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Friday, February 08, 2008
Palace wants cut in interest rates for microbusinesses (9:58 a.m.)
MANILA -- Presidential Management Staff (PMS) Director Cerge Remonde directed lending agencies for microfinance and small businesses to study the possibility of lowering their interest rates to encourage more domestic activity.
Remonde, oversight official for the government's micro, small and medium enterprises (MSME) program, said lower lending rates would make microfinance more attractive.
He gave the directive to the People's Credit and Finance Corp. (PCFC) and the Small Business and Guaranty and Finance Corp. (SB Corp) but the agencies have no commitment or estimates yet as to how much would be the cut in the interest rates because of “serious ramifications.”
Remonde said the move to raise the number of small businesses is part of President Gloria Macapagal-Arroyo's pump priming program in the light of the US economic slowdown.
SB Corp. president and CEO Benel Lagua said the interest rate for the SME Unified Lending Opportunities for National Growth (Sulong) is 9-14 while PCFC president and CEO Edgar Generoso said his corporation charges 10-12 percent per annum.
Lagua said his agency cannot give an interest that is lower than the T-bill rate but there are moves to push rates in the Bangko Sentral ng Pilipinas (BSP). Generoso also said the reduced BSP rates are being done in answer to the US slowdown.
Remonde said government's P200-billion surge program, which primarily involves frontloading infrastructure, also includes MSMEs in the “economic firewall.”
The PFPC president said P40 billion to P50 billion is expected to be used for microfinance for MSMEs.
Remonde also ordered the credit agencies for MSMEs to look into the expansion of the program in the conflict areas.
Generoso said only 42 towns do not have microfinance and most of these are in Mindanao, particularly the Autonomous Region in Muslim Mindanao (ARMM).
He said the most common business for microfinance is still the sari-sari store but this has dropped to 60 percent because those who are engaged in the cellular phone Pasaload and repair businesses are growing.
Remonde said P203.61 billion has been released to 3.65 million microfinance clients and SME accounts from 2004 to 2007, which generated 2.1 million jobs or 70 percent of the targeted new jobs to be created by 2010.
He said the P203.61 billion is 65.69 percent of the P309.98 target for 2010.
He said MSMEs, which are considered the backbone of economic activities in the countryside, comprise 99.6 percent of registered companies.
The trade department reported that value added contribution of MSMEs to the economy is at 30 percent, compared to the 40 percent target by 2010. (JMR/Sunnex) |
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