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Simplified, cheaper gov't loan deals to prod MSME's to restart businesses -- Gatchalian
Simplified, cheaper gov't loan deals to prod MSME's to restart businesses -- Gatchalian
Senator Sherwin Gatchalian on Wednesday, March 17 underscored the need to simplify the procedures and reduce the transaction costs for government loans access for Micro, Small, and Medium Enterprises (MSMEs).
(MANILA BULLETIN FILE PHOTO)
Gatchalian said this will encourage MSMEs to seek government loans to restart their businesses which in turn will help shore up the economy.
Gatchalian, chairman of the Senate Subcommittee on Banks, Financial Institutions and Currencies, issued the statement as his subcommittee started the public hearing on the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) bill.
The measure, according to Gatchalian, seeks to provide aid to companies severely impacted by the COVID-19 pandemic, including the MSMEs, by reducing taxes and transaction costs making it easier on the pockets to secure a loan.
This would make borrowings cheaper for small businesses through the Land Bank of the Philippines (LDP) and Development Bank of the Philippines (DBP), he said.
“The documentary stamp tax, capital gains tax, creditable withholding income tax, value-added tax, gross receipts tax are usually shouldered by the borrowers. If these will be lifted, it will lower the overall cost of borrowings of MSMEs and entice them to seek financial assistance from government banks. I also hope that the bill will effectively streamline the process,” Gatchalian said.
“A number of MSMEs continue to face cash flow issues due to prolonged lockdown. Providing the needed access to credit and financial assistance to distressed businesses, particularly the MSMEs, will boost their confidence in continuing with their operations and help in maintaining employment levels which are critical in reviving the country’s economy,” he added.
Gatchalian noted that the country’s economy lost about P1.5 trillion in economic value or approximately 9.5 percent of Gross Domestic Product (GDP) last year and approximately three million Filipinos lost their jobs at the end of 2020, a reduction of 7.2 percent of the employment rate.
He found out from Landbank that 58,000 MSMEs involving 1.2 million jobs could be saved if the bill is enacted into law.
“The GUIDE bill will supplement the financial assistance to MSMEs that Congress has granted through the Bayanihan laws enacted last year. This will help jumpstart the economy,” he added.