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Exporters seek development financing for MSMEs

LOCAL micro, small and medium enterprises (MSMEs) are in need of development financing to sustain their operations as many merchants remain unable to access affordable credit, an official of the umbrella organization of Philippine exporters said on Tuesday.

PhilExport Vice President for Advocacy, Communications and Special Concerns Ma. Flordeliza C. Leong said in a forum last Tuesday that while there are capacity-building programs and digital platforms aimed at helping merchants, “these are good; but these are not what MSMEs need.”

Leong said at the forum organized by the American Chamber of Commerce of the Philippines Inc. that during the early stage of their business, MSMEs “need hand holding; they need to be spoon-fed” and “they need development financing.”

She underscored that there are still MSME members of PhilExport “who complain that they cannot access [funds] because the terms are too difficult for them like requirements.”

“They don’t have collateral, which is I think the norm in banks.”

Leong added that PhilExport has gradually shifted its advocacy by asking government for traditional assistance for MSMEs.

“We now look at government” so that the terms are more lenient and flexible—mey be they wouldn’t require a collateral—”to bridge the huge gap.”

The PhilExport official, nonetheless, recognized the role of banks as having the responsibility to their stakeholders.

Leong added that PhilExport is also pushing for additional amendments to the Magna Carta for MSMEs and for its extension to another decade. She cited critical provisions in Republic Act 9501 that can be a “game-changer.”

Amendments

LEONG also cited a pending measure that centers on the removal of the regulatory cover of the Bangko Sentral ng Pilipinas (BSP) on Small Business Corp., the lending arm of the Department of Trade and Industry (DTI). The said measure, she added, has been stalled in the Senate.

Private sector group the Philippine Chamber of Commerce and Industry (PCCI), said in a statement on Monday it is also pushing for the amendment of RA 9501.

The Magna Carta for MSMEs recognizes that small and medium scale enterprises have the potential for more employment generation and economic growth and therefore can help provide a self-sufficient industrial foundation for the country.

PhilExport hopes the bill would get Senate action.

“In the last Congress, [the measure already had a committee report at the Lower House] but [at the] Senate, it’s not moving so we’re back to zero,” Leong said. “I hope they use the Committee report version.”

As she underscored the importance of this critical provision in the Magna Carta for MSMEs, Leong said “if we pass this, then maybe, within our lifetime, we can achieve that elusive dream of inclusive, sustainable MSME growth, which is really the biggest job generator.”

The Magna Carta for MSMEs is proposed to empower SBCorp. with more funds for this type of lending and to facilitate flexible and more lenient terms for MSMEs, according toLeong.

Capacity-building

AS for capacity-building, she said the PhilExport is continuing to work with the government and the private sector “towards capacity-building.”

“It’s true we need to teach our MSMEs how to build their books, how to be financially literate, how to borrow, how to keep a sound financial or cashflow,” among others.

Last month, PhilExport President Sergio R. Ortiz-Luis Jr. said the government needs to come up with “out-of-the-box” solutions to help small merchants contribute to the economic recovery path.

Ortiz-Luis noted that in order for MSMEs to generate jobs, it has to be spared from the traditional and burdensome lending process that makes these merchants go through a series of steps and fees.

The Philexport chief also mentioned that at the height of the mobility restrictions to address the Covid-19 pandemic, numerous small enterprises closed down. Ortiz-Luis added that while SBCorp., the financing arm of the DTI didn’t impose interest rates, it still required payment for a service charge and documentation.

Still, Ortiz-Luis stressed that since the SBCorp. is under the supervision of the central bank, it has to follow the rules of lending.

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