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Research

The document discusses the significant impact of the COVID-19 pandemic on small and medium-sized enterprises (SMEs) in the Philippines, highlighting their critical role in the economy and the challenges they face. It notes that many SMEs have struggled with reduced sales, permanent closures, and operational difficulties due to lockdowns and supply chain disruptions. The study aims to identify the common challenges leading to SME failures during this period.

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10 views2 pages

Research

The document discusses the significant impact of the COVID-19 pandemic on small and medium-sized enterprises (SMEs) in the Philippines, highlighting their critical role in the economy and the challenges they face. It notes that many SMEs have struggled with reduced sales, permanent closures, and operational difficulties due to lockdowns and supply chain disruptions. The study aims to identify the common challenges leading to SME failures during this period.

Uploaded by

javierandrei0322
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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I.

Introduction
a. Most developing countries, including the Philippines, rely heavily on small and
medium-sized companies (SMSEs) for economic growth (Tadeo, et. al., 2023). They are
the fundamentals that support the country's economic structure, since they serve as
important catalysts for economic movements, expansion, and development. But when
the COVID-19 pandemic struck worldwide including the Philippines, people became
devastated as well as the economy. The Philippines took swift action including
enhanced community quarantine (ECQ) to contain the pandemic and launched an
emergency subsidy program with massive public spending to support disrupted
households and businesses. The strict lockdown ran from mid-March to the end of May,
2020 in the national capital region and high-risk provinces, causing huge economic
losses (Shinozaki, et. al., 2021). Lockdowns are the only option available to the
government, and they had a severe negative impact on enterprises' ability to operate
economically. Foremost among these was a decline in sales and profits (Cammayo, et.
al., 2021). Some of the businesses are recovering from the impact of the pandemic, but
the SMEs are still not and are continuously going down in the Philippine market.
Furthermore, it is remarkable that COVID-19 has caused such a large number of
retailers and enterprises to close. Due to owners' incapacity to cover ongoing costs and
withstand the shutdown, many of these closures might be indefinite (Fairlie, 202).
Small and medium enterprises (SMEs) have gained increasing recognition in national
and international discussions. In the Philippines, its importance paved the way for the
passage of two major laws that govern the promotion of SMEs: Republic Act (RA) 6977
or the Magna Carta for Small Enterprises, as amended by RA 8289, and RA 9178,
better known as the Barangay Micro Business Enterprises (BMBEs) Act of 2002. Then,
COVID-19 pandemic, which began in early 2020 in the Philippines, caused a health
crisis and had far-reaching effects on almost every aspect of life. The conditions and
restrictions imposed in most countries to limit the virus’s spread among people, such as
social distancing and quarantines, have caused distortions in the system of supply and
demand for goods and slowed many countries’ economies. The impact of the COVID-19
pandemic has been felt by all economic sectors and institutions, specially small and
medium-sized enterprises (SMEs) (Hasanat et al., 2020).

In the report of the ADB Philippine Enterprise Survey on COVID-19 Impact (Asian
Development Bank, 2020), it was relatively clear that the pandemic had a large-scale
impact on the operations of the businesses. Of the 13,878 firms surveyed from
November 26 to December 10, 2020, only 63% reopened following the easing of
protocols on November 2020. However, only 9% operated at full capacity. Furthermore,
21% opted for voluntary closures despite government provisions for reopening and 7%
permanently closed due to business losses. In terms of operations, 67% declared
reduction in sales between July and November 2020 due to limited operations and
limited walk-in customers. Several companies reduced the working hours (19%) as well
as wages (16%). The major concern of the businesses is the insufficiency of cash
(66%).

SMEs have suffered from a shortage of workers and production inputs because of
distortions that marred supply chains, which negatively affected their sales (Gurría,
2020; Segal & Gerstel, 2020) and their ability to fulfill their financial obligations and pay
employees’ salaries (Robinson & Kengatharan, 2020). This problem has coincided with
a decrease in consumer spending because of the reduction in consumers’ income and
widespread feelings of uncertainty (Gurría, 2020). As a result, many SMEs found
themselves incapable of dealing with the situation (Ozili, 2020). Some businesses have
stopped their activities and remained closed since the first months of the outbreak
(Bartik et al., 2020).

This study is aiming to determine the common challenges faced by the SMSEs during
COVID-19 Pandemic, causing them to fail in the Philippine market.

b. Topic/Research Title “COMMON CHALLENGES LEADING TO SMSEs FAILURE IN


THE PHILIPPINE MARKET DURING COVID-19 PANDEMIC”
c. Thesis Statement
1. Support point 1(PEREZ)
2. Support point 2 (ROXAS)
3. Support point 3 (PEÑAREDONDA)

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