MANILA – A survey by the International Trade Center (ITC) shows that Filipino small and medium enterprises (SMEs) that invested in research and development (R&D) are less affected by the global health and economic crisis.
The Department of Trade and Industry (DTI) and ITC launched the Philippine SME Competitiveness Report on Wednesday showing how the coronavirus disease (Covid-19) pandemic affected Filipino businesses. It also provided policy recommendations to the government.
In its survey on 454 firms from Metro Manila, Central Luzon, Calabarzon (Cavite, Laguna, Batangas, Rizal, Quezon), and Cebu City from April to May this year, 68 percent of businesses said they are strongly affected by the Covid-19 crisis.
Around 88 percent of the surveyed firms also said they have experienced a drop in sales.
About 9 percent of the companies expected their business to shut down permanently due to effects of the global health crisis, the study shows.
“Small firms are more vulnerable during the crisis,” ITC Research and Strategies for Exports project manager Valentina Rollo said.
Rollo said SMEs were twice as likely as large firms to predict their own closure in three months’ time.
Of the enterprises that said they expect their operation to shut down within three months, 6 percent were SMEs and 3 percent were large enterprises.
ITC Research and Strategies for Exports program officer Sarah Mohan said firms that invested in R&D before the pandemic were the resilient ones amid the crisis.
Mohan said firms developed new processes and goods to adapt to the new business environment. This requires enterprises to have a strong innovation capacity.
Of the surveyed firms, 58 percent dedicated resources to R&D, with enterprises from Calabarzon region earmarked higher innovation and resources in R&D.
In its policy recommendation, ITC encourages the government to give incentives for R&D investments and also shift support from existing business networks towards innovative startups.
“It's clear that there continues to be a case for providing incentives to research and development. This helps keep up with the fast-moving market. We've seen it makes firms more resilient to crises whether it's Covid-19 or the typhoon… Companies that have the habit of making research and innovation efforts are able to deploy those habits to cope with whatever happens,” Mohan said. (PNA)
