MANILA, Philippines – The Philippines can learn a lot from South Korea’s industrial policy in terms of integrating small and medium enterprises (SMEs) into crucial growth areas, said Josef Yap, president of the Philippine Institute of Development Studies (PIDS) during last week’s Philippines-Korea Development Cooperation Forum.
Yap said industrial policy can be used to integrate domestic SMEs into major growth areas in the country.
He cited the case of the Republic of Korea which fully integrated its SMEs into the economy.
“While industrialization in the 1970s and 1980s is largely attributed to large-scale enterprises, subcontracting with small and cottage producers was practiced widely especially in later years,” Yap said.
He noted for instance that in the case of the electronics industry, the Korean government formed the domestic equipment and supplies industry to complement the main electronics sector.
“For example, there has been active encouragement of clustering supply firms on the Chonan Second Industrial Complex in Central Korea so that several emerging supply firms such as DNS Korea, Mirae and Posco-Huls are now located there on in its vicinity,” Yap said.
He also said the Philippines could learn from this example by supporting SMEs in the country. One form of support is by enhancing their technological capabilities.
Furthermore, he said the Philippine government could take steps to link multinational corporations and large domestic firms to these SMEs.
The government, for its part, is undertaking steps to help SMEs cope with the global financial turmoil.
Last year, the Philippines and other leaders of the Asia Pacific Economic Cooperation (APEC) committed to sustain their support for the development of SMEs in the region.
SMEs have been seeking government support in the form of better access to financing with export credit agencies, international financing institutions and private banks.
SMEs also need help in product development and in marketing their products through various international exhibits. –Iris C. Gonzales, Philippine Star
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