Recto wants to account for MSME lending

Published November 19, 2020, 7:00 AM

by Bernie Cahiles-Magkilat

Senator Ralph Recto yesterday sought for an accounting of the funds being allocated to government financial institutions for lending to the micro, small and medium enterprises (MSMEs).

Senator Ralph Recto (Senate of the Philippines / MANILA BULLETIN)

This transpired at the Senate hearing for the Department of Trade and Industry budget for 2021 where DTI Secretary Ramon M. Lopez through the agency’s budget sponsor Sen. Sonny Angara responded to interpellations that focused on lending to the MSMEs.

According to the DTI, the Department of Budget and Management (DBM) has already released P9 billion out of the P10 billion allocated to SB Corporation but the micro lending arm of the government has yet to approve 26,245 applications from the MSME sector.

 Since, the Bayanihan 1 the SBCorp. already released P1.2 billion loans to 1,160 MSMEs through its CARES program. But there are still 26,245 pending loans applications under that have to be approved for funding under Bayanihan ‘s P10 billion fund allocation to MSMEs including the tourism sector.

 Recto also noted that both the government banks Land Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP) have combined P24.47 billion. Combined with SBCorp. P10 billion, the MSME sector should have available P35 billion funding available for their recovery.

There are 1.4 million enterprises registered with the DTI. The MSMEs account for 99.6 percent of total business establishments in the country and provide 65 of total employment in the country.       

 This prompted Senator Ralph Recto, president pro tempore, to ask the DTI to ask for a report from these two institutions as to how much they have actually released to the MSMEs.

DTI is the chair of SB Corp. but it has no oversight role for DBP and LBP, which are under the Department of Finance.

Recto further explained that MSMEs are the constituents of DTI but which the agency has no oversight role, do not have a research about it or a report from the two banks as to how much of the fund allocation has really been provided to the sector.  Lopez said he can request for a report from both banks.

DBP and LBP lend directly to the MSMEs but they also partnered with micro financial institutions to lend to the micro enterprises.

Recto stressed the need to account for the MSME lending stressing that “While we laud the efforts of the Bangko Sentral ng Pilipinas to provide liquidity,” the banks just don’t lend to the MSMEs.

 The Bayanihan 2 created P145 billion emergency fund to help help enterprises get back on their feet and for government to respond to the COVID-19 crisis.