Exporters back bill seeking enhanced MSME access to credit

MANILA, Philippines - Philippine exporters back a proposed measure seeking to enhance the credit worthiness and access of micro, small and medium entrepreneurs (MSMEs) to the credit facility of banks through the creation of credit surety funds (CSF).

”Addressing these issues is very critical, as it can spell the entry, expansion, success or closure of MSMEs that are more and more turning to informal lending to respond to their funding requirements,” Philippine Exporters Confederation, Inc. president Sergio R. Ortiz-Luis Jr., said in a position paper on House Bill (HB) No. 4970.

HB 4970 seeks to institutionalize the CSF aimed to give more MSMEs greater access to the credit facility of banks.

The CSF program is developed by the Bangko Sentral ng Pilipinas (BSP).

The fund, which is pooled through contributions of cooperatives, local government units and partner institutions, serves as a security for loans of MSMEs from banking institutions by providing a surety cover in lieu of acceptable collaterals.

Ortiz-Luis said the CSF would address the long-standing issue of insufficient collateral for MSME loans.

Banks require collaterals when extending loans, a requirement which is often difficult for MSMEs to comply with.

“We agree with the recognition that government plays a vital role in encouraging, promoting and institutionalizing a national program that will allow MSMEs and business cooperatives to obtain easier access to credit from banking institutions under a win-win situation such as what the CSF offers,” Ortiz-Luis said.

To make the proposed law even more relevant, Philexport said local governments should also be asked to allocate specific financial contributions to the CSF.

This, as they also benefit from MSMEs through the taxes, licenses and registration fees generated from economic activities in their respective areas. The group added that interest rates should be MSME-friendly.

Earlier, the BSP said it aims to establish 13 more CSFs across the country from this year until next year.

As of end-2013, there were 29 CSFs across the country, with total loans extended amounting to P1.069 billion.