About 99.6% of registered enterprises in the country are classified as small and medium enterprises (SMEs). SMEs account for 53% of total employment generated and represent around 60% of total exporting firms all over the country (NSO). Recognizing the critical role of SMEs in maintaining economic stability, President Gloria Macapagal Arroyo has refocused economic policies to support and sustain in the growth of the manufacturing sector through the development of SMEs. Efforts are now being undertaken to expand domestic markets and assist SMEs in penetrating non-traditional markets for sustained growth and competitiveness.
However, to be able to do this, SMEs need substantial support in terms of:
a. New technologies;
b. Technical manpower training;
c. Access to capital;
d. Access to markets;
e. Product standards and testing facilities;
f. Appropriate packaging and product labeling;
g. Sustainable raw material supply;
h. Access to information;
i. Better/more efficient transport facilities.
To help provide some if not all of these needs, the Department of Science and Technology (DOST) launched the Small Enterprise Technology Upgrading Program (SET-UP) in response to the President's call for more focused programs fo assistance for SME's. SET-UP is a nationwide strategy to encourage and assist SME's to adopt technology innovations to improve their operations and thus boost their productivity and competitiveness. The program enables firms to address their technical problems through technology transfer and technology interventions to improve productivity through better product quality, human resources development, cost minimization and waste management, and other operation related activities.
SET-UP hopes to assist SMEs improve their productivity and competitiveness through the ff:
- Infusion of new/advanced technologies to improve operations of SMEs;
- Manpower training, technical assistance and consultancy services;
- Design of functional packages and labels;
- Assistance in the establishment of product standards including testing;
- Database management system; and
- Provision of limited funds for technology acquisition.
Improve viability of small and medium enterprises (SMEs) and enhance their competitiveness through infusion of technologies, technical assistance and manpower development.
- Improve productivity of participating enterprises;
- Higher quality products meeting world standards;
- Increase employment opportunities in rural areas; and
- Improve socio-economic conditions in rural areas.
Industry Sectors Covered
- >Food Processing
- >Fashion Accessories, Gift, Housewares, Decors, Handicrafts, Natural Fibers and Dyes
- >Marine and Aquatic Resources
- >Metals and Engineering
Management Information Systems
A management information system (MIS) for the Program will be established as a component of existing system in the region.
Manual of Procedures
A Manual of Procedures will be prepared for the Program. It will include the policies, guidelines and administrative procedures in implementing the Program.
Monitoring and Evaluation
To determine the impact of the program at the firm level and at the industry level it will be necessary to monitor and evaluate the performance of the program. A system of monitoring and impact evaluation will be established. It will be necessary, therefore to gather baseline information/data in every firm and industry where the interventions will be implemented. For on-going projects that will be placed under the coverage of SET-UP, accurate information on the status of the firm and industry sector in the locality/region immediately prior to the implementation of the interventions will be gathered.
DOST Strategies to Assist SMEs
A. Provision of technology
Technology needs assessment and sourcing of technology – Participating firms will be assisted in assessing their technology needs and appropriate technologies recommended for adoption. Once identified, the source(s) of the technology will be determined and negotiations for the acquisition and installation of the technology will be done.
Seed fund for technology acquisition – Most SMEs have no capital or have limited access to financing from commercial financial institutions to enable them to acquire the needed technologies. Although limited, DOST will provide one-time seed fund to participating SMEs to facilitate technology acquisition. This could hopefully enable them to access formal credit sources for future technology needs and expand their production activities.
Manpower training – Technical training for manpower on key production issues such as Hazard Analysis and Critical Control Points (HACCP) particularly for food processing, Good Manufacturing Practices (GMP), Quality and Environment Management Systems (QMS/EMS) as well as training on specific technical skills such as machining for furniture, handloom weaving, sea weed culture and tissue culture production among others will also be provided.
Consultancy and Technical Advisory Services – To ensure successful adoption of technologies, DOST through its pool of science and technology experts from its various agencies and members of the R & D network including academic institutions, will provide continuing technical and productivity consultancy services to participating firms.
