Ladies and gentlemen, a good day to all of the distinguished speakers and participants across the APEC Region.
It is with great pleasure that we welcome all of you to the APEC Global MSME Forum 2021. If not for the COVID-19 pandemic, we would have offered you warm Philippine hospitality at the newly rehabilitated Boracay beach. But for now, we hope you enjoy our Zoom background.
We would like to especially welcome our distinguished speaker for today’s session: World Trade Organization (WTO) Director-General, Dr. Ngozi Okonio-Iweala, who will deliver her keynote address. We also welcome our panelists: Minister Mary Ng of Canada, Vice Minister Rodrigo Yáñez of Chile, and Ambassador Jose Luis Cancela of Uruguay as Chairperson of the WTO Informal Working Group on MSMEs.
The Forum is the capstone activity of the Boracay Action Agenda (BAA) to Globalize micro, small, and medium enterprises (MSMEs). This was endorsed by Trade Ministers in May 2015 and adopted by APEC Economic Leaders in November 2015 during the Philippine hosting of APEC.
Since 2015, the BAA provided APEC a framework to strengthen our actions to assist MSMEs in harnessing the opportunities presented by open and increasingly integrated markets and to take advantage of global trade. The Action Agenda builds on APEC’s extensive work on regional economic integration, and explores both traditional and new areas of work in order to be relevant and responsive to MSMEs’ needs.
For the next three days, we will listen to policymakers, business leaders, officials of international organizations, MSMEs, and members of academia share their thoughts and views. The discussions will cover the following: the challenges and opportunities for MSMEs’ internationalization in the region; APEC’s contributions to the region’s inclusive and sustainable growth agenda; best practices in MSME globalization; and implementation of the BAA agenda, especially identifying areas for future work and ways to advance APEC’s MSME agenda.
We must remember that across the APEC region, MSMEs are considered a driver of growth. In APEC, MSMEs account for 97% of all businesses and employ over half of the workforce. They contribute significantly to economic growth, with their share of GDP ranging from 40% to 60% in most APEC economies. However, they only account for 35% or less of direct exports. Therefore, we need to tap the potential that MSMEs hold and encourage their development to build their capacity to engage in international trade, whether as direct exporters or as part of regional and global value chains.
While MSMEs have been a core agenda of APEC, the unparalleled effects on businesses by the COVID-19 crisis calls for stronger measures among APEC economies to support, strengthen and foster an enabling environment for MSMEs. Through the appropriate policies and measures, we need to assist them amidst the pandemic and beyond.
In 2020, the Philippine economy contracted by 9.6% from the shocks resulting from the pandemic. During the height of the lockdowns, around 38% of total registered businesses temporarily closed, and as the economy reopened in the second half of the year and into the first quarter of this year, the number recovered to a range of 4-8%, depending on the degree of community quarantine being applied.
Our continued gradual and calibrated reopening of the economy under the leadership of President Rodrigo Roa Duterte is keeping us on track towards a V-shaped recovery. What’s more, the International Monetary Fund (IMF) has forecasted the Philippine economy to grow by 5.4% in 2021 and 7% in 2022.
But we also believe that any recovery will start with a well-managed exit from the pandemic and supported by increasing vaccination rates. We are confident that the country’s substantial progress in rolling out the vaccine will support our efforts to build back better in 2021 as this will help restore consumer business confidence. But we can also see how the uncertainties in the course of the pandemic and the emergence of new coronavirus variants can pose risks to growth prospects.
To address the adverse impacts of the COVID-19 pandemic, MSMEs started implementing adaptive business measures. These include digitalization or the use of online platforms for their business transactions, cost reduction, diversification of products and services, utilization of non-cash payment options, and allowing employees to work from home. Some of these changes delivered greater efficiency for their business and more convenience for their customers. We expect that these MSMEs will endure well after the COVID-19 crisis has receded.
For our part, we continue to do our best to cushion the impact of the economic blow of the pandemic. Our Congress recently passed the Corporate Recovery and Tax Incentives for Enterprises (or CREATE) Act, which lowered the corporate income tax rates from 30% to 25%, and even down to 20% for MSMEs.
Policies were also put in place to ensure that MSMEs have continued access to formal financing channels and measures were adopted to support domestic liquidity and extend cheaper financing to borrowers, especially MSMEs. Examples of these include the MSME Credit Guarantee Program and the Small Business Corporation’s (SBCorp.) loans to micro and small businesses affected by the pandemic under the COVID-19 Assistance to Restart Enterprises (or CARES) Program.
More importantly, we reported in our recent APEC gathering that the Philippines continued to work on ease of doing business, and instituted policy reforms that facilitated trade and investments, particularly in essential commodities and critical medical products such as PPEs and vaccines.
These are some of the measures that we have done and we would be happy to share more during the panel session later. We look forward to the discussions to learn from the experiences of other economies and how we can cooperate to help our MSMEs recover from the crisis, as well as prepare for future shocks.
Again, we welcome all of you to this forum. Thank you very much and mabuhay po tayong lahat. ♦
Date of Release: 29 June 2021