MEMORANDUM ORDER NO. 238

DESIGNATING THE OVERSIGHT OFFICIAL FOR MICRO, SMALL AND MEDIUM ENTERPRISE (MSME) PROGRAMS OF THE COUNTRY AND FOR OTHER PURPOSES

WHEREAS, micro, small and medium enterprises play a significant role in the country’s economic development, particularly in generating jobs;

WHEREAS, the government committed to support three million entrepreneurs by providing them with credit in order to contribute to the generation of 6-10 million jobs until 2010;

WHEREAS, to ensure the achievement of said objective, there is a need to designate an oversight official for the sector who will synchronize and orchestrate the policies, programs and activities of the different implementing agencies so that these support and/or complement one another to further spur the development of the sector;

NOW, THEREFORE, I, GLORIA MACAPAGAL ARROYO, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby designate Secretary Cerge M. Remonde as the oversight official for MSME Development in his capacity as Director-General of the Presidential Management Staff (PMS).

Section 1. Functions. The oversight official shall perform the following functions:

1. Convey the President’s perspective and specific instructions to implementing agencies and ensure that these are fully complied with;

2. Identify policy gaps and implementation bottlenecks and carry out necessary interventions to address these; and

3. Provide the President with overall assessments of the MSME policy and program performance.

Section 2. Institutional Arrangements. To effectively carry out the above functions, the Oversight Official, or his duly designated representative, shall sit in the meetings of the Small and Medium Enterprise Development (SMED) Council, an inter-agency body created by RA 6977 as amended by RA 8289, and any other related bodies or committees whose work affects the MSME sector. The Oversight Official may also create coordinating bodies as he may deem necessary.

Section 3. Submission of reports. The implementing agencies shall provide the PMS regular quarterly reports and other special reports as may be necessary. For this purpose, the PMS, in consultation with concerned agencies, shall prescribe the format and content including performance indicators and measures of said reports.

Section 4. Separability Clause. In the event that any provision of this Order is declared invalid, the other provisions that are unaffected thereby shall remain in full force and effect.

Section 5. Repeal. All orders, rules and regulations or parts thereof inconsistent with this Executive Order are hereby repealed, amended or modified accordingly.

Section 6. Effectivity. This Executive Order shall take effect immediately.

DONE, in the City of Manila, this 4th day of January in the year of Our Lord, Two Thousand and Seven.

SGD. GLORIA M. ARROYO

By the President:

(SGD) EDUARDO R. ERMITA

Executive Secretary

Based on the provisions of the aforequoted Memorandum Order, the Oversight Official (or his duly designated representative) does not only sit in the meetings of the Small and Medium Enterprise Development (SMED) Council and other related bodies or committees whose work affects the MSME sector – but, the Oversight Official may also create coordinating bodies as he may deem necessary.

When I was the Undersecretary of the Department of Trade and Industry (DTI) – I used to sit in the SMED Council, an interagency body created by Republic Act 6977 (as amended by RA 8289) otherwise known as the Magna Carta for Small Enterprises. Under the provisions of Republic Act 9178 (Barangay Micro Business Enterprises Act of 2002, BMBEs for short) the DTI shall "in coordination with the private sector and non-government organizations (NGOs), shall explore the possibilities of linking or matching-up BMBEs with small, medium and large enterprises, and likewise establish incentives therefor."

BMBEs are not the same as SMEs. The latter is an acronym for small medium enterprises. BMBEs are governed by Republic Act No. 9178. On the other hand, SMEs are governed by Republic Act No. 6977 as amended by Republic Act 8289. The basic SME law was promulgated on January 24, 1991 while the amending law was approved on May 6, 1997. The total assets of BMBEs must not exceed Three Million Pesos. On the other hand, total assets of small enterprises are over Three Million Pesos but not more than Fifteen Million Pesos. Also, BMBEs are exempt from the coverage of the Minimum Wage Law as well as exempt from income tax for income arising from their operations. SMEs do not enjoy these incentives.

Have a joyful day!