BSP backs scheme to boost SME financing

The Bangko Sentral ng Pilipinas (BSP) has volunteered to help refine a national action program on financing for small and medium enterprises (SMEs) that will be finalized during the Sept. 29 National Competitiveness Summit.

The suggestion of BSP’s involvement in mapping out what to do to get more credit plowed to private businesses was floated by BSP Governor Amando Tetangco Jr. during a dialogue between organizers of the competitiveness summit led by the Export Development Council and top BSP officials last week.

The BSP head noted that some of the proposals drawn up by the summit’s task force on financing are already being pursued by the BSP. These include its support for credit information sharing being developed by the banking industry, its rediscounting facility, the reduction of risk weight for quality SMEs and the exemption of SMEs from submitting income tax returns when they borrow from the banks.

Summit organizers earlier zeroed in on coming out with an action agenda on financing that sets up a system of providing local businesses with faster to get and cheaper credit, particularly to SMEs that have had a hard time getting loans from private banks.

Better access to credit has been identified by summit organizers as one of six major fields where the Philippines can faster gain the ability to compete and win. The country has recently been rated at the bottom third of over 100 countries worldwide by international competitiveness ratings groups including the World Bank.

On top of the list of issues on financing that were initially prepared by the team assigned to evolve an action agenda were: the fact that private banks have dodged the law requiring them to lend to SMEs by buying government debt papers and other substitutes to actual lending, their high interest rates, weak partnership between the government and private banks in opening better access to credit and the absence of venture capital for new business projects.

Specific reforms and programs have been suggested to address the above problems, but Tetangco said there is a need to update these programs with the help of the technical people from the central bank.

Decisions on most of the issues on financing were seen to lie on the shoulders of the BSP. – Philexport News and Features