According to data from the Philippine Statistics Authority, there were 998,342 micro, small, and medium enterprises (MSMEs) operating in the Philippines as of 2018, accounting for 99.52 % of the 1,003,111 businesses in the country. Of the MSMEs, 887,272 were micro enterprises, 106,175 were small enterprises, and 4,985 were medium enterprises.
Clearly, MSMEs play a crucial role in bringing the dream of creating a prosperous Philippine economy to fruition. Considering that MSMEs comprise a considerable chunk of the total number of businesses in the country, it is important to not just nurture a culture of innovation to help small businesses flourish but also to develop the right entrepreneurial framework conditions to encourage the creation of businesses in the first place. Fostering an environment that is conducive to doing business enables MSMEs to confidently face the challenges that come their way and to seize many of the opportunities available to them.
Acknowledging that MSMEs are among the foundations of the economy and a key element to achieving inclusive growth in the country, the Philippine government, through the Department of Trade and Industry (DTI), established the Negosyo Center Program. This program decrees the creation of Negosyo Centers, which will be responsible for promoting ease of doing business and facilitating access to services for micro, small, and medium enterprises.
You might have heard a little about the DTI’s Negosyo Centers but it’s about time you learn more about it and the benefits MSMEs can avail from Negosyo Centers. In this guide, we’ll fill you in on some of the most crucial facts you should know about this government initiative, which could very well serve as a catalyst for making the Philippines a more entrepreneurial nation.
Negosyo Centers Exist Because of the ‘Go Negosyo Act’
In July 2014, the Republic Act No. 10644 or “An Act Promoting Job Generation and Inclusive Growth through the Development of Micro, Small, and Medium Enterprises” was signed into law. Otherwise known as the “Go Negosyo Act,” the law was first sponsored by Senator Paolo Benigno “Bam” Aquino IV and was a consolidation of Senate Bill No. 2046 and House Bill No. 4596.
The Go Negosyo Act was enacted in order to “foster national development, promote inclusive growth, and reduce poverty by encouraging the establishment of micro, small, and medium enterprises.” To make this possible, the Act authorized the establishment of Negosyo Centers in all of the Philippines’ provinces, cities, and municipalities.
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There Are Now More Than 1,000 Negosyo Centers in the Philippines
The good news is that 1,087 Negosyo Centers have already been established throughout the country as of September 2019. There are now 517 Negosyo Centers in Luzon, 267 in the Visayas, and 296 in Mindanao. In terms of service capacity, there are now 134 full-service Negosyo Centers, 599 advanced ones, and 354 centers with basic capacity.
Negosyo Centers Cater to Smaller Businesses
Although it should come as no surprise that smaller businesses are the target sector of Negosyo Centers, MSMEs have an exact definition as per Section 3 of Republic Act No. 9501.
According to the Act, "MSMEs shall be defined as any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity’s office, plant, and equipment are situated, must have value falling under the following categories:
Micro: not more than PHP 3,000,000
Small: PHP 3,000,001 – PHP 15,000,000
Medium: PHP 15,000,001 – PHP 100,000,000”
Businesses that fall within the mentioned definitions can take advantage of the services of Negosyo Centers.
Negosyo Centers Provide Various Business Advisory Services
Negosyo Centers are mandated to afford business advisory services to MSMEs. Tailored to the businesses’ specific needs, these services are aimed at providing proper guidance on compliance, documentary and license requirements, financing, management, marketing, accounting, and an entire host of other subject matters. The Negosyo Centers’ advisory services can also be provided through various means, including one-on-one consultations, focus group discussions, group mentoring, and personalized coaching.
Negosyo Centers Provide Business Registration Assistance
Providing assistance in the processing of documentary requirements necessary for business registration is another one of the important mandates of Negosyo Centers. This is particularly helpful to business owners who are just starting their entrepreneurial journeys. According to the DTI, Negosyo Centers can process business registration applications—particularly those filed by sole proprietors—in as little as 15 minutes. On top of this, Negosyo Centers are also empowered to facilitate MSMEs’ access to shared services, as well as to grants, loans, and other forms of financial assistance.
Negosyo Centers Provide Business Information and Advocacy Services
Another one of the primary mandates of Negosyo Centers is to conduct programs or projects that will aid entrepreneurial development in the country in general. Part of fulfilling this function is by conducting trainings, seminars, and dialogues that are aimed at enhancing not just the efficiency but also the productivity of MSMEs. More than these, however, Negosyo Centers are also empowered to chart all other information and services that can be useful to prospective entrepreneurs and investors, especially those that cover key value chains and economic subsectors within their respective jurisdictions.
Recently, the DTI had provided assistance to hard-hit microenterprises in Buang, La Union through providing 20 Negosyo Starter Kits as part of the agency’s Pangkabuhayan sa pagBangon at Ginhawa (PBG) program.
Each beneficiary received Php10,000 worth of kits varying from sari-sari store, rice retail, frozen foods and tool equipment for food processing. Beneficiaries were identified as those affected by the COVID-19 pandemic.
Negosyo Centers Are Also Vehicles for Public-Private Partnership
The Micro, Small, and Medium Enterprises Development (MSMED) Council and the Department of Trade and Industry encourage public-private partnership in the establishment and management of Negosyo Centers throughout the Philippines. In fact, First Circle is one of the private sector partners that the DTI has tapped in order to provide quick and convenient financing to MSMEs. Access to First Circle’s flagship products, namely invoice financing and purchase order financing, is especially beneficial to MSMEs because a huge number of them are not able to pledge collateral in exchange for financing.
On top of recognizing the importance of financing and helping entrepreneurs bridge working capital gaps, First Circle is also committed to upgrading the capabilities of entrepreneurs by conducting training on various other subjects, including financial literacy, operational efficiency, personnel management, customer relations, and many others.
Click here to learn about working capital financing.
Negosyo Centers Can Help Micro Enterprises Register as BMBEs
At Negosyo Centers, micro enterprises can also register as a Barangay Micro Business Enterprise or BMBE. This is highly beneficial to micro enterprises because BMBEs are entitled to a number of government incentives. These include exemption from paying for taxes from income originating from the conduct of one’s business, exemption from coverage of the Minimum Wage Law, and financing assistance from agencies like the Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation (SBGFC), and the People's Credit and Finance Corporation (PCFC).
Barangay micro enterprises are defined by Republic Act No. 9187 as “any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading, and services.” Their total assets should not exceed more than PHP 3,000,000.
Whether you need assistance in operating your business or help in getting it off the ground, you would be well-advised to tap into the numerous resources afforded by DTI’s Negosyo Centers. These centers have aided tens of thousands of micro, small, and medium enterprises throughout the Philippines, and your business could very well be the next.