Business Options; Change and Transformation in the SME Environment

Manila Bulletin, October 18, 2007 | Go to article overview
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Business Options; Change and Transformation in the SME Environment


Byline: Benel P. Lagua

Allow me to begin and end this column with biting excerpts from the President's Report in the 2006 Small Business Corporation's Annual Report.

"Wisdom is the gift of maturity. But along with wisdom is the realization that change never grows old, and neither does it pause for the unwary ones to understand that failing to adapt means missing the opportunity to stay ahead. This exempts no one - more so in the case of the Small Business Corporation. For causing change is in essence the mission of the Corporation. In so doing, it needs to transform itself. How it did so, and with what wisdom did it do so, are the core questions by which it accounts for its purpose."

"The SME sector, with whose change and transformation SB Corporation is tasked, is now an altered landscape. It has become a dominant concern in the nation's development agenda, no longer a backburner issue in the national consciousness as it was when the Small Business Corporation was created more than a decade and a half ago. The Small Business Corporation itself is no longer the same entity that it was in 1992 the year it was established, or in 1997 when its charter was reinforced and expanded, or five years ago when it was expanded through a merger with the Guarantee Fund for SMEs. From a lone and isolated voice championing the cause of an apparently neglected sector, SB Corporation should now play a new role in pushing the momentum created by the mainstreaming of SME development financing in the national agenda. From being an advocate, it must now lead."

"But the Corporation's true transformation goes beyond the sum of the lesser changes attached to it. Being a relatively young organization, it also needs more than the wisdom of the past to guide its transformation. And it needs a higher cause than the need to adapt to circumstance to shape its vision of what it could be."

We cite these excerpts to highlight a reality facing our SMEs today and the need for government to be more responsive. The urgency of amending the Magna Carta for SMEs is one of these burning issues. Not only must we act on these, we must act now.

We list some of the important advocacies for the revision of the Magna Carta for SMEs.

The Magna Carta's provision for mandatory credit allocation to SMEs expired last May 2007. Already the banks have requested BSP to be allowed to reduce their SME portfolio. We believe that the mandatory SME credit allocation provision of the Magna Carta for SMEs have succeeded in mobilizing credit for SMEs without unduly disadvantaging the banking system. We are requesting that it be extended for another 10 years.

We are proposing that the allocation be increased from the current 8% to 10%. Further, we are suggesting that the 10% should be an "omnibus" allocation into micro, small or medium-sized enterprises.

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