Backbone of Juan: The rise of the Philippine MSMEs

Nine years ago, a mother put up a small merchandising business, carefully lining up goods to earn extra income while her husband worked overseas as an OFW.

- RICARDO M. AUSTRIA

What began as a way to support her family has since grown into something more—she is now helping power the Philippine economy, one small transaction at a time.When the pandemic hit, the business was forced to close. But she did not stop. Determined to start again, she rebuilt from a small space and named the venture “Rholghie”—a blend of her own name, her husband’s, and those of their three children.

Over the years, the business steadily grew. From a modest operation, it expanded enough to employ another person, turning a once-personal source of income into a livelihood that now supports more than just one family.

From corner stores to family-run workshops and fast-growing startups, micro, small, and medium enterprises (MSMEs) form the economic engine that keeps local communities alive.

Often called the backbone of the Philippine economy, MSMEs generate jobs, support livelihoods, and sustain industries nationwide. They anchor communities, strengthen local supply chains, and bring opportunities closer to the grassroots, ensuring that economic growth is inclusive rather than concentrated in a few urban centers.

Moody’s Analytics economist Sarah Tan emphasized the crucial role of MSMEs. They make up over 99 percent of registered firms in the Philippines and employ about two-thirds of the workforce, with strong footholds in trade, food and accommodation, and manufacturing.

"These are sectors that underpin domestic demand and link households to broader supply chains," Tan said. "Collectively, MSMEs contribute an estimated 40 percent of [gross domestic product] GDP and around 25 percent of export revenues, underscoring their importance not only to inclusion but to overall growth."

Tan noted that supporting MSMEs is a "macroeconomic imperative," as productivity gains raise household incomes, strengthen consumption, and support broad-based growth, while also improving supply chains and economic resilience.