Low interest rates meant to ease financing access

The Bangko Sentral Ng Pilipinas (BSP) said the reduced interest rates is meant to provide businessmen with easy access to financing, thus Cebuano traders are urged to take advantage of these rates and avail of the banks’ credit facility to advance their businesses and compete in the global field.

BSP governor Amado M. Tetangco Jr., was here in Cebu Tuesday to speak before the business community during the Cebu Chamber of Commerce and Industry (CCCI) general membership meeting held at the Casino Español.

He said the government has recognized its inadequacy especially in providing infrastructure to help private entities compete globally.

The governor mentioned the Philippines poor performance in terms of global competitiveness, wherein it ranked 71st among 125 countries surveyed.

He said the lowest interest rate environment could help companies enhance competitiveness.

"We are improving the access to much needed financial support of the companies," Tetangco reiterated adding that BSP is now drafting key legislation to improve the capital market in the Philippines.

He said there are moves now by BSP to mandate all banks to simplify their documentary requirements, especially those banks that are serving the Small and Medium Entrepreneurs.

Immediately after the 1997 regional economic crisis, the banking sector had been very stringent in offering corporate loans, especially to the SMEs, not until mid-2000 that the banking sector started opening its doors to small and medium players for loans.

Last year, the Philippine banking sector grew by an average of 24 percent. Non-performing loans (NPL) has declined to 6.4 percent. This development pushed the banking institutions to re-open its doors to corporate borrowers.

As part of the government’s bid to strengthen the micro-finance support to reduce poverty, BSP earlier said that sustained advocacy for micro-finance have benefited more and more SMEs across the country.

In fact, there were a total of 650,000 Filipinos last year, who availed of the micro-finance assistance offered by banks.

To date, there are over 200 banks engaged in micro-finance activities with a loan portfolio of P4 billion.

Access to financing is the long-standing problem of SMEs, including the micro business players, specifically in Cebu, as banks continued to be choosy in granting corporate loans to the business sector.

Because of the growing number of Overseas Filipino Workers (OFWs), steady inflows of money to the banking system is assured, thus, boosting the entire banking system in the Philippines.