Magna Carta for Micro, Small and Medium Enterprises

Section 7

The existing Small and Medium Enterprise Development Council, which was created by Republic Act No. 6977, as amended by Republic Act No. 6977, as amended by Republic Act No. 8289, shall be strengthened to effectively spur the growth and development of MSMEs throughout the country, and to carry out the policy declared in this Act and shall now be known as the Micro, Small and Medium Enterprise development (MSMED) Council. The Council shall be attached to the Department of Trade and Industry and shall be constituted within sixty (60) days after the approval of this Act. (as amended by RA No 9501) The Council shall be the primary agency responsible for the promotion, growth and development of small and medium enterprises in the country by way of facilitating and closely coordinating national efforts to promote the viability and growth of small and medium enterprises, including assisting relevant agencies in the tapping of local and foreign funds for small and medium enterprise development, as well as promoting the use of existing programs, as well as seeking ways to maximize the use of our labor resources. (6a) (as amended by RA No 8289, renumbered by RA No 9501)

Section 7-A

The Council shall be headed by the Secretary of Trade and Industry as Chairman, and may elect from among themselves a Vice-chairman to preside over the Council meetings in the absence of the Chairman. The members shall be the following: a) Secretary of Agriculture; b) Secretary of the Interior and Local Government; c) Secretary of Science and Technology; d) Secretary of Tourism; e) Chairman of Small Business Corporation; f) Three (3) representatives from the MSME sector to represent Luzon, Visayas and Mindanao; g) One representative from the labor sector, to be nominated by accredited labor groups; and h) A representative from the private banking sector; to serve alternately among the Chamber of Thrift Banks; the Rural Bankers' Association of the Philippines (RBAP); and the Bankers Association of the Philippines (BAP). All members of the Council so appointed, except from the ex officio members, shall serve for a term of three (3) years. The person so appointed to replace a member who has resigned, died, or been removed for cause shall serve only for the unexpired portion of the term. The private sector members of the Council shall receive per diem of Two thousand pesos (P2,000) per meeting, for a maximum of twenty-four (24) meetings per year, which per diem may be adjusted by the MSMED Council as appropriate. The Council may call upon the participation of any national or local government agency, association of local government officials or private sector organization in its deliberations especially when such agency or private sector or organization in its deliberations especially when such agency or private sector organizations directly or indirectly concerned with and/or affecting the growth and development of MSMEs in any particular area or manner. The Council may create an Executive Committee of five (5) members elected by the Council from among themselves or their designated permanent representatives, with at least two (2) members representing the private sector, and with authority to act for and on behalf of the Council during intervals of council meetings, and within the specific authority granted by the Council. (7a) (as amended by RA No 8289, 9501)

Section 8

Designation of the Bureau of Micro, Small and Medium Enterprise Development as Council Secretariat. — The Bureau of Small and Medium Business Development (BSMBD) hereinafter referred to as the Bureau of Micro, Small and Medium Enterprise Development (BMSMED) is hereby designated to act as the Council Secretariat and shall have the following duties and functions: (as amended by RA No 9501) (1) to prepare, in coordination with local government units and/or associations of local government officials, and recommend annual as well as medium-term small and medium enterprises development plans for approval of the Council; (2) to coordinate the preparation of position papers and background materials for discussion or approval during Council meetings; (3) to assist the Council in coordinating and monitoring small and medium enterprise policies and programs and activities of all government agencies with respect to small and medium enterprises; (4) to prepare, collate and integrate all inputs to the Council's yearly report on the status of small and medium enterprises in the country; (5) to submit periodic reports to the Council on the progress and accomplishment of its work programs; and (6) to perform ad hoc functions as authorized by the Council. (9a) (as amended by RA No 8289)

Section 9

To finance its activities and operational expenses, the Council shall have a separate annual appropriation approved by the Department of Trade and Industry (DTI) which shall be provided in the General Appropriation Act starting in the fiscal year immediately following the approval of this Act. The Council may also accept contributions from the private sector. (as created by RA No 9501)

