TAGBILARAN CITY, Philippines – Representatives Erico Aumentado (2nd district, Bohol) and Jocelyn Limkaichong (1st dist., Negros Oriental have joined hands for the institutionalization of the credit surety fund (CSF) to provide entrepreneurs of easy access to credit facilities of banks.
The two legislators of Central Visayas cited records of the Department of Trade and Industry showing that, as of 2009, at least 780,437 business enterprises already operated in the Philippines, 99.6 percent of which were micro, small and medium enterprises (mSMEs) that contributed almost 63.2 percent of the total jobs generated that year.
“This sector, considered the backbone of the country’s economy, could contribute more to the economic growth if their problems, particularly the lack of capital and access to credit from banks, are addressed. So far, their need to expand or develop new products is hampered by these barriers,” Aumentado and Limkaichong said.
They said most cooperatives, falling under mSME category, are well-capitalized but whose economic potential is waiting to be harnessed, adding that many non-government organizations have been supporting the mSMEs also.
Aumentado and Limkaichong said Republic Act 9520, or The Philippine Cooperative Code of 2008, provides for the creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people power towards economic development and social justice.
RA 9501, or the Magna Carta for mSMEs, was also enacted in 2008 to strengthen financial and other support mechanisms for mSMEs. Under this law, banking institutions are required to allocate eight percent of their loan portfolio to micro and small enterprises and two percent to medium enterprises.
Despite this requirement, however, banks are still hesitant to extend credit to mSMEs including cooperatives, citing lack of acceptable collaterals, business experience or track record, unstable income cash flows, and low paying capacity. - THE FREEMAN