Basel III Implementation and MSME Lending: A Tight Balancing Act

Abstract

Access to finance remains to be a major challenge for micro, small, and medium enterprises (MSMEs) in the Philippines despite the implementation by government of several policies and projects to address it. In 2016, MSMEs account for 99.6 percent of the total 911,768 establishments and produced 4.9 million jobs or 63.3 percent of total jobs in the Philippines. Within this sector, 90 percent are micro enterprises—those with assets of up to PHP 3 million; 9.5 percent are small enterprises—those with assets valued from PHP 3,000,001 to PHP 15 million; and 0.4 percent are medium enterprises—those with assets valued from PHP 15,000,001 to PHP 100 million. In other economies in Southeast Asia as well as in the rest of developing Asia, MSMEs also comprise the majority of registered firms, an average of 96 percent in 2015.