KEYNOTE SPEECH OF SECRETARY RAMON M. LOPEZ
CDA INITIAL FINDINGS & POLICY DIALOGUE
30 July 2019, Edsa Shangri-La Hotel, Mandaluyong City
As delivered
The Department of Trade and Industry considers cooperative as one of the many partners that support the development of the Micro SME – Micro Small and Medium Enterprises. We’re really very happy that CDA has been made and is now part of the family of the Department of Trade and Industry although I know they are operating quite independently. It is really getting to maximize the synergy between the CDA and the DTI in all these programs. Especially now that our thrust and of that of the Department of Trade and Industry, the challenge is how we can bring to the grassroots all the programs from the national government like our agency — Department of Trade and Industry.
MSME as you know has been the front and center of the DTI’s program. It is also the priority of President Rodrigo Roa Duterte on how we can really change lives especially those who are at the bottom of the pyramid.
So many programs had been instituted even during his time and of course even prior to his administration. There had been programs that we started in partnership with private sectors like you know, the group I came from. And now in the Department of Trade and Industry we were able to sort of shift to the 4th gear already.
Many programs I might just sight a few of them it pertains to new programs like extending micro financing not by the Department but the Small Business Corporation, which is an attached agency. It serves as some kind of a wholesale fund concept that we get to distribute to all the credit delivery partners scattered nationwide. We have over 300 of them. And in fact, many of the cooperatives are credit delivery partners in this what we call Pondo sa Pagbabago at Pagasenso its literally translated fund for change and upliftment in life.
And so far, it is a Php 2 billion fund. This year we are getting another Php 1.5 billion, but still very low compared to the Php 30 billion target which we are trying to replace – the 5-6 system high interest rate or usurious system that we are trying to get rid of — so we just had to replace it. So at least we are now working on our Php 3.5 billion although we had Php 2 billion as of 2018 we were able to lend out already to Php 3 billion worth of borrowings. And that means that we are able to roll over some of the funds already.
That’s just one, micro financing. The other program that we are really trying to push forward is the shared service facility. This is really provision of equipment again to the communities and many cooperators are cooperatives as well. Because the idea is to have this equipment shared to many entrepreneurs. Like a group of entrepreneurs working on calamansi, or Philippine lemon farm and giving them the equipment that will extract the juice and convert them to concentrates or juice products. So equipment that would be given for free use, for two years. In other words, the ownership does not get to be transferred to the cooperative but if the operation proves to be viable, the ownership after two years will be transferred. In other words, loan to be paid but really an equipment loan that can be transferred after two years.
One thrust also that our President would like to emphasize is really working towards the level of the barangay system – barangay is like the village level. And coming from a national agency, the DTI is structured way that — we have 17 Regional Directors in regional offices. I think about 80 provincial offices. So are organized up to the provincial level but recently because of the Go Negosyo Law we are supposed to put up one Negosyo Center, which is a business center, for every municipality. We now have about 1,500 municipalities/cities and we [Negosyo Center] are now at about 1,072 so it’s quite a big number already. 824 of that were established during the time of President Duterte and we intend to complete hopefully before we finish our term by 2022, hopefully we are able to complete the 1,500 in terms number of municipalities/cities. In other words, covering all of them and conducting all these programs at the municipality level.
But as you know in each municipality, how many barangay? I think maybe 15 or even more. So our intention is beyond the municipality, to really even bring it down further to the bottom of the pyramid. That’s the intention of the department despite limited budget because our budget is up to the municipal level in terms of Negosyo Center.
But such is the passion and drive for the Department to reach out to all Filipinos and that’s the reason why we hope that the CDA and all the cooperatives would be partners in making this a reality. Just listening, I think the last chart, probably says it all when it comes to trust and the good image, and reputation of cooperatives, just work on professionalizing the cooperative system.
Again, let me just reiterate the cooperatives at the grassroots level help their members who are Micro SME by providing them with organization access to capital. These entrepreneurs are going to contribute to our country’s inclusive and sustained economic growth particularly in the rural and agricultural areas.
Aside from the micro financing, we’re giving extra emphasis on training and mentorship. We believe that any Micro SME and even cooperative members who are into Micro SME work, for them to be successful they really to have mastery, there has to be a change in mindset. From being employment-employee mindset or just a microentrepreneur mindset to one that is really an innovative entrepreneur kind of mindset. One that will really look for innovation, spotting opportunities, the gaps in the market and to serve market and all that and of course having a positive attitude etc. because such is the mind that is needed for a business to be sustained and prosper.
It’s easy to establish a business we all know that but to sustain that is the challenge and to even grow it, and to sustain it to many more years. We want the Micro to be smarter entrepreneur as we say. So Micro to become Small, Small becoming Medium and eventually the Large. Some indications, we’ve look at statistics compared to about four years ago we’ve seen the Micro entrepreneur share. You all know that the total is 99.6% Micro SMEs out of the total so .04 only for large. But between the Micro and the Small, the Micro used to be in the 90% and about 8% Small. Now, over after four or five years we’ve seen the Micro going down by about two percentage points and Small getting to be around over or increased by 2 percentage points. So the presumption is that some Micro are already becoming more Small, not smaller, but more on the small category. So, the Small hopefully eventually become Medium because we just want to build many Jollibee’s and Mang Inasal or all this small business getting to be big and then creating more jobs and really helping solve the poverty problem.
Of course at the Macro, you know that poverty at least has gone down from 27% to 21%. 27% in 2015 to 21% as of 2015. But the administration would really like to still bring it down further to 14% or even lower, and key really is — grassroot level empowerment. And this is where DTI and CDA can really work closely.
So aside from mindset, one of our big programs is making sure and as mentioned creating a smarter entrepreneur. Making sure that there is Mastery of Entrepreneurship. So at least knowing to differentiate product, branding, right packaging, product development, even a bit of financial literacy. And of course with continuous mentoring that is our 3rd M. Mindset, Mastery and Mentoring. I’ve mentioned Money the P3 program – micro financing. I’ve mentioned the Machine so what else. Different Models that we can offer. Models of businesses for those who cannot think of a model. The franchising, direct selling and other models that one can get into so at least one can get a livelihood or you know — source of income.
But more importantly, when one has a product, we have developed the last M — one of the most important M is also the Market access. We make sure that these products really get to have that exposure. So, Market access making them available in key market areas like malls and supermarkets for free, given free exposure. And many success stories had been mentioned or reported to us because of their exposure in those programs like the Go Lokal! program which is really a market incubation program. Literally a store tied up with malls and they are in the ground floor, high foot traffic, about 15 to 18 square meters and all the MSME products getting the exposure for free, no charge. Many get to be discovered there, eventually volume orders would follow and that is again the start of their growth. If they need more funds they go to the micro finance program that we have. So, it’s a kind of 360-degree program that we have.
We thank the OCDC for the presentation, sharing the numbers and the findings. We hope that all these numbers can help guide us, policy makers as well as the program developers as we strengthen the role of cooperatives as well as maximizing their role in really allowing us to empower the bottom of the pyramid. As we say we empower the bottom of the pyramid we empower the nation. And that is the vision of President Rodrigo Roa Duterte.
Thank you very much and good morning!