Can Filipino MSMEs keep up with growing digital economy?

MANILA, Philippines — The digital economy contributed 9.8% to the Philippine economy in 2025, according to the Philippine Statistics Authority (PSA), highlighting the growing role of digital technologies in the country’s economic activity.

For micro, small and medium enterprises (MSMEs), digitalization offers opportunities to reach more customers, sell products online and make business transactions easier. 

READ: Marcos wants safer online transactions for consumers, MSMEs

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MSMEs account for more than 99% of businesses in the country and employ a majority of the workforce, according to the Philippine Chamber of Commerce and Industry (PCCI). 

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Despite their contribution, the group has identified limited access to financing, fragmented supply chains, low productivity and gaps in digital adoption as challenges facing these enterprises.

How can digitalization help small businesses?

According to the University of the Philippines Institute for Small-Scale Industries (UP ISSI), digitalization refers to the use of digital technologies and data to improve business operations, generate revenue and transform existing processes. 

For small businesses, this could mean selling products through online marketplaces, accepting electronic payments or using digital tools to monitor sales and inventory.

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Online platforms such as Lazada, Shopee and Facebook Marketplace allow businesses to offer their products to customers beyond their immediate communities. 

What prevents MSMEs from going digital?

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Despite these opportunities, adopting digital tools can be difficult for small businesses.

One major barrier is financing. The Asian Development Bank (ADB) has identified limited access to credit as a persistent challenge for Philippine MSMEs.

The lack of financing can limit the resources available to small businesses as they seek to improve their operations and adopt digital technologies.

The UP ISSI has also identified limited technical expertise and gaps in digital literacy as barriers to digital transformation. Business owners may need training to use online platforms, manage digital payments and protect their businesses from online risks.

What support is available to MSMEs?

The government has been working with the private sector and development partners to help small businesses adopt digital technologies and improve their access to online services.

READ: How an inclusive digital economy empowers MSMEs

The Department of Trade and Industry (DTI), through its partnership with the Digital PINAS Joint Programme, has provided information and communications technology (ICT) equipment to 14 Negosyo Centers serving geographically isolated and disadvantaged areas. 

The packages included laptops, tablets and printers, while selected centers also received satellite connectivity equipment and internet subscription support.

These upgrades are expected to help thousands of MSMEs access online government services, markets and learning resources through the Negosyo Centers.

The DTI has also partnered with Converge ICT Solutions Inc. to launch programs aimed at helping MSMEs adopt artificial intelligence (AI) and other digital technologies, with the goal of making businesses more competitive.

Meanwhile, the Digital PINAS Joint Programme in partnership with the DTI and other government agencies, seeks to address policy, regulatory and systemic barriers to digital inclusion.

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The International Labour Organization (ILO) and its partners are also developing a mobile learning and behavioral nudge system to help MSMEs manage digital borrowing, avoid fraud and make better financial decisions. — Katherine Cielo Guimera/INQUIRER.net trainee /jpv