Around 98% of registered businesses in Iloilo are composed of Micro, Small, and Medium Enterprises (MSME), according to Velma Jane Lao, Head of the Local Economic Investment Promotion (LEDIP) Office of the Iloilo City Government. With approximately twenty thousand businesses in Iloilo, the sector generates 60% to 70% of local employment, underscoring its contribution to economic activity and local growth.
Iloilo City's business landscape is primarily driven by micro and small enterprises. Micro, with capitalization of 3 million and below, and small enterprises, capitalization between 3 to 15 million, comprise approximately 95% of businesses in the metro. Medium enterprises, with capitalization ranging from 15 to 100 million, comprise 3%, while large enterprises, with capitalization of 100 million and above, comprise the remaining 2%.
Nano enterprises, with capitalization of P250,000 and below, are an emerging segment in today's MSME sector under micro enterprises.
In terms of industry, wholesale and retail dominate the local business landscape, followed by service-oriented enterprises.
On Challenges: Business is a Balancing Act
Despite its contribution to the local economy, MSMEs continue to navigate an increasingly challenging business environment.
"The geopolitical situation is volatile," says Lao.
According to the LEDIP head, geopolitical instability contributes to higher costs of fuel, raw materials, and imported goods, creating a domino effect across supply chains, increasing operating expenses, affecting end products and ultimately impacting the broader economy.
"MSMEs are trying to balance costs and, at the same time, trying to be competitive in the market," says Lao.
For many MSMEs, managing costs while sustaining profitability is a balancing act. Businesses are compelled to reassess operations, manage overhead expenses, and implement cost-saving measures that do not compromise their competitiveness.
Moreover, Lao cites the recent wage hike as a challenge to business owners. Although largely considered a positive move by the government, it may be a financial hurdle for businesses when combined with other expenses. While higher wages improve the purchasing power of employees, they likewise increase operational costs for MSMEs already grappling with inflationary pressures and rising business expenses.
"When businesses go down, so does employment," says the LEDIP head.
Local Thrusts on Sustainability
With current challenges, Lao shares that the local government continues to provide solutions to support local businesses. The Uswag Negosyo Academy provides seven sessions of business education and capacity building, with the goal of empowering businesses to be sustainable, resilient, and competitive. Moreover, grants are given to qualified graduates of the academy.
Lao further shares that the local government, alongside the private sector, continues to promote local products through local, national, and international trade fairs and exhibitions. Such initiatives provide MSMEs with opportunities to expand market reach, strengthen brand visibility, and connect with buyers and investors.
As Iloilo City continues to strengthen its position as an emerging economic center, the resilience of its MSME sector remains central to inclusive and sustainable development.