Questions/Answers
Question 1
Please provide a brief summary of the initiative including the problems/challenges it addressed and the solutions that the initiative introduced (300 words maximum)
MSME Development is a key strategy for the sustainable growth and development of the micro, small and medium enterprise (MSME) sector to achieve the Government’s goal of inclusive growth and jobs generation.
With this, the Department of Trade and Industry (DTI) of the Philippines, pursues a seven-point strategic framework to help MSMEs start up, sustain, expand, and internationalize their own businesses, and thereby become smarter entrepreneurs. The 7Ms, namely, Mindset, Mastery, Mentoring, Markets, Money, Machines, and Models holistically equip MSMEs to make headway in increasingly competitive markets, while contributing to the larger cause of sustaining the entrepreneurial revolution.
In support to one of the 7Ms: Machine, the DTI has been implementing the Shared Service Facilities (SSF) Project aimed at improving MSME productivity and competitiveness by providing them with machinery, equipment, and tools under a shared system.
SSF projects are managed by cooperators for the common use of MSME beneficiaries engaged in the identified industry clusters such as processing of abaca, bamboo, cacao, kalamansi, ceramics and pottery, coconut/coco Coir, coffee, dairy, fashion accessories, furniture and furnishings, gifts, décor and housewares (GDH), handicrafts, meat (fresh and processed), metal and metalworks, milkfish, muscovado, organic fertilizer, pineapple, processed food, renewable energy, rubber, seaweeds, tuna, and veggie noodles.
The Cooperator may be an NGO, people’s organizations, cooperatives, industry/trade/business associations, LGUs, state universities/colleges.
a. What are the overall objectives of the initiative?
Please describe the overall objectives of the initiative (200 words maximum)
The SSF project is envisioned to attain one or more of the following objectives:
• Enable MSMEs to increase their productivity;
• Accelerate MSME’s competitiveness by giving them access to better technologies and more sophisticated equipment;
• Encourage the graduation of MSMEs to higher level where they could tap a better and wider market share and be integrated in the global supply chain;
• Take into account convergence where government resources are pooled and integrated;
• Address the gap and bottlenecks in the value chain of priority industry clusters
b. How does the initiative fit within the selected category?
Please describe how the initiative is linked to the criteria of the category (200 words maximum)
Coined as one of the “big push” initiatives for MSME Development, the SSF aims to increase the productivity and efficiency of MSMEs which will help achieve the country’s goal of poverty alleviation with inclusive growth. SSF, which is one of the four pillars and presumably the government’s response to SMEs’ need for technology and skills upgrading, complements available MSME assistance package in the areas of technology, product development, packaging and design.
Question 2
The initiative should improve people’s lives, notably by enhancing the contribution of public services to the implementation of the 2030 Agenda for Sustainable Development and the realization of the SDGs
a. Please explain how the initiative improves the delivery of public services (200 words maximum)
The SSF project improves delivery of public service because by design, it targets a group of enterprises as beneficiaries with a common need that is congruent to the priorities of government. As such, the need for efficient and effective use of public funds is addressed by having a broader set of beneficiaries for which the intervention will have an impact on especially to the countryside and the poor.
Question 3
The initiative must impact positively a group or groups of the population (i.e. children, women, elderly, people with disability, etc) and address a significant issue of public service delivery within the context of a given country or region.
a. Please explain how the initiative has addressed a significant issue related to the delivery of public services (200 words maximum)
Coined as one of the “big push” initiatives for MSME Development, the SSF aims to increase the productivity and efficiency of MSMEs which will help achieve the country’s goal of poverty alleviation with inclusive growth. SSF, which is one of the four pillars and presumably the government’s response to SMEs’ need for technology and skills upgrading, complements available MSME assistance package in the areas of technology, product development, packaging and design.
