DTI seeks P16-B budget for financing MSMEs over 4 years

Published July 17, 2019, 12:00 AM

by manilabulletin_admin

By Bernie Cahiles-Magkilat

The Department of Trade and Industry (DTI) is batting for P16-billion budgetary allocation over a four-year period to institutionalize affordable financing for micro, small and medium enterprises (MSMEs).

Trade and Industry Secretary Ramon M. Lopez
Trade and Industry Secretary Ramon M. Lopez

Trade and Industry Secretary Ramon M. Lopez said they are trying to institutionalize this annual MSME affordable financing budget at P4-billion annual budget allocation under the proposed Pondo sa Pagbabago at Pag-Asenso, sa or the P3 Bill.

Lopez explained that in the old P3 bill, which was not passed in the last Congress, the specific amount was removed but just the institutionalization of the availability of the fund.

In the new P3 bill that would be refiled under Sen. Koko Pimentel’s Committee, Lopez would like to also institutionalize the annual budget for MSMEs in the bill.

For this year, the DTI through SB Corp., the government financing arm for MSMEs, was granted P1.5 billion for P3 on top of the P2 billion granted last year.

So far, Lopez reported at the 2019 SME National Summit that P3.10-billion loans were released to 83,088 beneficiaries. Of this amount, P7.57 million were released to 457 borrowers in Marawi, P25.89M to 335 families of soldiers killed or wounded in action (KIA/WIA), and P3.14 million to 108 borrowers in Boracay.

The P4 billion annual allocation for MSMEs has been intended as a form of government’s war chest against the estimated P30-billion funds in the system from the loan sharks or the “5-6” lenders.

Lopez said the government’s P3, which carries a 2.5 percent interest rate only may not be big enough to eliminate the “5-6” but to give these loan sharks a good competition.

In fact, he said, in areas where P3 is present the interest rate of the loan sharks has gone down to 5 percent from 20 percent monthly.

The new bill should also push for allowing MSMEs to be paid within 15 days, not 30 or 60 days, because they are in need of faster turnaround of capital.

Former DTI Undersecretary Merly Cruz, now adviser of Philippine Center of Entrepreneurship Go Negosyo, noted that studies have shown that in the US, then survival rate of MSMEs is at a high of 80 percent on the first year, 70 percent on the second year, 50 percent on the fifth and 30 percent on the tenth year. The Philippine MSME success rate could not be far behind or lower, she said.