BMBE & OTOP: The right mix for business start-up

For many years now, job fairs are held with so much flair and publicity. As has always been customary, in most of them, some politicians are taking a ride. In most of these fairs, their names and pictures dominate the information dissemination campaigns. Whether the fairs ended up with good and substantial hires or not, they don’t really care.    Frankly, what they are up to is visibility for reelection purposes. Selfishly, that is something they make sure is done with certainty. Thus, it is really refreshing when a true public servant (career executive) will readily inform the public of unadulterated results of the fairs.

Truth to tell, this refreshing development came in the mold of Regional Director Gloria Tango. Lately, she truthfully said “that work opportunities offered during job fairs could not suffice the unemployment rate of the country, following the law of supply and demand”. Moreover, she said that “based on the labor force survey, the unemployment rate as of January 2012 reached to 7.2% nationwide while Region 7 presented 7.5% (which is higher than the national rate)”. She further added that “50% of the unemployment rate belongs to ages 15-24 years old, considered to be youth unemployment, in which inexperience, less education, job and skill mismatch are some of the contributing factors”.

Furthermore, apparently addressing our learning institutions, she added that the “industry and the academe should work hand in hand to avoid job and skills mismatch since it was found out that the skills of majority of the products of universities do not match the demand of the industry, resulting to underemployment and unemployment”.

With these developments, Director Tango concluded “that what the country needs nowadays is entrepreneurship that could result to the creation of more job opportunities to those unemployed”.   Honestly, this is an observation that we can’t help but agree. 

Coming from a public servant that is supposedly tasked to simply promote employment per se, this call is, indeed, appropriate and timely. Incidentally, we are not wanting in laws and programs that are designed or passed to support entrepreneurial undertakings. To recall, the government through the Department of Trade and Industry (DTI) initiated the One Town One Product (OTOP) program.   Unknown to most of us, this project is patterned after Japan’s Oita Prefecture’s very successful One Village One Product (OVOP) movement. Undeniably, OVOP was the key to Japan’s Oita Prefecture’s rural revitalization. In fact, it is this initiative that made the “think global, act local” a household slogan. Until 2002, Japan’s OVOP products comprised of 338 local specialties, 148 facilities, 133 cultural items, 111 revitalized regions, and 80 items related to environment, coming to 810 products in total.

Notably, like Japan, through this undertaking, we may not just be able to promote our products but develop as well a town that could be like Yufuin (in the Oita Prefecture of Japan-where OVOP originated). A town that plays host to more than 3.8 million visitors a year despite having only less than ten thousand population.

However, like Japan’s Oita Prefecture’s One Village One Product (OVOP) movement, the ultimate objective is rural revitalization. Thus, a model is imperative and necessary. There is an apparent need to establish a trail from conceptualization to realization. Portraying the successes of some accomplished entrepreneurs might help but will not certainly serve as the model for the rural area’s aspiring ones. Needless to say, some are even owned by millionaires who are just recipients of these moneymaking inheritances. Entrepreneurs who never tried starting from scratch.    Certainly, however, DTI can play a major role (as they have always been) in developing them.

The key is making use of the facilities that we already have. Facilities could be in the form financial support or enabling laws that may encourage would-be entrepreneurs in harnessing available resources. Or, could be in the kind of incentives that can push them to put to good use their inborn talents or developed skills in actualizing wild ideas and build organizations to help ensure commercial viability.

Raw materials and labor, prerequisites of OTOP, are abundant in the rural areas. Therefore, the ingredients to this program’s success are just waiting to be tapped. Like any undertaking, however, financial support is crucial and necessary. Whether this OTOP has enough development funds, we aren’t privy to that. Certainly, however, a law was passed in 2002 that might be able to help ensure success of OTOP, the “Barangay Micro Business Enterprises (BMBEs) Act of 2002” or RA No. 9178.

Unknown to many, this act’s purpose is so noble. This is supposedly a better version of the ineffective “Kalakalan 20”. It is passed to hasten the country’s economic development by encouraging the establishment and growth of BMBEs. As the barangays are considered the source of entrepreneurial talents, it could have been done by integrating those in the informal sector or in the underground economy with the mainstream.   By granting incentives and benefits to these BMBEs, they could have sprouted all over the country and should have generated employment and alleviated poverty.

Incentives and benefits are too tempting to ignore. While BMBEs shall be exempt from income taxes, LGUs are likewise encouraged to either reduce or exempt these enterprises from local taxes or fees. On top of these, BMBEs are exempted from the coverage of the minimum wage law. 

Credit facilities were made available too. 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) are mandated to set up a special credit window that will service the financing needs of BMBEs registered under this Act consistent with the Bangko Sentral ng Pilipinas (BSP) policies, rules and regulations. The Government Service Insurance System (GSIS) and Social Security System (SSS) are likewise mandated to set up a special credit window that will serve the financing needs of their respective members who wish to establish a BMBE.

To minimize the risks in lending to the BMBEs, the SBGFC and the Quedan and Rural Credit Guarantee Corporation (QUEDANCOR) under the Department of Agriculture, in case of agribusiness activities, were also authorized to set up a special guarantee window to provide the necessary credit guarantee to BMBEs under their respective guarantee programs.

To make sure this law succeeds, a BMBE Development Fund was set up with an endowment of Three Hundred Million Pesos (P300,000,000.00) from the PAGCOR. The SMED council is administering this fund. Supposedly, DTI, DOST, UP ISSI, CDA, TESDA, and TLRC may avail of the said Fund for technology transfer, production and management training and marketing assistance to BMBEs.

Since both programs (OTOP & BMBE) are under DTI’s guardianship, then complementing efforts can be easily initiated. Dangling the OTOP program before would-be BMBE registrants could be a good start. Simply put, OTOP-for product development and BMBE-for incentives and financial assistance. Potentially, this inseparable pair of honest to goodness rural revitalization programs can liberate the majority from this age-old oppression called poverty. These could be the best duo for success, a perfect combination.

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