IN a move to bolster entrepreneurship and support micro-sized, small-sized and medium-sized enterprises (MSMEs), the House of Representatives has given its nod to House Bill (HB) 10049, which aims to strengthen and empower financing and other support programs for these vital economic contributors.
The bill, endorsed for Senate approval after its passage on its third and final reading in the lower chamber, underscores the government’s commitment to fostering a conducive environment for MSMEs to thrive.
One of the key provisions of the bill is the periodic review and adjustment of the definitions of micro, small, and medium enterprises by the Micro, Small, and Medium Enterprises Development (MSMED) Council every three years. This ensures that the classification remains relevant and reflective of prevailing economic conditions.
Moreover, eligible MSMEs stand to benefit from various government assistance, incentives, and benefits outlined in the bill. These include streamlined permit and license application processes, reduced issuance costs, and preferential treatment in government procurement opportunities.
Among the notable provisions are mandates for local government units to allocate space for MSME stores in public areas, discounts on shipping and delivery fees, and incentives for private establishments to provide free or discounted space for MSMEs within their premises.
The bill also addresses access to finance, with provisions mandating lending institutions to allocate a percentage of their loan portfolios to MSMEs. It encourages cash flow-based lending, simplified loan application processes, and reporting of credit information to the Credit Information Corp.
The bill expands the membership of the MSMED Council, enhances the role of the Small Business Corp. (SB Corp.), and imposes penalties for noncompliance with mandated provisions, with the collected penalties allocated to the MSMED Council Fund.
The proposal amends the name of the “Small Business Guarantee and Finance Corporation” to “Small Business Corporation.” The bill also deletes the guarantee function of the SB Corp., replacing it with the “Enterprise Rehabilitation Fund” for calamity-stricken MSMEs. This fund must not exceed P500 million.
The bill also mandates the SB Corp. to submit an annual report to the MSMED Council, the Congress of the Philippines, and the GCG on the performance and financial condition of the corporation.
The proposal stipulates that the SB Corp. shall not be subject to the supervision and examination of the Bangko Sentral ng Pilipinas (BSP). The bill also exempts the SB Corp. from securing prior BSP authorization for engaging in quasi-banking activities.
HB 10049 increases the authorized capital stock of the SB Corp. to P50 billion, saying the national government equity in the SB Corp. shall be included in the annual General Appropriations Act.
It also stipulates that the initial amount of at least 10 percent of the equity contribution of the national government to the capitalization of the Small Business Corp. but not more than P500 million, shall be set aside to fund the venture capital and microfinance trust fund.
It extends the mandatory allocation of credit resources to MSMEs for another 10 years.
The bill also mandates all lending institutions to allocate 10 percent of their total loan portfolio for MSMEs for an additional period of 10 years, but only a maximum of 3 percent thereof shall be allocated for medium enterprises.
Meanwhile, the bill mandates all lending institutions to actively support and participate in programs that form part of the priority initiatives under the National Strategy for Financial Inclusion that promote access to finance for MSMEs while ensuring that they have adequate and effective credit risk management systems.