Easing Growing Pains: Supporting the Growth of Small Businesses in the Philippines

• Main Author: Castillo, Paulynne
• Format: text
• Published: Animo Repository 2018
• Subjects: Small and micro enterprises; Entrepreneurship; business; economy; Philippines; MSMEs; Entrepreneurial and Small Business Operations; Growth and Development
• Online Access: https://animorepository.dlsu.edu.ph/res_aki/122; https://animorepository.dlsu.edu.ph/context/res_aki/article/1123/viewcontent/aki_policy_brief_volume_x_4.pdf
• Institution: De La Salle University

In explaining the 2015 survey findings that the Philippines has the second to the lowest existing business rate in the ASEAN region, the Philippine Entrepreneurship Report, 2015-16 stated that “business operations become more burdensome as they grow due to the more restrictive regulations on large enterprises” (Velasco et al., 2017, p. 40). Established businesses, particularly firms operating in the formal sector, shoulder higher taxes and are subject to social security contributions, minimum wage, and industry-specific regulations (Velasco et al., 2017; Auriol, 2014). Strengthening early-stage entrepreneurial activities and supporting their quest for expansion, however, require access to financial, legal, and public services that are almost always only available to established enterprises and organizations that belong to the formal sector (International Labour Organization [ILO], 2013). Deprived of these key ingredients, small businesses may not be able to take advantage of opportunities to stabilize, expand, and/or generate profits (i.e., producing/selling a higher level of output, lowering costs through economies of scale, etc.). Caught between these two equally costly circumstances, a considerable proportion of Philippine businesses in 2015 were discontinued—12.1%, the highest in the ASEAN region (Velasco et al., 2017). Indeed, the Philippine Entrepreneurship Report, 2015-16 determined that the top two reasons for business closures in 2015 were the lack of profitability and the lack of access to credit (Velasco et al., 2017).