THE government should provide incentives to domestic production of raw materials and aspiring artisans in order to save the country’s cultural micro, small and medium enterprises (MSMEs). This, amid the unlevel playing field brought about by mass-produced and imported goods, according to a study by the Philippine Institute for Development Studies (PIDS).
The PIDS paper noted that despite supportive measures like the Philippine Creative Industries Development Act of 2022 and the Philippine Development Plan 2023-2028 (NEDA 2023), challenges persist in scaling operations, adopting new technologies and expanding market access.
The study, citing data from the Philippine Statistics Authority (PSA), said cultural MSMEs are an “integral” part of the creative economy, which contributed P1.72 trillion to the country’s gross domestic product in 2023.
“MSMEs contribute to cultural heritage and local economies while grappling with challenges such as competition from mass-produced goods, difficulty maintaining skilled workforces, limited access to technology, financial constraints, and complex government regulations,” the paper noted.
The local think tank underscored that market globalization and mass production “further pressure” small enterprises relying on handcrafted or culturally specific products, saying these are often “undercut” by cheaper, factory-made alternatives.
In addition, the paper noted that the decline of traditional skills among younger generations threatens the long-term survival of cultural MSMEs.
Further, the study underscored that balancing tradition with innovation is “crucial” for these small enterprises, “as adapting to modern market demands without compromising cultural integrity is a significant hurdle.”
Despite these obstacles, the study noted that cultural MSMEs are motivated by the desire for economic survival.
“MSMEs are motivated by the desire for economic survival, community empowerment, and cultural preservation,” the PIDS paper said.
However, to ensure these small merchants’ success, the paper underscored the need to put in place innovation-driven strategies and targeted policy recommendations such as financial support, simplified regulations, and digital literacy programs which the local think tank said are essential for sustaining these businesses.
Recommendations
The study emphasized the need to put in place measures to level the playing field, ensuring fair competition and addressing “unfair” trade practices, such as the dumping of cheap imports.
“Domestic production should be supported by providing incentives for the local production of raw materials and finished goods, reducing reliance on imports,” the local think tank noted.
In terms of “preserving” traditional knowledge, the paper said there is a need to link experienced artisans with young craftspeople who can “facilitate the transfer of skills and expertise, while financial incentives, such as scholarship grants, can encourage the pursuit of traditional crafts.”
On enhancing digital literacy, the local think tank pointed out the need to improve digital infrastructure particularly in rural areas to ensure that all MSMEs can participate in the digital economy.
“The government should offer affordable digital literacy training programs to equip MSMEs with the skills needed to leverage digital tools for marketing, sales, and operations,” added the PIDS study.
In addition, it noted that e-commerce adoption should be prioritized by supporting the development of platforms which will cater to the specific needs of cultural MSMEs to help them access wider markets.
To preserve cultural heritage, the study said cultural MSMEs must also be supported through research grants and funding opportunities aimed at developing new techniques, materials, and designs.
“Likewise, design centers should be established to foster collaboration among artisans, designers, and technologists, driving innovation,” the paper said.
The study also noted that strengthening intellectual property protections for traditional designs will help safeguard heritage while encouraging growth.
The study was published on the website of PIDS, and was written by authors June Ann J. Casimiro, Karenina B. Romualdo, and Via Shane R. Santiago.
The authors highlighted the need to protect the country’s cultural MSMEs, saying those engaged in traditional expressions such as crafts, textiles, and culinary arts, are “vital” for preserving heritage and driving local economic growth.
