Tacloban, pilot site for gov't anti-'5-6' lending program

TACLOBAN CITY, Philippines — An affordable loan program will be launched in Tacloban City next week, being one of the three pilot areas nationwide to abolish the so-called "5-6" money lending scheme popularized by Indian nationals in the country.

Other pilot areas are San Jose town in Occidental Mindoro, for Luzon, and Alabel town in Saranggani for Mindanao.

The new program is tentatively scheduled for launching at the Tacloban public market on January 25. Arrangements are being made for President Rodrigo Duterte to lead the launching, said Department of Trade and Industry-Region 8 Director Cynthia Nierras.

Duterte, who ordered for a crackdown of loan sharks last week, is set to visit post-Yolanda housing projects in the northern part of the city on January 25.

The city government provided a space at the public market for the office of Small Business Corporation (SBC), the DTI's financing arm. This will be manned by three staff, two of whom are tasked to collect payment around the market on a daily basis.

"Tacloban is a pilot area for the Visayas because our market vendors are most in need of this kind of assistance due to the reeling impact of supertyphoon Yolanda," Nierras said.

The 2017 General Appropriations Act has included an initial funding of P1 billion for financial assistance, a part of the planned P19 billion financing initiative for micro and small businesses in the next five years.

The program's fund will be lent out in the business centers in selected provinces, where the participating microfinance institutions (MFIS) and the SBC can operate.

The government earlier identified 30 poorest provinces in the country as priority areas for the micro-financing program, including Leyte, (Western) Samar, Eastern Samar, and Northern Samar.

Among the priority beneficiaries are those who do not have easy access to credit, or are accessing credit at very high cost, such as micro-entrepreneurs, market vendors, agri-businessmen and members of cooperatives, industry associations and co-operators.

Loanable amount per end-borrower can range from P5,000, for start-ups, to P300,000, with maximum interest rate of 26 percent every year without collateral requirement.

This rate is significantly below the hefty 20 percent per day, week, or month charged by "5-6" lenders. It is also lower than what is charged by most MFIs in the country.

In a meeting with his Cabinet on January 9, Duterte took up the "5-6" money lending scheme and ordered the arrest and deportation of foreigners involved in this practice, especially Punjabis from India. (FREEMAN NEWS)