Wednesday, October 11, 2006 Export leader rallies bankers to lend much more to small, medium firms
AN EXPORT leader day called on the banking community to put more resolve and intensity in complying with the spirit of the small and medium enterprises (SME) and agri-agra lending laws to gain a quantum leap in lending to micro, small and medium enterprises (MSMEs) in the Philippines.
The call was made Philippine Exporters Confederation Inc. (Philexport) president Sergio R. Ortiz-Luis Jr. when he presented the need for effective access to financing as one of the strategies that the country should adopt to be more competitive during the first National Competitiveness Summit held in Malacañang.
"We have determined that effective access to financing is one of the keys towards pushing upward our economy's ability to compete, and a sound strategy to conquer poverty in the Philippines," said Ortiz-Luis, a member of the core group of summit organizers.
"Our vision is simple," Ortiz-Luis said. "We seek to develop a financial system that provides access to micro, small and medium enterprises (MSMEs) the same way as big borrowers," he added.
"Financing, especially for MSMEs, must be accessible, fast and cost effective, made so through the active partnership and continuing commitment between government and the private sectors," he said.
He noted that MSMEs comprise most Philippine businesses and contribute most to employment but getting credit is among their most problematic areas. A three-fold increase in MSME lending is the key to a broad-based and sustainable development, he added.
In the wake of the decline of the dollar's value against the peso, Ortiz-Luis said easier access to financing on a sustained basis may just save indigenous exporters hit hired by the peso appreciation from going under.
He suggested that for quick wins, the banks should be encouraged to lend more to small borrowers. This can be done by assigning lower risk weights to SME exporters, developing a credit information system including the SMEs, revitalizing wholesale lending attractive to private banks, and waiving BIR-stamped income tax returns for SME borrowers.
The waiver has been ordered by the Bangko Sentral ng Pilipinas (BSP), according to news reports.
Ortiz-Luis stressed that they are only stop-gap measures. A quantum leap in lending is attained only if and when the banks abide by the real goal of the SME and agri-agra lending laws, that of lending to MSMEs.
He noted that only five out of 912 banks nationwide accounted for over half of all the money actually lent out to MSMEs. Of the five that did their share, only one was a private bank.
The Philippines was the least hit by the 1997 Asian financial crisis, Ortiz-Luis said, but it is still struggling to recover while neighboring economies have been booming after they fixed their banking sector and paid more attention to the credit needs of small enterprises. (Abe P. Belena/Philexport News and Features/Sunnex)
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