Around P55-billion rescue package for the micro, small and medium enterprises (MSMEs) affected by the coronavirus pandemic and prolonged lockdowns has been proposed under the Bayanihan to Recover as One Act, according to the Department of Trade and Industry.
Trade and Industry Secretary Ramon M. Lopez said P50 billion to P55 billion stimulus package is intended for the soft loans and working capital of MSMEs. Other sectors like agriculture and tourism will have separate stimulus funds also.
The Department of Finance was agreeable to the proposed allocation of P140 billion for the Bayanihan To Recover bill to help the critically impacted MSMEs, but had strong reservation over the proposed P1.3 trillion stimulus package under the ARISE bill or the Accelerated Recovery and Investments Stimulus for the Economy.
For the MSMEs, Lopez said they can avail of the soft loans through government banks Development Bank of the Philippines and Land Bank of the Philippines. Some of the funds may also go through SB Corporation, the micro financing arm of the DTI. Earlier, Lopez said the SB Corp was asking for P5 billion allocation for MSME financing.
For SB Corp. the interest rate would be at 6 percent but the DBP and LBP have their own lending rates.
Typically, he said, MSME loan interest rates through the privately-owned micro financing institutions range from 24-30 percent given the high risk factor of lending to this sector. But Lopez said this is better than the illegal 5-6 money lenders.
One way also to help the MSMEs as mention by President Duterte in his state of the nation address is for the Bangko Sentral ng Pilipinas to provide regulatory relief to banks so the banks can in turn go easy on their borrowers through loan term extension.
For instance, he said, banks will extend the payment of principal loans but borrowers will just pay the interest rate for now.
“I am not going to call it loan restructuring, but perhaps renegotiation of the term agreement,” he said.
Lopez reported that DTI’s latest survey showed that about 26 percent of the 1.5 million registered MSMEs have closed, 52 percent are partially opened and 22 percent are fully operational.
The manufacturing sector has declined by 22 percent affecting at least 2-3 million workers. The restaurant business, which is not allowed to open except for delivery services during the Enhanced Community Quarantine and Modified ECQ, employs 900,000 while the salons and barbershops have 400,000.
Aside from the economic stimulus, Lopez said the government provides direct support for companies’ digital transformation.
Under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Bill, the president is given the power to grant specific incentives to major and critical investments like power rates. There are also incentives for companies that locate in the countryside.
Additional income tax holiday may also be granted for companies that will not retrench workers for maximum ITH years of 10 years.