Survey: 64% of MSMEs opened to support family

More than half of MSME (micro, small, and medium enterprises) owners in the Philippines started their business as a source of income for their family, as well as to increase their revenue as a short-term goal, according to a survey by US-based management firm Boston Consulting Group (BCG) and the Department of Trade and Industry (DTI).

Released this month, the study, “Heart of Hustle: What Fuels the Filipino MSME,“ involved 3,098 MSME owners.

Data showed 64 percent of startups aimed to achieve financial independence for the family; 41 percent were driven by a passion for their product or service; and 38 percent sought personal financial independence.

“These are not corporate ambitions, they are deeply personal goals. For many MSMEs, business is not the dream, it is the vehicle to achieve the dream,” the report pointed out.

For MSMEs’ growth priorities for the next 12 months, 60 percent want to increase their revenue; 53 percent desire to reach more customers; 48 percent intend to improve their product or service; and 40 percent wish to secure additional financing.

BCG said there are five access points that can trigger MSME growth, namely: financing, market, tools, government support, and labor.

The survey said 33 percent cite access to financing as the most common concern and consistent barrier for MSMEs to grow.

Meanwhile, 55 percent have never applied for a loan, 42 percent of whom are afraid of going into debt; 34 percent said high interest rates discourage them from taking out loans, 16 percent of whom are intimidated by complex application process.

“Accessibility is not the same as availability. MSMEs need financing solutions that feel safe, understandable, and tailored to their context, not just technically open to them,” the survey said.

Thus, 44 percent of MSMEs continue to depend on personal savings, while 34 percent want to learn more government programs in the future.

Government support

The respondents ranked export training, trade promotions, and access to credit as top priorities for government support.

The study found that only 36 percent believe the government is doing enough to support access to financing. “Many MSMEs are aware of public loan programs but find it difficult to access them or do not see them as applicable to their needs,” the report said.

As for awareness of DTI support programs such as Negosyo Centers, Kapatid Mentor ME, Go Lokal, and Pondo sa Pagbabago at Pag-asenso, over 70 percent of MSMEs said they are familiar with the initiatives, but actual participation is much lower at less than 20 percent.

Some respondents said they have difficulty in meeting requirements, while others are unsure of which programs to apply.

MSMEs are also eager to expand and upskill, the study said. However, they have concerns on talent readiness and government support.

Some 72 percent said they want to expand their workforce, while 82 percent want to upskill their existing employees.

Even so, only 54 percent feel they are currently providing enough training opportunities, and 53 percent believe their current workforce is skilled enough to support business growth.

Only 48 percent feel the government is doing a good job in upskilling jobseekers.

“MSMEs show a clear desire to grow and receive support. They are investing in their products, exploring new channels, hiring staff, and engaging with support systems where they can. But in many cases, the systems around don’t keep up. The barriers are not about resources, but rather fit,” the survey said.

“MSMEs need support that reflects the way they operate: fast-moving, resource-constrained, and more personal than corporate. Bridging these gaps will require more responsive programs, simpler processes, and stronger coordination across public and private sectors,” the survey added. 

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Source: Manila Times

Building permit approvals inch up in May

Approved building permits picked up 1.1% year on year in May due to the modest growth in residential construction projects, the Philippine Statistics Authority said in a report.

Preliminary data showed building projects covered by the permits numbered 16,282 in May from 16,105 a year earlier.

This was slightly higher than the 0.6% growth in May 2024 and the revised 8.2% decline in April.

In May, constructions projects covered 3.22 million square meters (sq.m) of floor area, down 17.8% year on year from 3.92 million sq.m.

These building projects that received approval were valued at P42.09 billion, 22.7% lower than a year earlier when it reached P54.48 billion.

The increase in construction signifies growth in economic activity, Emmanuel J. Lopez, professorial lecturer at the University of Santo Tomas Graduate School, said in an e-mail.

“Specifically, a positive increase in investment spending ultimately leading to increase in employment buoyed by increase investment,” he said.

Permits for residential projects, which accounted for almost 70% of the total, rose 10.4% in May to 11,331.

These projects were valued at P21.25 billion, down from P25.67 billion a year earlier.

Applications for apartment buildings climbed 31.7% to 1,397 while applications for duplex or quadruplex homes nearly tripled to 250.

Single homes, which accounted for 85.3% of the residential category, grew 6.3% year on year to 9,664.

On the other hand, nonresidential projects slumped 14.9% year on year to 2,930 permits from 3,443 in May 2024. This accounted for 18% of the total.

Nonresidential projects represented by the permits were valued at P16.80 billion, declining 23.2% from a year earlier.

Meanwhile, approved commercial construction applications contracted 14.5% to 1,994. These made up 68.1% of all nonresidential projects.

Institutional building permits plunged 23.9% to 488, while industrial permits inched up 0.8% to 264.

In May, approved agricultural projects fell 20.7% to 96 while other nonresidential projects picked up 2.3% to 88.

Permits for additions, or construction that increases the height or area of an existing building, declined 17.3% to 546 approvals.

On the other hand, alteration and repair permits totaled 1,086 in May 2025, 17.6% lower from a year earlier and were valued at P2.61 billion.

Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had the most approved construction projects in May 2025 accounting for 25% of the total with 4,063 permits.

This was followed by Central Luzon (20.2% share with 3,290 permits), and Ilocos Region (8.8% share with 1,425 permits).

Mr. Lopez said that the increase in employment will lead to increase in consumption spending which is a major component of the country’s economic growth.

Source: Business World

World Bank says job reforms to drive PHL growth to nearly 7%

Reforms to enhance job creation and quality could propel Philippine economic growth to close to 7% and transform it into a middle-class economy by 2040, the World Bank said.