There is no exact equivalent of SSF in the literature. Although it may be regarded as something similar in a way to business incubators because they both provide non-financial support to SMEs, but different in the sense that incubators cater mostly to start-ups, while SSF is intended for SMEs that have passed the initial start-up stage.
b. Please explain how the initiative has impacted positively a group or groups of the population within the context of your country or region (200 words maximum)
In the same vein, the Philippines through the SSF is likewise making direct, firm-level provisions for technology upgrades of domestic SMEs. Initiated in 2013 with a budgetary allocation of PhP 700 million, the SSF project aims to improve the quality and productivity of microenterprises and SMEs by addressing the gaps and bottlenecks in the value chain of priority industry clusters through the provision of processing machines/equipment for the common use of the MSME within the said industry clusters all over the country. The goal is to assist SMEs accelerate their bid for greater competitiveness and help them graduate to the next level and move up in the global supply chain. Thru SSF, this is done not just by providing MSMEs access to equipment and machinery, but at the same time by addressing their inherent disadvantage from lack of economies of scale.
Since its inception, the SSF project has benefitted almost a hundred thousand MSMEs, both existing and potential entrepreneurs further generating hundred thousands of employment. It has become DTI’s way of bridging technology gaps of MSMEs for greater productivity, paved the way for process and product improvements and has helped conquer markets.
Question 4
The initiative must present an innovative idea, a distinctively new approach, or a unique policy or approach implemented in order to realize the SDGs in the context of a given country or region.
a. Please explain in which way the initiative is innovative in the context of your country or region (200 words maximum)
The SSF Project provides technology, machinery, equipment, tools, systems, skills, and knowledge under a shared system for MSMEs to improve the quantity and quality of their products/ services further increasing their competitiveness in both domestic and international market. Aside from the typical facility intended for the processing activities aligned with specific industries, establishments of business resource center and fabrication laboratories have also been done.
Department of Budget and Management and Department of Trade and Industry provided for the establishment of business resource centers in strategic locations in the regions to serve as hubs to capacitate MSMEs towards excellence. These BRCS provide business counselling and business development services and other forms of administrative services that will assist MSME beneficiaries, including those of SSF, in pursuing their business activities.
The establishment of Fabrication Laboratory has also been a priority of the regions implementing the SSF Project. It is a digital fabrication workshop where entrepreneurs and individuals have the opportunity to develop, innovate and produce prototype/custom-made products that are not accessible by conventional industrial scale technologies. It is generally equipped with an array of flexible computer controlled tools that cover several different length scales and various materials aimed at making "almost anything".
Question 4b
b. Please describe if the innovation is original or if it is an adaptation from other contexts (If it is known)? (200 words maximum)
Common service center is no longer a strange concept in today’s time. Establishment of these facilities are done to serve the local communities under a shared system. With an SSF project established in an area, MSMEs and potential beneficiaries will be given more access to better technologies thereby increasing their productivity and enhance their competitiveness. Despite the high cost necessary for the procurement of machineries and equipment, the government acknowledges the importance of the project for MSMEs. One of the salient features of the project is that once the Cooperator in two years of using the SSF is deemed successful through increase in beneficiaries and sales, the ownership of the facility will be given directly to them.
Question 4c
c. What resources (i.e. financial, human , material or other resources, etc) were used to implement the initiative? (200 words maximum)
To support our objective of technological advancement for MSMEs, DTI has been implementing the Shared Service Facilities (SSF) Project aimed at improving MSME productivity and competitiveness by providing them with machinery, equipment, and tools under a shared system through the following:
1. The regional and provincial offices of DTI have been the implementing arm of DTI for the project. Partnered with a qualified cooperator who may be a cooperative, NGO, SUCs, LGUs and people organization, these offices ensure that each project is operationalized and utilized for the benefit of its target beneficiaries
2. Since its inception in 2013, the project has been allocated with an estimate of Two Billion pesos resulting to thousands of established SSF projects to include among others their insurance policy and maintenance and other operating expenses. This 2018, an additional One Billion pesos has been allocated to the project to establish more facilities and improve the existing projects.
3. The private sector together with other government agencies has been the DTI’s partner in project identification and implementation of the SSF in the regions and provinces.
