Digitalization: A way forward for Filipino MSMEs during the COVID-19 pandemic

• Main Authors: Mia, Ian Benedict R, Habaradas, Raymund B., Jimenez, Shieradel V.
• Format: text
• Published: Animo Repository 2023
• Online Access: https://animorepository.dlsu.edu.ph/res_cbrd/26; https://animorepository.dlsu.edu.ph/context/res_cbrd/article/1031/viewcontent/DLSU_Business_Notes_and_Briefings_Vol._9_No._2.pdf
• Institution: De La Salle University

The coronavirus (COVID-19) pandemic has had an unprecedented impact on Micro, Small, and Medium Enterprises (MSMEs) in the Philippines. In 2019, the Philippine Statistics Authority recorded 1,000,506 business enterprises operating in the country – 995,745 (99.5%) of which are MSMEs. Of the total number of MSMEs, the top five industries include wholesale and retail trade; repair of motor vehicles and motorcycles (462,492), accommodation and food service activities (144,024), manufacturing (115,387), other service activities (65,918), and financial and insurance activities (46,100). Together, the MSMEs generated a total of 5,510,760 jobs or 62.4% of the country’s total employment. Microenterprises generated the most employment (29.8%), followed by small enterprises (25.2%) and medium enterprises (7.4%). According to a study by the Asian Development Bank (Shinozaki, 2020), Philippine MSMEs, due to quarantine measures, experienced a drop in domestic demand and struggled with a disruption of production and supply chain, among others. During the pandemic, the MSMEs relied mostly on their own funds and informal financing sources, even as they sought the deferrals of loan and tax payments. The study adds that over 70.6% of Philippine MSMEs were forced to close due to the pandemic temporarily — this place the country as the one with the most business closures, followed by Laos (61.1%), Indonesia (48.6%), and Thailand (41.1%). Additionally, 58.8% of Philippine MSMEs reported zero income, while 28% said revenues fell over 30%.