B. Product Standards and Testing
Product Standards – To be able to compete globally and locally, Philippine made products must meet certain standards. Unfortunately, there are still no local standards for a large number of Philippine products. DOST is currently working with the Bureau of Product Standards (BPS) of the Department of Trade and Industry (DTI) in cooperation with the private sector, the academe, other government agencies and non-government organizations in establishing standards for some products.
Product testing and enhancement of testing laboratories – To determine if products conform to standards these must be tested in accredited laboratories. DOST, established a network of regional testing laboratories in cooperation with the State Colleges and Universities and private testing centers. However, these facilities need to be upgraded to be able to provide as wide a range of testing service needed as well as improve testing efficiencies, consistency of results and reduce turn around time for tests to be completed.
C. Packaging and Labeling
Products must be packaged well to increase shelf life especially for food products, improve handling and protection and ultimately improve their marketability. In addition the export market requires appropriate labeling of food products in response to the demand of the highly environment and health conscious consumers. DOST established the Packaging R & D Center in its Bicutan Compound to assist SMEs in developing functional designs for packages, identifying and developing suitable or alternative packaging materials especially from indigenous sources. However, there is a need to establish three or four similar Centers in strategic areas in the country to better serve the needs of more SMEs especially those in the regions.
D. Database Management and Information System
Several databases vital to SMEs are now being prepared. These include a listing of available technologies at the national and regional level, listing of S & T experts, and a listing of testing laboratories including testing services provided as well as costs. These databases will be accessible through the SET-UP web page that is currently being developed. This will be linked with the DOST web site to enable better access. Agreements with the Development Bank of the Philippines (DBP), DTI and other relevant databases have been made/are being made to allow the posting of participating firms in these databases.
E. Linkaging and Networking
Raw material sourcing – While researches on raw material characteristics and processing properties are being done by DOST and its member agencies, actual production is not directly within the mandate of the research community. DA and DENR in cooperation with the private sector are responsible for providing sustainable supply of raw materials. A viable SME upgrading program however, requires that backward linkages with suppliers of raw materials be established. Policies attendant to the harvesting and movement of these raw materials are also important factors to consider in ensuring a sustainable supply of the needed raw materials. Thus, the Program has taken initiatives to study policies affecting raw material supply as well as measures to establish linkages with appropriate government and non-government agencies.
Marketing – This is not within the mandate of DOST. However, the success of the Program largely depends on how well the participating firms are able to market and profit from their products. Thus, the Program will link with DTI and the private sector particularly the Philippine Chamber of Commerce and Industry and other industry associations to facilitate the marketing of the products of SMEs.
Technical/Entrepreneurial training – Linkages with TESDA, UP-ISSI and other relevant institutions and agencies will also be established to provide the training needs of participating firms that are not covered by the program.
Financing – DOST will likewise forge linkages with both government and private financial institutions to provide participating companies access to a wide range of financing packages for technology acquisition, production expansion and marketing.
Equipment design and fabrication – Considering the high cost of most equipment, DOST through the Metals Industry Research and Development Center (MIRDC) will assist in the design and fabrication of equipment. Whenever possible, private fabricators will be trained and accredited by MIRDC to address the equipment fabrication requirement of SMEs.
Inter-Agency Design and Engineering Assessment (IDEA) Team – The IDEA Team was created as a support group for the implementation of SET-UP. Eight (8) DOST agencies namely PCIERD, ASTI, FNRI, FPRDI, ITDI, MIRDC, PNRI, and PTRI compose the Team with the Undersecretary for R&D spearheading and the Undersecretary for Regional Operations as co-chair. The IDEA Team assists in the development, assessment and standardization of the efficiency and performance indicators of various equipment, tools, jigs and fixtures attached to or associated with some if not all of the technologies developed by DOST agencies for possible adoption of SMEs at the regional level.