August 26, 2009
Size isn’t Everything: Economic
Forum on Role of Small and Medium Enterprises
newspaper, in cooperation with the Philippine
and the Friedrich Naumann Foundation for
Liberty (FNF), held an economic forum on 26 August 2009 in Cebu
City. The forum looked at what opportunities might arise for the
small and medium enterprise (SME) sector in Cebu as the world
emerges from recession.
Dr. Cayetano Paderanga, economics professor at the University
of the Philippines Diliman, started the discussion with an overview
of the financial crisis. He talked about the cheap money policy
of the U.S. Federal Reserve and the unsustainably high U.S. current
account deficit. He also looked at the Philippine economy
in the context of the crisis, pointing out the country
has weathered the storm better than expected.
This is especially due to the remittances of overseas Filipinos
that did not contract as expected but instead continued to grow
Philippine Institute for Development
Studies Senior Research Fellow Rafaelita Aldaba, Ph.D, focused
on the role of SMEs in Philippine manufacturing. She explained the
structure of the sector and the challenges it faces. Dr. Aldaba
outlined the key constrains as: lack of
access to finance, technology and skills and supply chain problems.
However, she also pointed out the programs undertaken by government
and the private sector to help overcome these limitations.
Siegfried Herzog, FNF resident representative, provided a look
at the success factors that have turned the German SME sector
into the backbone of the economy. He used the Global
Competitiveness Report of the World Economic Forum as an analytical
framework and illustrated it with some examples from globally
operating SMEs. “One critical insight is that the most
important task of the government is to get the basics right.
Reliable institutions that implement the rule of law, good infrastructure,
basic education and healthcare are keys to development,”
Herzog said. “As long as these are not tackled, money
spent on special promotional programs will not make much of a
difference. Good infrastructure will
allow SMEs to emerge all over the place,” he added. “Vocational
training is an area with huge potential, but it should be run
by the private sector, maybe with some financial help from the
government, because the private sector knows
what the training needs really are.”
Please click here
to view Siegfried Herzog’s presentation.