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EIGHTEENTH CONGRESS OF THE +)
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

H.B.No, 4352

Introduced by Rep. Vilma Santos-Recto
6" District of Batangas

AN ACT
EXPANDING THE COVERAGE OF MICRO ENTERPRISES AS BENEFICIARIES
OF THE MAGNA CARTA FOR MICRO, SMALL AND MEDIUM ENTERPRISES,
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 6977, AS AMENDED

EXPLANATORY NOTE

‘The State upheld the policy “to promote, support, strengthen and encourage the
growth and development of small and medium enterprises in all productive sectors of the
economy” with the enactment of Republic Act No. 6977 or the Magna Carta for Small
Enterprises in 1991. It created the Micro Small and Medium Enterprise Development
(MSMED) Council and the Small Business Finance and Guarantee Corporation to aid in the
fulfillment of the guiding principles enshrined in the law. The law also established rules in
the provision of technical and other forms of assistance to MSMEs and required all lending
institutions to set aside part of their loan portfolio and make it available for small enterprise
credit. These interventions were made in recognition of the MSME’s potential to generate
‘employment and boost economic growth.

Nonetheless, problems and issues hindering the MSMEs from achieving their
potentials still persist despite the enactment of the RA 6977 and its subsequent amendments.
One of these impediments is the outdated definition of the business activities or enterprises
that belong to the MSME category. While the Magna Carta for Small Enterprises and its
subsequent amendments provided the MSMED Council the power to review and adjust the
definition of business establishments considering inflation and other economic indicators, the
definition of MSMEs remained unchanged since the enactment of RA 9501 in 2008. This
creates an onerous situation where a good number of small enterprises are barred from
enjoying the benefits, programs and plans to improve their productivity and competitiveness.

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In order to correct this situation, this bill proposes to redefine the asset value
thresholds of the Micro and Small Enterprise categories in order to make more privileges and

benefits available to more enterprises. This bill proposes to amend the definition of micro
enterprises as those with total assets of not more than P7.5 million instead of P3 million.
Consequently, small enterprises will now be defined as those with total assets ranging from
more than P7.5 million to P15 million. This bill thus reinforces the di
MSME Development Plan 2017-2022 in addressing the key challenges and constraints that

prevent the MSME sector from realizing its full potential in boosting the country’s industrial

tion laid out in the

growth, Redefining the total asset value of MSME categories would reinvigorate the business
environment, protect critical economic drivers, and sustain the Philippine economic

momentum in the near future.

In view of the foregoing, approval of this bill is earnest]

VILMA SANTOS- RECTO


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EIGHTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES )
First Regular Session )
HOUSE OF REPRESENTATIVES
HB. No, 4392

Introduced by Rep. Vilma Santos-Recto
6" District of Batangas

AN ACT
EXPANDING THE COVERAGE OF MICRO ENTERPRISES AS BENEFICIARIES
OF THE MAGNA CARTA FOR MICRO, SMALL AND MEDIUM ENTERPRISES,
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 6977, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

Section 1. Section 3 of the Magna Carta for Micro, Small and Medium Enterprises or
Republic Act No. 6977, as amended by Republic Act No. 8289 and further amended by
Republic Act No. 9501, is hereby further amended to read as follows:

“Sec. 3. Micro, Small and Medium Enterprises (MSMEs) as

Beneficiaries. — MSMEs shall be defined as any business activity or

enterprise engaged in industry, agribusiness and/or services, whether single

proprietorship, cooperative, partnership or corporation whose total assets,
inclusive of those arising from loans but exclusive of the land on which the
particular business entity’s office, plant and equipment are situated, must have

value falling under the following categories:

micro: not more than [P3;000,000] P7,500,000
small: [P3-000;004-P45.000,000] MORE THAN P7,500,000 TO

15,000,000
medium: —_[P45,00,001-P100,000,000] = MORE = THAN
15,000,000 TO P100,000,000.
“XxX.
one)

Sec. 2. Implementing Rules and Regulations. — The Department of Trade and
Industry shall, in coordination with the Micro, Small and Medium Enterprise Development

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Council, promulgate the necessary implementing rules and regulations within thirty (30) days
upon the approval of this Act.

Sec. 3. Repealing Clause. — All laws, decrees, orders, rules and regulations or parts
thereof inconsistent with any of the provisions of this Act are hereby repealed, amended or
modified accordingly.

Sec. 4. Effectivity Clause. — This Act shall take effect fifteen (15) days after its
complete publication in the Official Gazette or in at least two (2) newspapers of general
circulation.

Approved,