THE Filipino Cebuano Business Club Inc. (FCBI) is calling for the strict implementation of the Magna Carta for micro, small and medium enterprises (MSME) or RA 9501, particularly in accessing loans from lending institutions to further promote entrepreneurship, even in the countryside.

Updates on President Benigno Aquino III's presidency

FCBI president Rey Calooy said in an interview last Saturday that although the bill was approved, there is still a perceived lack of awareness and enforcement of the law.


Calooy cited in particular the lack of information materials such as fliers in every bank that should contain information on credit allocation for MSMEs, as mandated by law.

“Awareness of this law is very vital for MSMEs, especially that they comprise the biggest part of the business industry. The law has a lot of benefits MSMEs can take advantage of,” Calooy said.

MSMEs represent 99.6 percent of all registered firms in the country and generate about 70 percent of the local workforce.

Aside from information dissemination, Calooy also mentioned the difference in the interest rates between rural and commercial banks, which makes it tough for MSME’s to gain equal footing in the playing field.

He said interest rates per annum for rural banks stood at 18 to 20 percent while that

of commercial banks stood at eight to 11 percent.

“How can we compete fairly with large companies with the same offered services when interest rates are higher in rural banks than commercial banks?” Calooy said.

Rural banks

He noted, however, that most MSMEs borrow from lending institutions like thrift and development banks.

But he said that the presence of rural banks is important, especially for MSMEs in the countryside.

Calooy also said that he hopes government agencies like the Department of Trade and Industry would continue conducting consultative meetings among MSMEs to discuss the law’s features.

The amended law revised the mandatory allocation of credit resources of all lending institutions for MSMEs.

The law now requires them to lend at least eight percent of their loan portfolio to micro and small enterprises.

Previously, lending institutions merely had to allocate six percent to small and two percent to medium firms.

Other major provisions of the law also include the formulation of a six-year MSME development plan, reconstitution of membership in the MSME Development Council and the involvement of Congress in oversight functions.