Exporters are pushing for the passage of amendments in the Magna Carta for Micro Small and Medium enterprises (MSMEs) to enable SB Corp., the micro lending arm of the government, implement more MSME friendly lending policies.
Sergio Ortiz-Luis Jr., president of the Philippine Exporters Confederation (PhilExport), said at the virtual “BPOs, Exporters and OFWs: How can they bring the dollar income back?” webinar organized by the Management Association of the Philippines that amending the Magna Carta for MSMEs will free up the SB Corp. from the Bangko Sentral ng Pilipinas lending rules.
“We look forward to the passage of the amendments in the Magna Carta for MSMEs that will free SB Corporation from the regulatory cover of the Bangko Sentral for more MSME-friendly lending policies,” said Ortiz-Luis.
In pushing for the passage of the amendments, Ortiz-Luis noted of inflation pressures that may force the BSP to tighten money supply and raise interest rate to rein it in. With soaring prices, inflation rate in the country already topped the 4 percent government target.
“This would then create the domino effect of reducing borrowing and dampening consumer spending. The newly released Bureau of Internal Revenue Regulation 9-2021 that imposes VAT on exports for refund later poses another challenge on MSME cash flow,” he said.
Aside from higher prices, Ortiz-Luis said MSMEs would be burdened by voluminous documents to submit physically to the Bureau of Internal Revenue office, as exporters go through a process that will give them the burden of proof just to get back their own money.
“Additionally, we continue to grapple with stringent policies of the Department of Environment and Natural Resources; Philippine National Police on regulated chemicals; the higher shipping cost that tripled due to the vessel space issue; issues with the Bureau of Customs on penalties, risk management and birth pains in their computerization program; the digital divide, connectivity and infrastructure gaps that became more evident due to this pandemic; and many other sectoral concerns,” he said.
“Let us not look at export and MSME programs and support as an expense. Our ASEAN neighbors have long realized that it pays for employment and economic performance to invest in exports and MSMEs, who in the Philippines, account for 65 percent of employment,” he said.
“Let us stop the lip service and token grants that do not even scratch the surface. Government can actually do a lot more, especially towards our economic recovery if only the right will, mind and heart are into it. We owe this to our exporters, especially MSMEs, and their never-say-die spirit, which after being battered from one crisis after another, remain resolute to sustain their operations. This optimism is also giving us the confidence that yes, exports will continue to be a major engine of our recovery and growth.”
Already, exports target had already been downgraded for both 2021 and 2022 to reflect the extent of the impact of the pandemic. The export sector is now aiming for $105 billion instead of $122 billion to $130.8 billion in goods and services exports by the end of 2022 for what should have been an annual growth rate of 8.89 to 9.96 percent.
Ortiz-Luis also pushed for support given recent inspiring news from the exports sector.
“ For one, we are relieved to know that orders are coming back even for non-essential items such as garments, furniture, and giftwares. While the renewed demand still failed to lift their sectoral performance up in the export charts, the orders have increased production activities as shared by our members,” he said.
Also, electronics continued to dominate exports to the tune of 56.4 percent, contributing to the 72.1 percent-strong export rebound to $5.71 billion in April this year compared with $3.32 billion in 2020.
Other consistent performers so far were ignition wiring sets, metal components and other manufactured 2 products. This puts the country’s export growth year-to-date (January to April) in the positive territory at 19 percent to $23.37 billion.
“While we are indeed coming from bearish pandemic baselines, prospects have turned more bullish as factories worldwide start to ramp up production as a response to what is termed as revenge purchases. We hope that the passage of the Corporate Recovery and Tax Incentives for Enterprises Act can indeed attract more activities and investors that will help absorb some of the 4.14 million Filipinos without jobs as of April 2021,” he added.
While unemployment rate is at a high of 8.7 percent, even worse than March 2020’s 7.1 percent record when the first hard lockdown was declared, Ortiz-Luis expects the situation to improve as more Filipinos receive their vaccines and start integrating again into the labor market.