Question 5
The initiative should be adaptable to other contexts (e.g. other cities, countries or regions). There may already be evidence that it has inspired similar innovations in other public-sector institutions within a given country, region or at the global level.
a. Has the initiative been transferred to other contexts?
Yes
The collaboration among various organizations and stakeholders paved a way in making the SSF project felt especially in the countryside. The SSF is adaptable to other contexts because it is anchored on the universal principle of cooperation, as it seeks to foster convergence among competitors by way of its delivery of public service. This project complements the existing programs of the Philippines for MSMEs in areas of technological advancement including among others, the Small Enterprise Technology Upgrading Program (SET-UP) of the Department of Science and Technology and Farm Mechanization Program of the Department of Agriculture.
From 2,227 SSFs established in the span of four years, it has already benefitted almost two hundred thousand beneficiaries, both MSMEs and potential entrepreneurs further generating employment to the poor.
Question 6
The initiative should be able to be sustained over a significant period of time.
a. Please describe whether and how the initiative is sustainable (covering the social, economic and environmental aspects) (300 words maximum)
While the implementation of the SSF Project starts from procurement, delivery and utilization of machineries and equipment of target beneficiaries, provision of Maintenance and Other Operating Expenses (MOOE), and capacity building trainings complements the assistance.
Further, commitment on the part of the Cooperator plays a vital role in providing counterpart funds and facilities such as physical space and location of the project site, personnel, funds for supplies and maintenance and other forms of support on consideration for the project. Commitment of both parties to prepare Business Manual of Operation which will include the schedule of fees to be collected from the user of the facilities which shall take into account the sustainability of the operations of the facility in terms of cost recovery as well as building of funds devoted solely for the repair and maintenance of the facility including acquisition and renewal of an all-risk insurance policy.
As seen to be one of the effective channels in the development and promotion of MSMEs, the SSF project has been allocated with 1 Billion pesos budget for 2018 to further augment the number of facilities in the region thereby making its impact and presence felt in the countryside.
b. Please describe whether and how the initiative is sustainable in terms of durability in time (300 words maximum)
With the increasing number of demand for the initiative, the SSF project has come a long way in providing access to better technology for MSMEs and individual entrepreneurs further generating employment to the poor.
The eligible cooperators make available provision to house the equipment, provide working capital and counterpart support such as but not limited to power utilities, ancillary facilities and personnel required to manage, operate and maintain the SSF.
Jointly with the DTI, prepare and adopt a Business Manual of Operations, which shall include, among others.
• Organizational/ Functional Structure for the facility
• Procedure for accessing the services
• Business plan
• Schedule of fees which balances the need for sustainability and affordability
• Promotion/ Marketing plan to promote use of the facility
• Reportorial procedures, etc.
The Cooperator likewise operate, perform, repair and maintain, and ensure safekeeping of the machines/ equipment in the facility including responsible property custodianship and turn over the above to DTI in the event that compliance to the stipulations in the Business Manual of Operations can no longer be achieved; And periodically submit to the Provincial Office reports of physical accomplishments and financial records and all other monitoring and evaluation instruments.
The additional budget allocation for the SSF makes it more sustainable covering among others, the machineries and equipment insurance and the maintaining and other operating expenses.
Question 7
The initiative should have gone through a formal evaluation, showing some evidence of impact on improving people’s lives.
a. Has the initiative been formally evaluated?
