SSS, GSIS urged to invest in SMEs

The Philippine Stock Exchange is urging the government Service Insurance System (GSIS) and the Social Security System (SSS) to divert part of their P5-billion financing program for small and medium enterprises (SMEs) to the capital market specifically created for these establishments.

PSE vice president for business development Jose Fernando Alcantara pointed out that only P343 million or about seven percent of the total SME financing package given out by the GSIS and SSS has been availed of during the past two years.

Moreover, he said there is no assurance that the funds were utilized by the SMEs themselves for project financing.

"The best way to make full productive use of the fund, and at the same time, mitigate lenders' risk and optimize return is to utilize the SME board of the exchange as an entry and exit mechanism for financing," Alcantara said.

The SME board, a separate listing and trading facility established within the PSE, provides a venue through which small and medium, young companies with high growth potential can raise capital by selling their shares to the public through an initial public offering (IPO).

The first batch of SMEs is scheduled to list their shares this quarter. The list includes shoemaker Le Donne, diversified construction group GGC, industrial firm Shin Lim, Nova Garments and Banco San Juan.

Qualified SMEs are those that have an authorized capital of P20 million to P100 million, net tangible assets worth at least P5 million, and a track record of a positive net operating income during the last two financial years.

Alcantara said that since the P5-billion special SME financing program of the pension funds has not shown any significant impact, the program should instead be channeled "partly, if not wholly, as a buy and sell portfolio for the public offering and trading of SME stocks."

He added that the PSE is set to formally submit its "extensive fund reactivation proposal" to GSIS and SSS early next week.