The Philippine Exporters Confederation Inc. (Philexport) has expressed strong support for proposed amendments to the Magna Carta for micro, small, and medium enterprises (MSMEs), while stressing that reforms must deliver concrete benefits such as improved access to financing and more favorable loan terms.

In a March 11 letter to Sen. Rodante Marcoleta, chair of the Senate committee on trade, commerce, and entrepreneurship, the exporters’ group said previous versions of the Magna Carta—Republic Act (RA) Nos. 6977, 8289, and 9501—have fallen short of strengthening MSMEs’ financial capacity.

“Our MSMEs remain the most underbanked in the whole of Asia, with a staggering 50 percent with no access to formal loans,” Philexport president Sergio R. Ortiz-Luis Jr pointed out in the position paer.

Philexport said the Philippines continues to offer only “token efforts” to expand MSME access to credit, leaving the country behind its Association of Southeast Asian Nations (ASEAN) peers in developing the sector.

Ortiz-Luis emphasized that sustaining economic growth will depend on addressing key constraints faced by MSMEs, particularly limited access to financing.

To address gaps in the current law, the group proposed several amendments, including removing the Small Business Corp. (SB Corp.) from the regulatory oversight of the Bangko Sentral ng Pilipinas (BSP) to enable it to provide developmental loans and set its own lending rules. SB Corp. is the financing arm of the Department of Trade and Industry (DTI) tasked with extending accessible credit to MSMEs.

Philexport also underscored the broader economic impact of strengthening MSME financing programs, saying such initiatives could deliver stronger outcomes than existing social assistance measures.

“Considering our fiscal position, this is unsustainable compared with supporting MSMEs to develop, grow and generate jobs and livelihood,” Ortiz-Luis said, referring to government dole-out programs.

The position paper noted that while MSMEs account for 99.6 percent of businesses and employ 65 percent of the workforce, they contribute only 35 percent to the country’s gross domestic product (GDP).

“Clearly, there is much room for development in this sector that could unlock opportunities for greater employment, rising incomes, innovation and value creation,” the paper said.

Philexport called for lending programs tailored to MSMEs’ needs, rather than traditional banking requirements.

“Instead, they should be designed based on criteria such as employment and business growth. It is high time that we seriously consider investing in our MSMEs,” it said.

The group also recommended establishing an enterprise rehabilitation fund for MSMEs affected by calamities, capping the loan portfolio share of medium enterprises to allow greater allocation for micro and small businesses, and tightening compliance rules for banks by excluding “evergreen loans” from credit compliance calculations.

It further pushed for the retention of penalty provisions for non-compliant lenders, including fines of not less than ₱500,000, with proceeds to support the capitalization of SB Corp.

At the same time, Philexport expressed support for selected provisions in Senate Bills (SB) Nos. 492, 931, and 761, including incentives for MSMEs, enterprise digitalization, and risk-based lending for movable assets under the Personal Property Security Act.

The group also emphasized the need to standardize the definition of MSMEs across government agencies to ensure consistency in policy implementation and evaluation.