Biz environment for MSMEs better – ADB

Credit to Author: Anna Leah E. Gonzales| Date: Thu, 29 Oct 2020 16:26:37 +0000

The business environment for micro, small and medium enterprises (MSMEs) has moderately improved six months after the coronavirus pandemic broke out, but they still need state support to help them recover, surveys by the Asian Development Bank (ADB) showed.

Shigehiro Shinozaki, ADB senior economist for economic research and regional cooperation department reported during the “Asian Impact Webinar: Asia’s SMEs Beyond the Covid-19 Crisis” event on Wednesday that the number of MSMEs that suspended operations “sharply” fell from March to September.

According to the Manila-based multilateral lender’s Rapid MSME survey conducted with 1,804 respondents in the Philippines in March and April, about 70.8 percent of micro firms, 68.9 percent of small companies and 76.0 percent of medium enterprises suspended operations.

But results of the Philippine Enterprise Survey, which polled 686 firms in August and September, showed that these figures fell to 9.5 percent for micro enterprises, 9.4 percent for small firms, and 0 percent for medium companies.

“The number of MSMEs that temporarily closed business sharply decreased. So businesses have started reopening, suggesting [that] the Philippine economy has moved to the recovery stage,” Shinozaki said.

“However, a drop in domestic demand on MSME products and services has expanded…especially [from] small- and medium-sized enterprises,” he added.

In terms of income, Shinozaki said the majority of MSMEs did not immediately generate revenue because of the strict lockdowns implemented in March to curb the spread of the coronavirus.

“This condition has largely improved in August. So MSMEs with no revenue decreased sharply,” he added. “However, about 40 percent of MSMEs face [an] over 30-percent revenue drop with expanding trends.”

Shinozaki also said that, in March and April, MSMEs faced a serious lack of funds to restart their business, especially micro enterprises.

“This condition has moderately improved in August. MSMEs with already no cash and savings decreased sharply in August, especially micro enterprises. Those who reported [that] funds [had] run out within three months at the time of the survey also decreased in August. However, MSMEs with funds [that would] run out in six months increased in August…” he added.