Legal basis and existing MSME laws
- The IRR is promulgated to implement Republic Act No. 10644.
- The IRR requires interpretation and implementation consistent with the Declaration of Policy of Republic Act No. 10644.
- The IRR recognizes and continues existing State policies on MSMEs under:
- Republic Act No. 9178 (Barangay Micro Business Enterprises Act of 2002);
- Republic Act No. 6977, as amended by Republic Act No. 8289 and Republic Act No. 9501 (Magna Carta for MSMEs);
- Other MSME laws to the extent they are not amended or repealed by Republic Act No. 10644.
Policy intent and coordination framework
- The IRR adopts the policy of the State to foster national development, promote inclusive growth, and reduce poverty by encouraging MSMEs that facilitate local job creation, production and trade in the country.
- The IRR directs the State to develop plans and means to ease constraints in establishing MSMEs to rationalize existing bureaucratic regulations, provide greater incentives and benefits, and strengthen the Micro, Small and Medium Enterprise Development (MSMED) Council.
- The IRR recognizes the imperatives of working with Local Government Units (LGUs) and other public and private sector agencies and organizations toward Local Economic Development.
- The IRR requires coordination and collaboration with existing structural mechanisms promoting MSMEs and entrepreneurship to avoid duplication of efforts.
Negosyo Centers: establishment and structure
- The IRR provides for the establishment and management of Negosyo Centers under the supervision of the MSMED Council in all provinces, cities, and municipalities.
- The IRR provides that Negosyo Centers promote ease of doing business and facilitate access to services for MSMEs within their jurisdiction.
- The IRR provides that the MSMED Council through its regional offices of the Department of Trade and Industry (DTI) performs oversight functions and assigns personnel to fulfill Negosyo Center functions.
- The IRR allows existing SME Centers to continue operating as Negosyo Centers in applicable areas, subject to the Act’s provisions.
- The IRR provides for conversion of existing SME Centers and the National Economic Research and Business Assistance Center (NERBAC) into Negosyo Centers where applicable, and allows use of existing Regional NERBACs or SME Centers as Negosyo Centers for the provinces and cities where they are physically located.
Negosyo Centers: creation plan, PPPs, LGU role
- Within one hundred eighty (180) days from reconstitution, the MSMED Council must approve a multi-phase plan for creation/strengthening of Negosyo Centers.
- The multi-phase plan must consider different modes of establishing Negosyo Centers based on MSME needs and LGU capacities, and must include management structure and processes for the MSMED Council’s supervision.
- The IRR provides that creation and roll-out of the multi-phase plan must allow Negosyo Centers to continue to be established and to perform mandates without prejudice to the MSMED Plan.
- The IRR directs the MSMED Council, both nationally and locally, to encourage public-private partnerships in establishment and management of Negosyo Centers.
- Where a province, city, or municipality takes the lead in establishing and managing Negosyo Centers, the DTI, DILG, and the LGA may offer assistance to integrate this creation through the LGU’s Local Development and Investment Plan, Annual Investment Plan, and other relevant executive and legislative issuances.
Negosyo Centers: functions and operating duties
Negosyo Centers must perform these functions:
Business Registration Assistance
- Accept and facilitate all new registration and renewal applications of MSMEs, including applications for Barangay Micro-Business Enterprise (BMBE) status.
- Coordinate with LGUs and liaise with concerned government agencies to process duly accomplished forms submitted by MSMEs.
- Implement a unified business registration process preferably through automated systems such as the Philippine Business Registry (PBR).
Business Advisory Services
- Assist MSMEs in meeting regulatory requirements to start and maintain the business.
- Build local support networks and establish market linkages for MSME development through the MSED Council and the DTI.
- Facilitate access to grants and other forms of financial assistance, shared service facilities and equipment, and other support for MSMEs through national government agencies (NGAs).
- Ensure management guidance, assistance, and improvement of working conditions of MSMEs.
- Co-organize with local chambers of commerce, other business organizations, and government agencies a mentoring program for prospective and current entrepreneurs and investors.
- Conduct other entrepreneurial development programs or projects aligned with the MSMEs development plan.
Business Information and Advocacy
- Provide information and services in training, financing, marketing, and other areas required by MSMEs.
- Establish and maintain a databank supporting business information requirements of MSMEs.
- Promote ease of doing business and access to services for MSMEs within its jurisdiction.
- Support private sector activities relating to MSMEs development.
- Encourage government institutions related to the business application process to help promulgate Negosyo Center information.
- Coordinate with schools and related organizations on youth entrepreneurship programs.
- Encourage women entrepreneurship through access to information, training, credit facilities, and other forms of assistance.
Monitoring and Evaluation
- Monitor and recommend business-process improvement for MSMEs.
- Establish a feedback mechanism among MSMEs in the Negosyo Center’s jurisdiction.
Negosyo Centers must also perform other functions assigned by the MSMED Council that are germane to Republic Act No. 10644 and other related laws.
MSME registration, forms, and deemed registration
- The IRR requires creation of a unified and simplified business registration form developed by the DTI in coordination with the DILG and other relevant agencies, based on the current form used for the Business Permits and Licensing System (BPLS).
- The IRR requires the unified business registration form to be made available in all Negosyo Centers and local government units, and to be updated and maintained by the DTI, including electronic availability.
- The IRR provides a registration timeline rule for MSMEs:
- If business permits and licensing offices (BPLO) fail to process an application within fifteen (15) calendar days upon receipt from the BPLO, the MSME is deemed registered for one (1) year.