Yes
If yes, please describe how the initiative was evaluated? (200 words maximum)
The Philippine Department of Budget and Management (DBM) has collaborated with the Philippine Institute for Development Studies (PIDS) to review existing government programs. One of which is the Shared Service Facilities (SSF) Project of the Department of Trade and Industry and to better understand and appreciate the value of the SSF initiative, DBM has specified the following objectives:
i. Assess the impact of the SSF project on the productivity and competitiveness of beneficiary Micro, Small and Medium Enterprises (MSMEs) and on job generation of the MSME sector;
ii. Assess the effectiveness of the SSF project in addressing the bottlenecks and gaps of the MSMEs;
iii. Describe and review the implementation process and procedures of the SSF project;
iv. Determine the number of tools, machinery and equipment delivered and the number of MSMEs who have access to the facility;
v. Generate recommendations on implementation of SSF project and for the development of the MSME sector
b. Please describe the outcome of the evaluation of the impact of the initiative (200 words maximum)
The evaluation attempts to assess one of the pillars of the "Big Push" for MSME development of the Department of Trade and Industry: the Shared Service Facility (SSF). Implemented in 2013, the SSF seeks to address the gaps and bottlenecks in the value chain of priority industry clusters through provision of processing and/or manufacturing machinery, equipment, tools and related accessories for the common use of the MSMEs. The project costs very little but it has had notable and substantial impact on jobs and productivity. This indicated by the very low estimates of the implicit subsidy per worker, and generally favorable measure of the benefit-cost ratio of projects undertaken under the project. In addition, the FGDs, on the whole brought out encouraging feedback from all concerned.
The SSF projects which are typically given over for use by cooperatives, including farmers, small-scale food processors, or other entities engaged in light industry, improved their productivity and added value to their output, thereby helping them increase their income or tap new markets.
c. Please describe the indicators that were used (200 words maximum)
The assessment used case studies of selected three (3) project sites where focused group discussions (FGDs) were held and preliminary data on output, performance and costs were obtained. Overall data from DTI on SSF were also utilized using the following indicators: number of SSFs established, fund utilization, subsidy per worker, MSMEs assisted and jobs generated.
Continuous monitoring and evaluation on the implementation of the SSF Project has also been done to properly identify the strength and weaknesses of the project. Specifically, the Bureau of Small and Medium Enterprise Development as the Project Management Unit conducts their assessment of the implementation of the SSF in the region and further provide inputs and recommendations for the improvement of the project. The Department Internal Audit Service (IAS) also conducts their independent audit to assess the management and operationalization of the SSF projects.
Database on established SSF projects and its bottomline accomplishments including MSMEs and potential beneficiaries are readily available.
Question 8
The initiative must demonstrate that it has engaged various actors such as from other institutions, civil society, or the private sector, when possible.
a. The 2030 Development Agenda puts emphasis on collaboration, engagement, coordination, partnerships, and inclusion. Please describe what stakeholders were engaged in designing, implementing and evaluating the initiative. Please also highlight their roles and contributions (300 words maximum)
The Shared Service Project is bannered by strong partnership and collaboration among stakeholders. Under this initiative, the qualified cooperator plays a vital role in the operationalization of the project since they will identify and provide the sustainable facilities with which to house the machinery and equipment.
Recognizing the importance of MSMEs as the backbone of Philippine economy and the SSF project which is making its presence felt especially in the countryside, various organizations, both public and private have shown their support and assistance through the following:
The President of the Philippines who is very vocal on his support to MSMEs especially during the recently held ASEAN hostings;
Senate of the Philippines for budget augmentation for the establishment of SSFs;
Office of Governor and Congressional District for additional funding for the maintenance and operating expenses;
National Government Agencies such as Department of Agriculture, Department of Science and Technology, Department of Labor and Employment through provision of additional equipment and capacity trainings further institutionalizing partnerships and collaboration and efficient use of government resources;
Non-government organizations for technical capacity trainings and provision of personnel to man the facility;
State Universities and Colleges for the partnership as one of the primary cooperators in providing access to better technology for the students and the youth;
Local Government Unit (LGU) for providing budget for skills training, product and market development; and foreign assistance from JICA in areas of product development, among others.
Question 9
a. Please describe the key lessons learned, and any view you have on how to further improve the initiative (200 words maximum)
While the SSF Project has served its purpose of increased productivity and competitiveness of the MSME sector further generating employment to the poor, its implementation on the local level still needs to be improved specifically in the following aspect:
1. Procurement and availability of locally sourced machines and equipment
2. Ratification of governing laws to further facilitate procurement of while maintaining adherence to global standards
3. National and international collaboration and synergy necessary to expand the market reach of target beneficiaries