“To stay on a path to upper middle-income status and to realize the national ambition of a middle-class society free of poverty by 2040, the country needs a new wave of reforms. Faster, broader, deeper,” World Bank Country Director for the Philippines, Malaysia, and Brunei Zafer Mustafaoğlu said.

In its maiden launch of the Country Growth and Jobs Report for the Philippines on Tuesday, the World Bank said that it is “feasible” for economic growth to accelerate to 6.8% by 2040, along with ramping up employment and wages.

“The implementation of the set of reforms recommended in this report is estimated to increase annual gross domestic product (GDP) growth to 6.8%, create over 5.1 million additional jobs, and boost real wages by 12.9% by 2040,” according to the report.

World Bank models show the Philippines growing by an additional 1.4 percentage points (ppts) if its recommended reforms are implemented.

Broken down, economic growth could increase by 0.78 ppt annually through reforms aimed at productivity and human capital; by 0.45 ppt through deeper capital reforms; and by 0.18 ppt by boosting labor force participation.

The report has about 45 actionable recommendations, with the reforms focused on those three main pillars.

The World Bank said reforms are needed to boost project infrastructure investment, especially in connectivity.

“In an archipelagic economy like the Philippines that has spent so much in connectivity infrastructure, keeping restrictions to inter-island transport, the form of cable path restrictions, is sort of a big distortion, a big cost,” World Bank lead economist for Brunei, Malaysia, the Philippines and Thailand Gonzalo J. Varela said.

“Lifting restrictions to inter-island shipping, domestic shipping, is something that is also going to help the economy grow, and a lot of the growth happens at local levels.”

The multilateral institution also recommended policies to lower entry barriers for businesses; open domestic shipping to lower inter-island transport costs; and strengthen service delivery by local government units.

“Ensuring that local governments have the capacity to deliver the key services that they are mandated to deliver is also going to be crucial,” Mr. Varela added.

To further mobilize private capital, there is also a need to support small and medium enterprises and multinational companies linkages and deepen capital markets.

“The Philippines has received more foreign direct investment in the last few years, and we are yet to see that small and medium enterprises are connecting to these multinationals, that they are gaining from that connection as suppliers, gaining productivity,” he said.

FASTER GROWTH

With these reforms implemented, growth can further accelerate. “What it does is it brings that baseline that we had estimated at 5.4%, closer to that Philippine Development Plan target,” Mr. Varela said.

“It means that if these reforms are implemented by 2040, the Philippine economy would be 24% larger than it would have been otherwise,” he added.

The government is targeting 5.5-6.5% GDP growth this year and 6-7% from 2026 to 2028, according to latest Development Budget Coordination Committee  estimates.

Under the Philippine Development Plan, the government had placed an upper bound of 8% on economic growth targets until 2028.

“To achieve its goal of becoming a middle-class society, the Philippines needs to sustain annual growth of 6-10% for decades,” the World Bank said.

It noted that though job quality remains a concern despite an increase in the number of jobs.

“Despite impressive gains, productivity growth remains weak. Job creation has tilted heavily toward non-tradable sectors, while the tradable economy — so critical for long-term growth and innovation, is shrinking,” Mr. Mustafaoğlu said.

“Top firms are not expanding fast enough. Competition is limited and too many workers remain in low-quality, low-wage jobs.”

The latest data from the local statistics agency showed the Philippines’ unemployment rate went down to 3.9% in May from 4.1% in April, with the number of individuals in the labor force hitting an all-time high of 52.32 million.

“The middle-class society by 2040 national ambition is not a utopia. It is something that is achievable if there is a commitment, both from the public sector to double down on reforms, and from the private sector to innovate and compete,” Mr. Varela said.

Based on the World Bank’s latest income classification, the Philippines still remains a lower middle-income economy, narrowly missing the threshold to achieve upper middle-income status.

The Philippines posted a record gross national income per capita of $4,470, only $26 shy of the World Bank’s upper middle-income threshold of $4,496-$13,935.

ARTIFICIAL INTELLIGENCE

Meanwhile, the World Bank also flagged the impact of disruptive technologies such as artificial intelligence (AI).

“Some jobs in the Philippines are at risk of technology displacement. AI exposure and AI’s potential complementarity can affect employment. The Philippines has slightly fewer jobs comprising routine tasks than its peers,” according to the report.

“However, the Philippines is more exposed to AI’s displacement effect than other East Asia and the Pacific countries due to its higher engagement in cognitive services sectors, such as contact centers in the IT-BPO sector.”

Mr. Varela said these technologies are “fast moving” and so far, they have yet to see displacement in the implementation of AI.

“At the moment, that is not yet happening. The sector is looking at it very carefully, but neither in the Philippines nor in other countries that have a large share of the economy and productivity, we see that these are at the moment being displaced.”

“What AI will do is it will create new jobs, similar to what we saw with other technological changes that created some new jobs and displaced others.”

Mr. Varela said it will be crucial to have labor market institutions that facilitate the movement of people across sectors and activities.

“It’s also having the skills to do that. So, there’s an agenda on skilling and upskilling workers… science, technology, engineering, mathematics, are also going to be increasingly important with AI.”

Mr. Mustafaoğlu said that there is a “very good opportunity” for the Philippines to benefit from the shift to AI.

“It has a young population, and things are happening a lot in the case of Asia and the East Asia region. If we can take that opportunity to actually benefit from this new development of AI and integrate AI and technologies in a way that firms increase their capability… and the economy continues to benefit and grow.”

“That will also attract FDI (foreign direct investment), because when you have those capabilities, foreign firms will also come and invest here with new technologies,” he added.

Source: Business World