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Building Resilient MSMEs for a Prosperous Future in AI Era
Updated , Published at 11:46 AM PHT, by
Dennis Cabrera
Resilient MSMEs Can Transition to a Sustainable Growth Path
Introduction: How MSMEs Can Navigate and Build Resiliency
This guide provides awareness and insights for Filipino professionals and MSMEs to thrive in the AI era, knowing that they are not alone in the entire Asia and Pacific region. The guide contextualizes Filipino MSMEs within the bigger picture of Asia and the Pacific. It is within this context that they gain expert insights and practical steps for launching a successful Philippine MSME. With access to information, finance, and a coordinated policy framework, the MSME sector is ensured a resilient and prosperous future in the AI Era.
What are MSMEs, and what value do they deliver?
Micro, Small, and Medium-sized Enterprises (MSMEs)
are the backbone of economies not only in the Philippines but in the entire Asia and the Pacific. They drive job creation, stimulate domestic demand, and foster innovation. The Asian Development Bank Insitute (ADBI) define MSMEs as "The Tiny Businesses Solving Giant Problems" [1][2].
What specific challenges do they face today?
The challenges they need to address are limited access to finance and fierce competition, often from the informal sector. The rapidly evolving technological landscape, particularly the advent of Artificial Intelligence (AI), presents both new disruptions and unprecedented opportunities.
What bigger challenges do they have to be aware of?
Digital tools offer substantial benefits like enhanced access to business information, expanded networks, new market opportunities, and reduced operating costs. Their effective utilization requires a certain level of digital competence. Studies from the Philippines and Indonesia during the COVID-19 pandemic reveal that simply using the internet or e-commerce did not always guarantee success; in fact, it could initially lead to negative outcomes or income instability.
What solutions can the government and private sector give?
Both the government and the private sector can target policy actions that focus on strengthening human capital through IT skills training, improving information and communication technology (ICT) infrastructure, and promoting not only the adoption of e-commerce and digital payment systems, but also increasing its accessibility and opportunities to all.
How can financial access be provided for MSMEs?
Digital technology offers a powerful solution through innovative financing models like digital invoice financing (e.g., India's TReDS platform) that streamline operations, reduce transaction costs, and connect MSMEs with multiple financiers at competitive rates. Innovative financial models solve issues of delayed payments and high interest costs, preventing the "lugi" path for MSMEs. Also, the growing emphasis on climate finance and green bonds is an open door for financiers in digital platforms to provide easier credit access to what MSMEs need - the "kita" path [3].
How can MSME ecosystems be optimized vs. external pressures?
While traditional strategies like new product development or research and development (R&D) are important, international certification emerges as a crucial differentiator since it builds consumer trust and enables access to formal and bigger markets. A focused and evidence-based policy approach based on research and statistics, rather than a "one-size-fits-all" solution, can create the optimal ecosystem MSMEs need - given the diverse characteristics of each by sector, size, and growth orientation.
What specific policies are needed to ensure MSME resilience?
Policies should prioritize strengthening digital capabilities, promoting financial inclusion, streamlining business registration processes, and ensuring fair competition on digital platforms. Government assistance, especially during crises, needs to be more equitably distributed, as studies in Thailand showed disproportionate benefits between capital city-based firms compared to local MSMEs. With the right policies, resilient and adaptable MSMEs are given a prosperous future in the AI Era. In countries of the Asia and the Pacific region, they will drive inclusive growth and contribute to the United Nations Sustainable Development Goals [4][5].
"The Tiny Businesses Solving Giant Problems"
How can MSMEs in the Philippines and in the entire Asia-Pacific region "solve giant problems"?
During hard times, MSMEs fill the markets vacated by giant corporations.
In tough times, they can provide the best services possible.
When they provide the best services possible, they enhance the likelihood of keeping their customers
The niche expertise the MSMEs occupy may be small, but when the economy recovers, their markets grow
An employee shed by a giant corporation can be a valuable pickup for an MSME
Since MSMEs are unburdened by large bureaucracies, they can shift to more profitable strategies with greater speed
MSMEs have the opportunity to differentiate themselves from bigger corporations by the high-quality services they provide
MSMEs can focus on sound fundamentals, stay positive, and as the economy revives, work for a prosperous business from what they can do under their control [6]
During any downturn, MSMEs can "solve giant problems" by balancing healthy competition and unitive collaboration both with each other and with giant corporations
Part 4: Learn how to promote your MSME brand, (Market thru digital platforms: LinkedIn, Facebook, EEAT from Google, Zero-click strategies, and Schema markups)
