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MSMEs urged to innovate, protect IP in digital globalization pivot

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Government officials at the recent Intellectual Property (IP) Grand Forum called on MSMEs to raise their innovative capabilities and protect all IP-able assets in the process, especially as they expand to e-commerce and into its global competitive environment for recovery. 

Industry Development and Trade Policy Group Assistant Secretary Allan B. Gepty said that as more are on-boarding e-commerce to adapt and survive, the competition for MSMEs has been pushed to the global stage. And with big competitors online, MSMEs have “to compete smarter and in a different manner.”

“In this context, innovation is key. And when you talk about innovation, you cannot afford not to talk about IP,” Gepty said. 

IP, Gepty added, is “a great equalizer” that allows fair competition for small businesses.

“The rules are uniform whether you are big or small,” he said, explaining how IP as an asset has value that is translatable to its equity or market value, making them sellable, licensable for added revenue, and used as loan collateral or capital generation. 

For Competitiveness and Innovation Group Assistant Secretary Napoleon K. Juanillo Jr., government must be more aggressive in compelling MSMEs to strategize with their IPs, given how this aspect has been largely overlooked by micro-businesses. 

“The knowledge-based society is where we are now, it’s a world of intangible assets and brains. The real empires now are the empires of the minds,” Juanillo said. 

“[T]alking to MSMEs, giving them this particular mindset and value orientation  that their brand is an asset and should be protected all the time given this particular ecosystem, I think would just make for a more vibrant and tactical and strategic core for MSMEs,” he added. 

A silver lining for MSMEs

PhilExport President Sergio Ortiz-Luis Jr. called technology and IP as some “bright linings” to the current plight of MSMEs. 

“Technology is something that can be used by MSMEs. The IP system can put value to their assets,” Ortiz said, adding that some companies’ IPs are far more valuable than their physical assets. 

However, Ortiz said government must do more, noting that while many laws have been enacted, various efforts launched, the Philippines has yet to see its MSME stand as a backbone to the economy, “simply because over the years we have neglected and never taken seriously this thing about empowering MSMEs.” 

ADB’s recent study titled Asia Small and Medium-Sized Enterprise Monitor 2020 shows that Philippine banks only lent $11.6 billion to MSMEs in 2019, logged the smallest MSME bank loan total among the Association of Southeast Asian Nations-5 for the year. 

Regional Operations Group Undersecretary Blesila A. Lantayona joined the call for greater support for MSMEs, highlighting greater collaborations and capacity building especially as the times demand for entrepreneur upskilling, retooling and repurposing.

“Our MSMEs should really need to be more resilient [and understand] how to adapt and pivot according to the needs of the market,” Lantayona said. 

“Really, government must help enhance this capacity of our MSME so it is actually a collaboration with entrepreneurs [and] government,” she added. 

Converging support for MSME innovation

Fortunately for MSMEs, the government provides numerous support to scale up their capacities in ways tailored for their needs and relevant to current and emerging trends. 

Lantayona touted how the DTI’s 1,179 Negosyo Centers in cities and municipalities serve as one-stop shop for MSMEs. Here, entrepreneurs can enhance their products and capacities, access loans, and even have their IP registration applications facilitated.

For needs specific to developing entrepreneurial skills, Lantayona touted the DTI’s Kapatid Mentor Me program and the Youth Entrepreneurship Program as proving indispensable in producing successful entrepreneurs over the years. 

Meanwhile, for innovation-specific needs, MSMEs must tap the DTI’s Regional Inclusive Innovation Centers (RIIC).

Piloted in four regions across the Philippines, RIICs are designed to make the innovation ecosystem of the country more connected by strengthening the linkages between academe, industry and government. Today, RIICs are helping MSMEs in the areas of technology upgrading and research and development, among others.

Juanillo said that with the RIIC’s help in scaling up small business innovation capacities, government hopes to see MSMEs “make a mark in the global market and in the global customers’ amid the current wave of digital commerce.

Cornerstone in e-commerce roadmap

At the forum, E-commerce Lead Assistant Secretary Mary Jean T. Pacheco emphasized that achieving an IP-friendly digital environment was “one of the key pillars” of the Philippines E-Commerce 2022 Roadmap.

According to the World Bank’s Philippine Digital Economy Report 2020, “strongly enforced IP rights encourage firm innovation and increase consumer confidence in the digital economy,” guaranteeing firms that they can reap the benefits of their creations and innovations and provide a level playing field for businesses of all sizes.

“For MSMEs to avail all of this potential in e-commerce, we need to protect our brands out there,” Pacheco added, saying the DTI is in close tandem with IPOPHL in encouraging MSME e-commerce merchants to register their IPs.

As the Philippines moves to create a safer digital environment, Congress is currently deliberating the Internet Transactions Bill, which will hold online shopping platforms “solidary liable” with merchants for the selling of products that do not comply with IP and consumer protection laws, among others.

“Liability is not an issue of us versus platforms but us capacitating the MSMEs to have an equal footing with the bigger guys,” IPOPHL Deputy Director General Teodoro C. Pascua said. 

Meanwhile, for MSMEs who become the subject of buyer complaints, Consumer Protection Undersecretary Ruth B. Castelo advised them not to feel dampened and instead view the report “as an opportunity [to] build strong and lasting relationships with their consumers.”

“We want them to increase patronage from the consumers. The consumer complaints may be also viewed as valuable information as to how they can improve their businesses and of course building the relationship with the consumer to increase consumer confidence,” Castelo added.

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