The Duterte administration’s campaign to drive “5-6 loan sharks” out of business is gaining ground, Trade Secretary Ramon Lopez said on Tuesday.
Lopez said the rollout of the Pondo Para sa Pagbabago at Pag-Asenso (P-3) program, which has an initial funding of around P1 billion, had led to a drop in interest rates charged by usurers.
“At least from what we heard in regions and provinces where we are distributing the loans, the interest cost of the ‘5-6’ has gone down,” he told reporters.
“They said it has now gone down to 5 percent a month when, before, it was 20 percent per month. It was really usurious. Sometimes, it was even 20 percent per day or per week, depending on your needs,” he added.
Alternative loan source
The P-3 program aims to provide microenterprises with an alternative source of funding. Borrowers can take out a loan of P5,000 to P100,000 with no collateral and with a maximum monthly interest rate of 2.5 percent.
Lopez said the Department of Trade and Industry (DTI) wanted to increase the program’s funding to P30 billion because that was reportedly the total amount lent by “loan sharks” in the country.
“We’ve committed close to P1 billion in terms of funds, and we need to get more funds really to support this nationwide approach,” Lopez said.
“Based on our estimates, if we are to really counter the 5-6, the rough number given to us—since it’s an informal sector, our source was also informal—the 5-6 lends around P30 billion,” he said.
“So, if we are really to replace all the 5-6, we should have that fund. P1 billion is fine at the start,” he added.
Program expansion plan
Lopez noted that President Duterte wanted the program to allot at least P1 billion per region.
He said efforts were being made to expand the program and cover all of the country’s 81 provinces.