Republic of the Philippines

Department of Education
REGION I
SCHOOLS DIVISION OF CANDON CITY
Candon City, Ilocos Sur

APPLIED ECONOMICS
Quarter 2 – Week 3 - Module 3
Refined by: Aniceto G. Bacoteng
Lesson Micro, Small, and Medium
3 Enterprises
I. Objective:
1. Understand the importance of micro, small, and medium enterprises in the
economy.

II. Guide Questions:

1. How does a business classify as micro, small, or medium enterprise?
2. What is the importance of micro, small, and medium enterprises in the Philippine
economy?

III. Discussion
Micro, Small and Medium Enterprises (MSMEs)

According to the Magna Carta for MSMEs, micro, small, and medium enterprises are
classified based on the worth of the business assets. The microenterprises have a total asset
up to ₱3,000,000. The total assets for small enterprises should range from ₱3,000,001 –
₱15,000,000. For medium enterprises, the total assets are from ₱15,000,0001–₱100,000,000.
MSMEs help to promote a competitive economic activity, provide employment and it can
reduce poverty in the country.

Number of MSMEs in the Philippines

The 2018 List of Establishments of the Philippine Statistics Authority (PSA) recorded
a total of 1,003,111 business enterprises operating in the country. Of these, 998,342 (99.52%)
are MSMEs and 4,769 (0.48%) are large enterprises. Micro enterprises constitute 88.45%
(887,272) of total MSME establishments, followed by small enterprises at 10.58% (106,175)
and medium enterprises at 0.49% (4,895). The majority of the MSMEs can be found in the
National Capital Region (NCR) with 203,312 (20.36%) business establishments.

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The top five (5) industry sectors according to the number of MSMEs in 2018:
1. Wholesale and Retail Trade with 461,765 establishments
2. Accommodation and Food Service Activities with 144,535 establishments
3. Manufacturing with 116,335 establishments;
4. Other Service Activities with 66,162 establishments; and
5. Financial and Insurance Activities with 46,033 establishments.

Contribution of MSMEs on the Philippine Economy

1. Employment Opportunities

These MSMEs generated a total of 5,714,262 jobs or 63.19% of the country’s total
employment in 2018. The micro-enterprises produced the biggest share (28.86%) closely
followed by small enterprises (27.04%) while medium enterprises were far behind at
7.29%. Meanwhile, large enterprises generated a total of 3,328,801 jobs or 36.81% of the
country’s overall employment.

2. Exports Contribution of MSMEs

MSMEs account for 25% of the country’s total export revenue. It is also estimated
that 60% of all exporters in the country belong to the MSME category. MSMEs can
contribute to exports through a subcontracting arrangement with large firms, or as
suppliers to exporting companies.

Government Programs to Support MSMEs

1. Barangay Micro Business Enterprise (BMBE) Act or R.A. 9178

It encourages the formation and growth of BMBEs (or micro-enterprises) by

granting them incentives and other benefits (i.e., exemption from income tax, exemption
from minimum wage). As defined in the article, Barangay Micro Business Enterprise
refers to any business entity or enterprise engaged in the production, processing, or
manufacturing of products or commodities, including agro-processing, trading, and
services, whose total assets including those arising from loans but exclusive of the land on
which the particular business entity's office, plant, and equipment are situated, shall not
be more than Three Million Pesos (P3,000,000.00). It includes also the enterprise
engaged in services, excluding those rendered by anyone, who is duly licensed by the
government after having passed a government licensure exam, in connection with the
exercise of one’s profession (e.g., accountant, lawyer, doctor, etc.)

According to Section 7-8 of the article: “All BMBEs shall be exempt from tax for
income arising from the operations of the enterprise”. “The BMBEs shall be exempt from
the coverage of the Minimum Wage Law, provided, that all employees covered under this
Act shall be entitled to the same benefits given to any regular employee such as social
security and healthcare benefits.”

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 2. Go Negosyo Act or R.A. 10644

The law seeks to promote “job generation and inclusive growth through the
development of MSMEs” in the country. It promotes “ease of doing business and
facilitates access to services for MSMEs within its jurisdiction” by establishing Negosyo
Centers in all provinces, cities, and municipalities to promote. Business advisory services
through technology transfer, production and management training, and marketing
assistance for MSMEs. Business registration assistance through the Philippine Business
Registry Databank under the Department of Trade and Industry (DTI). Go Negosyo Act
will provide financial assistance for the development and promotion of MSMEs in
priority sectors of the economy to be sourced from the MSME Development Fund and
BMBE Fund.

