The World Bank’s corporate arm, the International Finance Corp. (IFC), has urged the Philippines to prioritize the passage of legislation that will increase access to finance micro, small and medium enterprises (MSMEs) and make doing business easier for them.
Yuan Xu, IFC country manager for the Philippines, said that secured- transactions reform could effectively promote greater financial inclusion.
“If the Philippines truly wants to increase access to finance to MSMEs and increase its competitiveness in doing business, this bill needs to be prioritized so that a sound institutional framework will be in place to give financial institutions more confidence to lend to MSMEs,” she said.
Xu was referring to the secured- transactions bill, which is now moving toward the second reading in both the Senate and Congress.
She cited the example of China, where the implementation of comprehensive secured-transactions reform mobilized $3 trillion initially to MSMEs.
Secured-transactions reform entails strengthening the legal framework to enable financing based on movable assets, establishment of a modern centralized registry for both movable assets held as collateral and credit information and institutionalization of systems for dealing with insolvencies.
Gay Santos, senior financial sector specialist at IFC World Bank Group, said the passage of such legislation could help boost the Philippine ranking in ease of doing business.
“[This] aligns well with the 10-point socioeconomic agenda on focus on rural finance, MSMEs, as well as increasing competitiveness in doing business. This is already a priority legislation under the PDP [Philippine Development Plan] but not at the Neda [National Economic and Development Authority] level yet,” she said.
The country on Wednesday hosted the Fifth Financial Infrastructure Development Network (FIDN) Conference, which tackled on how the region can move forward after setting up foundations for a financial environment supportive of MSME and agricultural development.
FIDN is composed of Asia-Pacific Economic Cooperation (Apec) member-countries, IFC, APEC Business Advisory Council; SME Finance Forum and the Organization for Economic Co-operation and Development.