TIME RIPE FOR ENTREPRENEURIAL REVOLUTION

TIME RIPE FOR ENTREPRENEURIAL REVOLUTION

Of Trees And Forest

By SENATOR MANNY B. VILLAR

January 8, 2013, 6:22pm

THE time is right for our people to become entrepreneurs and for the government and non-government organizations to help small businesses.

Our economy is awash with cash. A primary reason is the strong inflow of remittances from overseas Filipino workers (OFW). The Bangko Sentral ng Pilipinas said cash remittances amounted to $1.84 billion in October, 2012, up by 8.5 percent from the same month last year.

This brought total remittances for the first 10 months of 2012 to $17.49 billion, up by 5.8 percent from $16.53 billion year on year. By the end of 2012, cash remittances were expected to breach $21 billion, compared with $20.11 billion in 2011. And the World Bank estimates total remittances from overseas Filipinos to reach as much as $24 billion this year.

We also have a very liquid market. The Bangko Sentral recently reported that domestic liquidity grew by 8.6 percent year-on-year in October, faster than the 7.5 percent recorded in September, to reach R4.7 trillion. This indicates that liquidity in the financial system can amply fund the economy’s growth requirements amid ongoing strains in the global economy.

In addition, interest rates remain low, which should encourage more loans for businesses.

Our problem is how to translate these developments into more businesses and more livelihood opportunities.

For the past 20 years, I have been calling for an entrepreneurial revolution that will encourage micro, small, and medium enterprises. We should change our mindset: instead of aspiring to become employees we should strive to become employers.

My wish is for the Philippines to have a strong entrepreneurial class. Our gains from economic growth will not have a lasting impact, particularly in terms of raising the quality of life of Filipinos, unless we become a nation of entrepreneurs.

Even the world’s biggest economies recognize the role of small businesses in their development. According to online publication About.com, citing data from the US Small Business Administration, the US economy is not dominated by giant corporations but by independent enterprises with less than 500 employees, which employ 52 percent of all US workers.  During the period 1990 and 1995, small businesses generated 75 percent of new jobs in the US.

In China, which has dislodged the United States as the world’s biggest economy, is adopting new measures to help small businesses through loans and tax breaks. China.org.cn quoted Mike Bastin, marketing and management academic at Tsinghua University, as saying that he believes the measures were adopted because of the growing significance of small businesses to the country’s economy. Bastin noted that small and medium-sized enterprises generate 50 percent of China's annual tax revenue and contribute 60 percent of its GDP.

The government, he said, recognized that China’s future economy would depend more and more on the growth of small businesses.

In my view, the future of the Philippine economy will also depend on the success of our small businesses, which account for more than 90 percent of all registered enterprises in the country.

I continue to encourage OFWs and their families to set up small businesses instead of spending all of their money on gadgets and consumer items that they can do without.

The Villar Foundation and its partner NGOs offer skills training and counseling for OFWs and other people who are interested to become entrepreneurs.

Local banks should increase lending to small businesses and aspiring entrepreneurs, and the Bangko Sentral should increase its efforts to make it easy for small businesses to borrow capital.

We need more than lip service. According to the Bangko Sentral ng Pilipinas (BSP), the government is bent on increasing financial assistance to the microenterprises sector to attain an economic growth rate that will actually reduce the incidence of poverty.

The Credit Surety Program, a pool of funds from state-owned banks, local governments, cooperatives, and non-government organizations that was launched by the BSP in 2008 to make loans accessible for small businesses, is targeting total loan releases of P1 billion by the end of this year.

I believe the monetary authorities and the banks should do better. According to a BSP report, outstanding loans from commercial banks totaled R3.31 trillion as of October, 2012, including R142.14-billion credit card loans and R80-billion auto loans. These figures make the loans to microenterprises pitiful.

Let’s not waste the advantages that we have right now. While many of the wealthy economies are struggling through recession, let’s push the revolution that will transform the Philippines into a nation of entrepreneurs.

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(For comments/feedback e-mail to: mbv_secretariat@yahoo.com. Readers may view previous columns at www.senatorvillar.com)