IV. EXAMPLES
LIST OF MICRO BUSINESS IDEAS IN THE PHILIPPINES
Source: https://businesstips.ph/list-of-micro-business-ideas-in-the-philippines/

Trading, merchandising, and retail Agriculture and aquatics

1. Sari-sari store
2. Mini grocery store
3. RTW (ready to wear) and apparel store
4. Cellphone loading business
5. School supplies store
Food business
6. Canteen or carinderia business
7. Meat shop business
8. Catering business
9. Fruit stand business
10. Vegetable stand
11. Tocino and Longganisa making
12. Salted duck egg production
13. Local delicacies business
14. Lechon and roasted chicken business
15. Barbecue stand
16. Buko juice, gulaman and sago business
17. Balut, taho, fishball, Kwek-kwek,
chicharon, and other street foods business
18. Chocolate, cakes, candy, and pastries
making
19. Sorbetes or ice cream making business
20. Rice farming
21. Copra production
22. Coconut winemaking
23. Poultry and animal (pigs, chickens, goat,
etc.) raising business
24. Prawn farming
25. Tilapia, milkfish, and other freshwater
fish culture
26. Mud crab (alimango) culture
27. Daing (dried fish) business
28. White cheese from carabao’s milk
production
Online or web-based businesses
29. Blogging and publishing
30. Website design and development services
31. Online marketing services (SEO, search
engine marketing, social media marketing)
32. Affiliate marketing
33. Content and article writing services
34. Web host reselling
35. Website flipping
36. Virtual assistance
37. Business process outsourcing
38. Web application development

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Graphic and design Travel and transportation
39. Desktop publishing 70. Van, taxi, or car for hire
40. T-shirt printing 71. Boat for hire
41. Photography and photo editing 72. Travel agency or Ticketing office
42. Videography 73. Tour and adventure guide
43. Video animation 74. Jeepney and multi-cab operation

Arts and crafts Party and events

44. Furniture making 75. Wedding planning
45. Jewelry and accessories business 76. Event organizing business
46. Gift basket making 77. Photobooth business
47. Scented candle making 78. Mobile bar business
48. Flower shop or flower arrangement 79. Balloon and part needs business
business
49. Souvenir items and corporate giveaways Pets care
50. Tikog products (hat, bag, mat, etc.) 80. Dog daycare business
81. Pet grooming business
Licensed Professional services 82. Pet supplies store
51. Accounting, auditing, and bookkeeping
services Education
52. Business consulting and coaching 83. Personal tutorial services
53. Legal and notarial services 84. Training center
54. Real estate brokerage 85. Daycare center
55. Dental clinic 86. Pre-elementary school
56. Medical clinic 87. Elementary school
57. Architectural firm 88. Secondary school
58. Engineering firm Green business
89. Recycling business
Money and finance 90. Organic farming
59. Lending business 91. Landscaping business
60. Pawnshop 92. House cleaning services
61. Money remittance business 93. Lawn care and gardening services
62. Money changer business
Other businesses
Franchised business 94. Security agency
63. Food cart and food kiosks business 95. Janitorial services
64. Bakeshop 96. Recruitment agency
65. Perfume and personal care business 97. Boarding house and room for rent
66. Water refilling station 98. Photocopying and printing
67. Pizza shop 99. Herbal and bath soap making
68. Drugstore 100. Barbershop and beauty salon
69. Laundry shop 101. Internet café business

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V. GENERALIZATION
Micro, small, and medium enterprises (MSMEs) have a very important role in
developing the Philippine economy. They help reduce poverty by creating jobs for the
country’s growing labor force. They stimulate economic development in rural and far-flung
areas. Despite policies that aim to provide an enabling environment for MSME development,
the sector still faces various constraints that prevent it from realizing its full growth and
potential.

VI. EXERCISES
A. Directions: Read each statement carefully. Write T if the statement is correct. Otherwise,
write F.

1. A small enterprise has an asset of less than ₱3,000,000.

2. The total assets of the business to be considered as micro-enterprise is at least
₱5,000,000.
3. A medium enterprise has a total asset of more than ₱100,000,000.
4. Go Negosyo Act promotes ease of doing business and facilitate access to services
for MSMEs through the Negosyo Centers.
5. Barangay Micro Business Enterprise Act encourages the formation and growth of
micro enterprises by granting incentives and other benefits.

B. Directions: Name five (5) MSMEs operating in your barangay or city.

1.
2.
3.
4.
5.

Performance Task No. 2

Directions: From the list above, choose one (1) MSMEs and identify its business
environment and competitiveness using the SWOT Analysis or the Porter’s Five
Forces Model. Use a long bond paper for your answer.

Rubrics for the Performance Task No. 2:

10 points 8 points 6 points 4 points

Applied appropriate Applied certain Applied certain Applied certain
model with clarity models but was models but no clear models but no
and conciseness. unable to clearly explanation on its explanation at all.
explain some of its components.
components.

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