OTOP-Philippines Enhancing the competitiveness of rural enterprises Felix Tonog Philippine Business for Social Progress Manila, Philippines Email: [email protected]International conference on The OVOP Movement and Rural Entrepreneurs in Southeast Asia Ritsumeikan Asia Pacific University Beppu-shi, Oita, Japan 15 March 2011
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OTOP Philippines: Enhancing the competitiveness of rural enterprises
Micro, small and medium enterprises (MSMEs) dominate the Philippine business sector particularly in the rural areas. The Philippine government adapted the One Town, One Product (OTOP) program as a job generation and poverty reduction strategy to promote the creation and growth MSMEs. The study reveals that after six years of implementing the program, it has generated positive results in terms of investments, sales, enterprises assisted and jobs generated. Despite certain limitations and misgivings in its implementation, the study concludes that the program was successful in upgrading rural enterprises and linking them with the mainstream market. Conversely, the entrepreneurs deem the OTOP-Philippines very useful and they are satisfied with the kind of support that their businesses are receiving through the program. Some observations and recommendations for reforms were put forward to make the program more relevant and effective.
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OTOP-Philippines Enhancing the competitiveness of rural enterprises
Felix Tonog Philippine Business for Social Progress
development and design, access to financing (loan, grants and
subsidies), business process and management support.
0
5
10
15
20
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30
Type of support from OTOP program
Series1 30 24 15 10 10 8 1
Marke
ting
Traini
ng
Desig
n
Finan
cial
Busin
ess
Mana
geme
Other
Supp 0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Very
sat isf ied
Satisf ied Average Not
Satisf ied
Unsatisf ied
Evaluation of OTOP Support
Fig. 7: Respondents’ Assessment of OTOP Program Support to MSMEs
OTOP exhibitions and trade fairs have likewise benefited the
participating enterprises through (1) sales promotion, (2)
understanding consumers’ needs, (3) improving the quality of the
products, (4) appropriate pricing, and (5) having knowledge
about the competitors’ products.
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5
10
15
20
25
30
Sales promotion
Understanding consumers'
needs
Quality improvement
Price setting Knowledge on the
competitors products
Others
Evaluation of OTOP Exhibition
Fig. 8: Evaluation of OTOP Exhibitions
Some suggestions...
• Financing should be made more accessible to MSMEs
to allow them better opportunities to improve their
products, upgrade their plant, machineries and
equipment, and to augment their working capital.
• A permanent place in Metro Manila could be
provided for OTOP products to be sold throughout
the year and not only during trade fairs or exhibits.
• Strengthen partnership with, and support from the
local government units.
Some suggestions...
• Provide common service facilities for OTOP
enterprises in the municipality;
• Enhance assistance on product development, design,
packaging, and promotional activities;
• Provide subsidies for participation in OTOP activities
and trade exhibits; and
• Fair treatment among OTOP beneficiaries.
• “Entrepreneurs should not be spoon-fed all the time
so that they will learn how to survive and innovate”
Case Studies
Case 1: Navarro Foods International
Case 2: KATAKUS, Inc.
Case 3: Carmfood Enterprises
Case 1: Navarro Foods Int’l.
Location Pampanga (Luzon)
Product Processed food (local delicacy)
- Crab paste, fermented shrimp and
fish
Market Domestic – supermarkets and
groceries nationwide
Export – through exporters and
distributors
OTOP
assistance
Product development, HACCP,
packaging and labeling, financing,
trade exhibits
Problems Declining supply of crab meat
High transport cost
Dealing with employment issues
Case 2: KATAKUS, Inc.
Location Davao City (Mindanao)
Product Handcraft – novelty items from
handmade paper and scrap
materials
Market Domestic
Export – US, UK, Japan, Hong Kong,
Kuwait, Canada, Germany
OTOP
assistance
Product development, financing,
marketing
Problems Need better tools and equipment
to improve productivity and
product quality; Limited capital;
upgrade workers’ skills
Case 3: Carmfood Enterprises
Location Cavite (Luzon)
Product Processed fish – dried, smoked,
marinated and cooked fish
Market Domestic – supermarkets and
groceries
Export – through local consolidator
and exporter
OTOP
assistance
Training on GMP/HACCP
Financing for the construction of
factory and purchase of new
equipment
Problems Limited capital, seasonal supply of
fish, high transport cost
Conclusion
Conclusion
• OTOP-Philippines provides tremendous opportunity for these enterprises to become viable and competitive in the long run.
• The government’s policy to promote and support these enterprises is really necessary and crucial to the overall economic growth and development.
• The localization of program implementation allowed the program to focus on sectors and types of business activities that are dominated by rural micro and small enterprises.
Conclusion
• The program has given women-entrepreneurs the opportunity to upgrade their business activity from mere home-based livelihoods into viable enterprises.
• The program has been quite successful in linking the rural enterprises with the market, both domestic and export.
• Rural enterprises have already realized the need to go out of their comfort zones and to embrace a bigger challenge for their businesses.
• Overall, the entrepreneurs have high praises for the program, which they deem very useful.
Recommendations for Reforms
• Equal attention must be given to improving the production
efficiencies of rural enterprises to increase their
competitiveness.
• Investment in research and development must be intensified
to develop new and better products that have high market
potential.
• Financing should be made more accessible to rural micro and
small enterprises for without it they would not be able to
scale-up production and invest in modern technology.
Recommendations for Reforms
• Private sector participation and leadership in the
implementation of the OTOP program is very important in
making sure that the program is freed from politics.
• Structural reforms are needed to make sure that the business
enabling environment is conducive to the creation and growth