Section 7-B

The MSMED Council shall have the following powers, duties and functions: a) To help establish the needed environment and opportunities conducive to the growth and development of the MSME sector; b) To recommend to the President and the Congress all policy matters affecting MSMEs; c) To coordinate and integrate various government and private sector activities relating to MSME development; d) To review existing policies of government agencies that would affect the growth and development of MSMEs and recommend changes to the President and Congress through the Committee on Economic Affairs of the Senate and the Committee on Small Business and Entrepreneurship Development of the House of Representatives. whenever deemed necessary. This shall include efforts to simplify rules and regulations, as well as review of the applicability in the registration, financing, and other activities relevant to MSMEs the result shall be included in the annual report to be submitted to Congress; e) To monitor and determine the progress of various agencies geared towards the development of the sector. This shall include overseeing, in coordination with local government units and the Department of Interior and Local Government as well as private sector groups/association, the development among MSMEs; g) To provide the appropriate policy and coordinative framework in assisting relevant government agencies, in coordination with the NEDA and the Coordinating Council for the Philippine Assistance Program, as may be necessary, in the tapping of local and foreign fund's for MSME development; h) To promote the productivity and viability of MSMEs by way of directing and/or assisting relevant government agencies and institutional at the national, regional and provincial level towards the: 1) Provision of business training courses, technical training for technicians and skilled laborers and continuing skills upgrading programs; 2) Provision of labor-management guidance, assistance and improvement of the working conditions of employees in MSMEs; 3) Provision of guidance and assistance regarding product quality/product development and product diversification; 4) Provision of guidance and assistance for the adoption of improved production technique and commercialization of appropriate technologies for the product development and for increased utilization of indigenous raw materials; 5) Provision of assistance in marketing and distribution of products of MSMEs through local supply-demand information, industry and provincial profiles, overseas marketing promotion, domestic market linkaging and the establishment of common service facilities such as common and/or cooperative bonded warehouse, grains storage, agro-processing and drying facilities, ice plants, refrigerated storage, cooperative trucking facilities, etc; 6) Intensification of assistance and guidance to enable greater access to credit through a simplified multi-agency financing program; to encourage development of other modes of financing such as leasing and venture capital activities; to provide effective credit guarantee systems, and encourage the formation of credit guarantee associations, including setting up credit records and information systems and to decentralize loan approval mechanism; 7) Provision of concessional interest rates, lower financing fees, which may include incentives for prompt credit payments, arrangements tying amortizations to business cash flows, effective substitution of government guarantee cover on loans for the borrower's lack of collateral; 8) Provision of bankruptcy preventive measures through the setting up of a mutual relief system for distressed enterprises, and the establishment of measures such as insurance against extraordinary disasters; 9) Intensification of information dissemination campaigns and entrepreneurship education activities; 10) Availment of and easier access to tax credits and other tax and duty incentives as provided by the Omnibus Investment Code and other laws; 11) Provision of support for product experimentation and research and development activities as well as access to information on commercialized technologies; and 12) Through appropriate government agencies: a) Provide more infrastructure facilities and public utilities to support operations of MSMEs; b) Establish, operate, and administer a small business incubation program in coordination with academic institutions, Department of Science and Technology and other appropriate government entities that will provide space for start-up and expanding firms, shared use of equipment and work areas, daily management support services essential to high-quality commercial operations, technical assistance and other services to develop innovative and deserving MSMEs; d) Provide local and international network and linkages for MSME development; e) Compile and integrate statistical databank on Philippine MSMEs; f) Set-up new MSME centers and revitalize already established MSME centers to provide MSMEs in the regions easier access to services such as, but not limited to, the following: i. Accept and act on all registration application of MSMEs; ii. Streamline registration process and facilitate speedy registration for the establishment of business enterprises in the country; iii. Provide all information and referral services it shall deem necessary or essential to the development and promotion of MSMEs; iv. Conduct other programs and development programs, training, advice, consultation on business conceptualization and feasibility, financing, management, capacity building, human resources, marketing, and such other services to support the needs of MSMEs; v. Provide courses and development programs, training, advice, consultation on business conceptualization and feasibility, financing, management, and such other services to support the needs of MSMEs; g) To submit to the President and the Congress through the OVERSIGHT Committee as defined under this Act, a yearly report on the status of MSMEs in the country, including the progress and impact of all relevant government policies, programs and legislation as well as private sector activities; h) To coordinate, monitor and assess the implementation of the MSMEDP, and when necessary, institute appropriate adjustments thereon in the light of changing conditions in both domestic and international environment; and i) Generally, to exercise all powers and functions necessary for the objectives and purposes of this Act. (8a) (as amended by RA No 9501)