SMALL ENTERPRISE TECHNOLOGY UPGRADING PROJECT

(SETUP)
(culled from the following documents: How do we improve technology and production effiency of MSMEs for
ASEAN integration? Powerpoint presentation of Dr. Carol M. Yorobe of DOST, SETUP brochure, SETUP manual
of Operations, www.dost.gov.ph and www.dti.gov.ph)

For assessment using the PIMME Checklist

I. BACKGROUND
The Department of Science and Technology (DOST) launched the Small Enterprise Technology
Upgrading Program (SETUP) in response to the call for more focused programs of assistance for
small and medium enterprises (SMEs). SETUP is a nationwide strategy to encourage and assist
SMEs to adopt technological innovations to improve their operations and thus boost their
productivity and competitiveness. The program enables firms to address their technical problems
through technology transfer and technological interventions to improve productivity through better
product quality, human resources development, cost minimization and waste management, and other
operation related activities.
II. ISSUES
Small and medium enterprises (SMEs) form the driving force of the countrys manufacturing sector
and determine economic stability, hence it is the backbone of the Philippine economy.
As of 2012, The Philippines has a total number of 936, 791 registered small (92,027) and medium
enterprises (940,886) which accounts 97% of all registered businesses in the country1. Majority of
the SMEs are in wholesale and retail trade, repair of motor vehicles and motorcycle industries,
accommodation and food services, manufacturing, human health and social services, real estate and
other services sectors. They account for 60% of the total number of exporting firms in the country
and employ 53% of the countrys total work force.
In recognition of the crucial role SMEs play in national growth economic policies have been
refocused to fuel the growth of the manufacturing sector through the development of SMEs. SME
markets are being expanded and their competitiveness is being honed. Despite this, SMEs continue to
face, among other challenges, a constant need for innovation which will require effective
partnerships for shared resources, services and knowledge2.
In view of this, the Small Enterprise Technology Upgrading Project (SETUP) was established as a
nationwide strategy encouraging and assisting micro, small and medium enterprises (MSMEs) to
adopt technological innovations to improve their operations and increase their productivity and
competitiveness. SETUP aims to assist SMEs in the following areas:
1. New technologies
2. Technical manpower training
1

http://www.dti.gov.ph/dti/index.php/msme/msme-statistics

http://www.sunstar.com.ph/cebu/business/2013/03/17/smes-still-face-crucial-challenges-273480

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3.
4.
5.
6.
7.
8.
9.

Access to capital
Access to markets
Product standards and testing facilities
Appropriate packaging and product labeling
Sustainable raw material supply
Access to information
Better transport facilities

The program enables firms to address their technical problems through technology transfer and
technology interventions to improve productivity primarily through enhanced product quality,
upgraded manpower, cost reduction, effective waste management and operations tune-up.
Through the abovementioned range of assistance, SMEs are hoped to be able to address current
problems; obtain free technical advice from consultants; avail of technical training courses for
workers/employees; acquire new equipment to mechanize and/or improve production lines;
standardize and improve the quality of products and be more competitive.
The total project cost stands at five-hundred million pesos (Php500, 000,000.00) for fiscal year 2013.
III. TECHNICAL ASSISTANCE
A. Impact and Outcomes
SETUP enables MSMEs to address their technical problems and improve productivity and efficiency
through:
1.
2.
3.
4.
5.
6.

Infusion of appropriate technologies to improve operations

Human resource training, technical assistance and consultancy services
Design of functional packages and labels
Assistance in the establishment of product standards including testing
Database management system
Provision of limited funds for technology acquisition

Priority sectors for technical assistance are the following: (1) food processing; (2) furniture; (3) gifts,
housewares, decors; (4) marine and aquatic resources; (5) horticulture and agriculture; (6) metals and
engineering; (7) health products and services/pharmaceuticals and (8) ICT/Electronics.
B. Methodology
The Department of Science of Technology shall provide technical assistance to MSMEs through the
SETUP using the following strategies:
Provision of technology
a.

Technology Needs Assessment and Sourcing of Technology- participating MSMEs will be

assisted in assessing their technology needs and appropriate technologies recommended for
adoption. Once identified, sources of technology will be determined and negotiations for the
acquisition and installation of the technology will be done.

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b.

Innovation System Support-participating firms shall be assisted in the acquisition of needed

equipment and/or technology to improve their production efficiency.
Human Resource Training-Participating firms shall be provided with technical training on
key production aspects such as Hazard analysis and critical control point (HACCP);
Quality/environment management system (QMS/EMS) as well as training on specific
technical skills such as machining for furniture, handloom weaving, seaweed culture and
tissue culture production, among others.
Consultancy and Technical Advisory Services-participating firms shall be provided with
continuing technical and productivity consultancy services including CP/ETV and Effective
Energy Management/Energy Audit to ensure successful adoption of technologies through
DOSTs pool of science and technology experts from its various agencies and members of
the R&D network including academic institutions.

c.

d.

