahinante, at operator -- kundi ang iba pang sector na dapat mabigyan ng tulong sa ilalim ng Bayanihan 2.

Which leads us to our number three proposed solution: Ease credit requirements and dramatically increase allocations for quick-andeasy access, conditional loans for MSMEs.

According to the Department of Trade and Industry, out of 1.42 million registered businesses, 99.6 percent are composed of MSMEs. These enterprises generate 63.19 percent of the country's total employment.

Considering that we have yet to meet our daily target of 500,000 vaccinations and are currently hitting about 20 percent of that goal, and with Covid-19 daily infections still elevated, consumption of non-essential items will remain subdued, especially where physical distancing is difficult to implement.

Hotels, restaurants, and leisure companies are likely to cut back on staff and unemployment is expected to worsen as major airlines and logistics companies lay off workers.

Under Bayanihan 2, 10 billion pesos was allotted for DTI-Small Business Corporation's Covid-19 Assistance to Restart Enterprises. As of early April 2021, SB Corporation has approved only a total of 3.3 billion pesos in loans to MSMEs under the program, which reached about 28,000 borrowers. Of the total approved loans, 2.78 billion pesos has already been released to 23,000 borrowers. Mabagal. Matatapos na ang deadline sa June 30, isa sa tatlong aplikante lamang ang na-a-approve, at mas konti pa ang nakakahawak mismo ng perang inutang.

Nitong pandemya nga, mahigpit pa rin ang requirements. Tapos, mas maliit pa kaysa sa inutang nila ang ibinibigay.

Ang kwento ng PCCI o Philippine Chamber of Commerce and Industry, ang na-release na pautang sa kanilang mga miyembro sa ilalim ng Bayanihan 2 ay 31.7 million pesos lamang. Sa 246 na nag-apply, 84 ang na-approve. The process took months. Some of the approved loans were lower than what they applied for. Dahil dito, many MSMEs decided hindi na sila mag-a-apply ng pautang.

Ganito na ang nangyari kahit sumaklolo pa ang PCCI sa mga dating bangkero para tumulong sa MSMEs na ma-i-restructure ang kanilang mga utang sa tulong ng SB Corporation.

Small and medium enterprises need more flexibility for loan requirements for MSMEs, kaya nag-suggest din sila ng helpdesks - mga naka-tutok na gumabay at i-coach ang mga MSMEs. Sabi nila, "This, we believe, is more important than increasing allocation."

In addition to loans, we suggest that SB Corporation be allowed to invest as well in MSMEs.

Sabi ng mga maliliit na mamumuhunan na nakausap natin, we have to be open to innovative ways to secure credit for our MSMEs.

Meron ding potensyal ang micro credits sa mga tinatawag na fivesix. Ayaw natin ng usurious o di makataong interest rates ng kanilang mga pautang pero baka naman pwedeng gayahin ang kanilang sistema.

Sa Japan, ang Panasonic ay nag-umpisa bilang maliit na kumpanya sa kanilang community credit cooperative kung saan lahat ng ka-barangay ay miyembro.

Magagawa lamang natin ito kung may sapat na ayuda para sa MSMEs.

Uulitin ko po, tatlong solusyon na inihahain natin: una, bumili ng gawang Pinoy at dapat magsimula sa gobyerno mismo; ikalawa, bilisan ang pag-bigay ng ayuda, i-extend ang Bayanihan 2; at ikatlo, luwagan at lakihan ang daloy ng pautang at ayuda sa mga MSMEs.

We are appealing to the august chamber to allow us to have this privilege speech referred to the Committee on Trade and Industry so that perhaps, the Chairman during recess, during our adjournment can conduct hearings and get a better appraisal of precisely where our MSMEs are.

In conclusion, let me reiterate: We have to adapt to survive. We have to harness our creativity to move to a better normal.

We have always approached MSMEs in a very tokenistic manner. We need to approach things outside the box and see stimulus as investment and not as an expense. Pagpapataba ng ekonomiya ang approach natin sa pamamagitan ng pag-alaga sa MSMEs.

How do we encourage more investments? Putting local component is important.

On buying local, the Department of Health not buying from our local companies cause them to lay off people and close business. Tangkilikin ang sariling atin at dadami ang trabaho.

Maraming salamat sa pagkakataong ito and Mr. President, in the interest of time and given the tight schedule, may I request with the permission of the body that in lieu of an interpellation, that the same privilege speech be referred directly to the Committee on Trade and Industry so that again, as I said earlier, our Chairman of the Committee on Trade will conduct public hearings during the break.

Magandang araw sa kanilang lahat and again, maraming maraming salamat.