Senatorial aspirant and Sorsogon Governor Francis “Chiz” Escudero on Monday urged banks to ensure that 10 percent of their loan portfolio goes to micro, small and medium enterprises (MSMEs) financing.
Escudero, who used to head the Senate committees on finance, and banks and financial institution, said this would help facilitate faster economic recovery in the Philippines as it copes with the ongoing struggle agaisnt COVID-19 pandemic.
“What MSMEs need now is a credit line that will allow them to start anew and pump fresh resources into businesses that are barely surviving. Banks have the opportunity and responsibility to help our local entrepreneurs, as dictated by the Magna Carta for Micro, Small and Medium Enterprises,” Escudero said in a statement.
Escudero, who is seeking a fresh term in the Senate in the upcoming May 2022 eleections, noted that MSMEs, especially in the provinces, are in dire need of assistance in terms of financing and capacity-building.
He said MSMEs need to regain their footing after the pandemic caused business closures, displacement of workers and pay cuts due to a reduction in working hours.
Under Republic Act No. 6977 or the Magna Carta for MSMEs Act, Escudero noted banks must set aside at least eight percent of its loan portfolio for micro and small enterprises and at least two percent for medium enterprises.
The period covered for such mandate was from 2008 to 2018, but the Bangko Sentral ng Pilipinas (BSP) continues to monitor MSME lending. In the first quarter of 2021, only 5.2 percent of banks’ P8.6-trillion loan portfolio went to MSMEs, or around P448 -billion as banks continued to be wary of extending loans to MSMEs.
“We should consider reinstating this provision in the Magna Carta if we want to jumpstart the economy as 99 percent of businesses in the Philippine are MSMEs. There is no recovery without the recovery of the MSME sector,” Escudero pointed out.
“Ang pagpapautang sa mga MSMEs o pagbibigay ng ayuda ay hindi naman para ibulsa ng mga may-ari ng negosyo, kundi para may pang-sweldo sila sa kanilang mga empleyado (Providing to loans to MSMEs is not giving cash assistance that business owners can just pocket, but to ensure that their employees can also get their salaries),” he explained.
“Sa gayon, hindi na madadagdagan pa ang mga Pilipinong walang trabaho at mga pamilyang walang makain (With that, it will help reduce the number of Filipinos who have no job and families that would go hungry),” he added.
Citing a joint research conducted by UN agencies in the Philippines last August 2021, Escudero noted that banks tightened credit due to the perceived uncertainty in the business environment.
Around 75 percent of MSMEs have either suspended or stopped their business operations in 2020 while 60 percent reported that they have not received any assistance from either the government, private sector or non-government organizations (NGOs).
The UN report also identified credit facilities, tax breaks and deferred loan payments as the most pressing needs of the MSMEs.
“Kailangan ng mabilis na credit line hindi lang ng mga MSMEs sa Metro Manila o sa malalaking probinsya gaya ng Cebu at Davao, kundi lalo na ng mga nasa maliliit na siyudad (a faster credit line is not only needed by the MSMEs in Metro Manila or bigger cities like Cebu and Davao, but also by those situated in smaller cities),” Escudero said.
“Wala dapat parte ng bansa na maiwan sa ating pag-angat, dapat sabay-sabay tayong makabangon (No part in the country should be left behind in the development, everyone should be able to recover),” he stressed.