Product Standard and Testing

Participating firms shall be assisted with product testing for them to be able to meet certain standards
that will allow them to compete locally and globally. DOST, established a network of regional testing
laboratories in cooperation with the state colleges and universities (SUCs) and private testing centers.
Packaging and Labeling
Participating firms shall be assisted with design and selection of appropriate packaging materials to
increase shelf-life and marketability of their products. DOST established the Packaging R&D Center
under the Industrial Technology Department Institute (ITDI) to assist MSMEs in developing
functional designs for packages, identify and develop suitable or alternative packaging materials
especially from indigenous sources.
Database Management and Information System
Several databases vital to MSMEs are now being developed/maintained which includes list of
available technologies and necessary equipment per technology including specification at the
national and regional level, list of S&T experts, list of accredited fabricators and list of testing
laboratories including services and cost. These databases will be accessible through the SETUP
website.
IV. APPLICATION PROCESS
Eligibility of Proponent
The following may apply for assistance from SETUP:

Any company or individual firm based in the Philippines and wholly-owned by Filipino
citizens
Any micro, small and medium scale business firm that can be classified under the identified
priority sector
Any company or individual firm willing to apply technological innovations to their existing
operations
Any LGU willing to apply technological innovations to the existing operations in their
locality

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Checklist of Requirements
1. Comprehensive Proposal containing the technical, marketing, management/administrative,
and financial aspects as well as waste disposal method;
2. Endorsement from the DOST Regional Director where the firm is located;
3. Review and Technical Evaluation Committee (RTEC) Executive Report completely signed
by all the RTEC members and duly approved by the regional director;
4. Proponents letter of interest to avail of financial assistance, stating commitment to
repayment, including the proposed repayment schedule;
5. Copy of business permits and licenses from relevant LGUs and other government offices;
6. Financial statements of at least the past three (3) years for the company/beneficiary duly
signed by a Registered Accountant/Auditor;
7. Projected financial statements for the next five (5) years;
8. Certificate of Registration of Business Name with the Department of Trade and Industry
(DTI), Securities and Exchange Commission (SEC) or Cooperative Development Authority
(CDA);
9. Board resolution authorizing the borrowing and designating authorized signatories for the
financial assistance (if applicable);
10. Three (3) quotations from suppliers/fabricators of the equipment to be purchased/fabricated;
and
11. Complete technical design/drawing of the equipment to be purchased/fabricated
IV. APPLICATION PROCESS
Procedure of Application
Proposal Preparation, Submission, Review and Approval
A. For proposals from non-DOST proponents
i.

The proponent shall submit a letter of interest to avail of the SETUP assistance with all the
requirements indicated above to the DOST Regional Office thru the Provincial Science and
Technology Center where the company is located.

ii. The proponent together with the DOST Regional Office/Provincial Science and Technology
Center shall conduct technological needs analysis (TNA) to identify current problems,
improvements and potential technologies interventions needed.
iii. If found viable, the DOST Regional Office endorses the proposal to SETUP- National
Program Management Office (NPMO) for evaluation and approval. All proposals must be
supported by a TNA report, an RTEC report and all the requirements.
B. For Proposals with DOST as Proponent
i.

The proponent shall submit a proposal. For continuing projects, the proponent must submit
status/terminal report and financial report using SETUP Form No. 005 and 006,
respectively. Proposals from regional offices must be supported by an RTEC Report.

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C. Proposals with incomplete documents will not be considered received. SETUP-NPMO refers the
received proposals to the evaluator following the evaluation scheme from the SETUP Manual of
Operations.
D. Upon approval of the proposal, a Memorandum of Agreement or Instruction (MOA or MOI)
shall be prepared and release of funding shall be processed.
i.

For approved project of non-DOST agency-A Memorandum of Instruction (MOI) shall be

executed with the concerned DOST Regional Office as the monitoring agency who will
then execute a Memorandum of Agreement with the beneficiary as the implementing
agency.

ii. For approved project of non-DOST agency-A Memorandum of Instruction (MOI)) shall be
executed with the concerned DOST Regional Office as the monitoring agency who will
then execute a Memorandum of Agreement with the beneficiary as the implementing
agency.
V. MONITORING AND EVALUATION
The Department of Science and Technology, especially its regional offices, in partnership with
private firms and local government units willing to apply technological innovations to their existing
operations are the key implementers of SETUP.
Periodic monitoring and review of equipment, productivity, workers performance and standard
compliance using a Balanced Score card for planning, monitoring and evaluation is conducted.
Results are also reinforced through conduct of regional audit by an external committee.
Data gathered from the monitoring process are used to enhance baseline data in SETUP online
(website) based on project info sheets for continuous data updating.
VI. IMPLEMENTATION
As one of the flagship programs of the DOST, SETUP has had 1,951 beneficiaries for the period of
2002-2012. Assistance provided includes provision of training, technical assistance, consultancy
services and assistance on technology acquisition all over the country.
Among the notable impacts of the program include generation of employment, increase in product
volume, improvement of product design/quality, compliance to certification procedures such as
HACCPi, reduction of rejects and rework, expansion of markets and increase in profits.
YEAR
2002
2003
2004
2005
2006
2007
2008

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Amount (PhPM)
15.36
23. 75
30.66
39.10
50.06
68.03
105.88

2009
2010
2011
2012
2013

82.24
138.92
142.73
375.30
500.00

The financial assistance provided by DOST also significantly increased from 15.36 million pesos to
500 million pesos in 2013. This was done to increase support to ensure adoption of appropriate
technologies and innovations to make SMEs competitive in the global market.
Assistance/Services Offered through SETUP

FDC

DOST
Agencies

DOST
Balik
Scientist
Program

DOST
Food
Innovation
Center

RSTLs

Packaging
Centers

LGUs
Private
Sector

NGAs

SUCs
and Other
Research
Centers

Technology Hubs for food processing for short-run production

Food research and testing laboratories for
-process and product development
-shelf-life testing
-nutritional labeling
-sensory evaluation
-food quality and safety tests
Packaging and labeling services
Technology Information
Technical Trainings
Technical Consultancy and Advisory
-technology and marketing brokering
-productivity consultancy
-process and product development

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