- Within thirty (30) calendar days from the date of application of an MSME with the BPLO, the BPLO has authority to revoke the permit or license if the MSME fails to meet the requirements and qualifications imposed by the office.
- The BPLO must immediately inform the applicant by written notice of revocation.
- The IRR provides that the registration of Barangay Micro Business Enterprises (BMBEs) follows Section 5 (b) of Republic Act No. 10644.
- The IRR directs the MSMED Council, through a resolution, to provide guidelines for the issuance of the Certificate of Authority for BMBEs.
- The IRR provides for a Philippine Business Registry Databank (PBRD) in accordance with Section 5 (c) of Republic Act No. 10644.
MSME eligibility, start-up funds, and training/assistance
- MSME eligibility under the IRR follows the definition in Section 3.(a) of Republic Act No. 9178.
- The IRR provides for establishment of Start-up Funds for MSMEs under Section 7 of Republic Act No. 10644, with the amount allocated and guidelines for use identified by the MSMED Council through a resolution.
- The IRR provides that technology transfer, production and management training, and marketing assistance are availed in accordance with Section 8 of Republic Act No. 10644.
- The IRR authorizes the MSMED Council to issue, after consultation with the concerned agencies, a resolution on a Manual of Operations identifying individual and collective roles for technology transfer, training, and marketing assistance.
- The IRR provides that Negosyo Centers assist MSMEs in availment of assistance from DTI, DOST, UP-ISSI, CDA, TESDA, and other agencies concerned.
MSMED Council: composition and additional functions
- The IRR establishes the composition of the MSMED Council pursuant to Section 9 of Republic Act No. 10644, with the following members:
- The Secretary of Trade and Industry as Chair;
- The Secretary of Agriculture;
- The Secretary of the Interior and Local Government;
- Three (3) representatives from the MSME sector to represent Luzon, Visayas and Mindanao, with at least one (1) representative from the microenterprise sector;
- One (1) representative from the women sector designated by the Philippine Commission on Women;
- One (1) representative from the youth sector designated by the National Youth Commission;
- The Chairman of Small Business Corporation.
- The IRR provides for an Advisory Unit composed of the following:
- The Secretary of Science and Technology;
- The Governor of the Bangko Sentral ng Pilipinas;
- The President of the Land Bank of the Philippines;
- The President of the Development Bank of the Philippines;
- The Director General of the National Economic and Development Authority;
- One (1) representative from the labor sector, nominated by accredited labor groups;
- A representative from the private banking sector to serve alternatively between the chamber of thrift banks and the Rural Bankers Association of the Philippines (RBAP);
- A representative of microfinance NGOs;
- A representative of the University of the Philippines-Institute for Small Scale Industries (UP-ISSI);
- The President of the Credit Information Corporation.
- The IRR mandates additional MSMED Council functions consistent with Section 10 of Republic Act No. 10644, including:
- Acting as the coordinating and supervising body for all agencies involved in establishing and operating Negosyo Centers, and monitoring progress for inclusion in its annual report to Congress.
- Publishing compliance guides for each rule or group of related rules issued by any government agency for MSMEs, written in plain language or local dialect if necessary, with distribution and website posting requirements.
- Conducting research to support women entrepreneurship, including barriers, participation and cessation rates, discriminatory practices, and contribution to the national economy and growth.
- Providing policy direction recognizing women’s propensity in doing business and establishing linkages enabling more opportunities for women to engage in entrepreneurship.
- Developing, in coordination with the Department of Education, TESDA, and CHED, an entrepreneurship education and training curriculum/program to promote entrepreneurial culture and competence, integrated into curricula of educational and training institutions at all levels.
Public information dissemination, budgeting, and amendments
- The Philippine Information Agency (PIA), in coordination with the DTI and DILG, must ensure proper and adequate information dissemination of the contents and benefits of Republic Act No. 10644 and this IRR.
- The IRR requires dissemination through electronic updates and website and social media posting, and through leaflets or brochures containing frequently asked questions.
- The IRR provides for appropriations:
- The amount necessary for initial implementation must be sourced from the current budget of the DTI.
- Continued implementation funding must be included in succeeding General Appropriations Acts, including support for provincial, city, and municipal operations of Negosyo Centers.
- The IRR requires amendments to be processed as follows: when amendments are needed, the BSMED submits proposed amendments to the Secretary of Trade and Industry for approval.
Transitory provisions and final clauses
- The Secretary of the Department of Trade and Industry, as Chair of the MSMED Council, must ensure the currently constituted MSMED Council deliberates and acts on policy and program matters until full reconstitution under Republic Act No. 10644, limited to matters with identified timeframes and urgent concerns to avoid gaps in policy and program formulation.
- The MSMED Council must be reconstituted within sixty (60) days from approval of this IRR, and the Philippine Commission on Women (PCW) and National Youth Commission (NYC) must submit names of designated representatives before reconstitution.
- The IRR provides for continuity in the Advisory Unit: any current MSMED Council member whose representation is designated as part of the Advisory Unit continues as an Advisory Unit member until the MSMED Council issues the relevant policy concerning term of office of Advisory Unit members not ex-officio in nature.
- The IRR contains a separability clause: if any section, provision, or application is declared unconstitutional or invalid, the remainder remains effective.
- The IRR contains a repealing/superseding clause: inconsistent provisions of rules, regulations, codes, orders, resolutions, measures, and other policies issued pursuant to Republic Act No. 9178 and Republic Act No. 6977, as amended by Republic Act No. 8289 and Republic Act No. 9501, are superseded, repealed, or amended accordingly.