Gov’t to allot P50B for MSMEs—DTI exec

The government plans to allot P50 billion in the remaining years of the Duterte administration to develop micro, small, and medium-sized enterprises (MSMEs), according to Trade and Industry Secretary Ramon Lopez on the sidelines of a business launch on Tuesday.

The accumulative budget would only be for MSME development, although this already largely comprises the thrust of the Department of Trade and Industry (DTI), Lopez said.

A huge chunk of this budget is expected to go to a financing program for MSMEs, which would have fallen victim to loan sharks.

The program, called Pondo sa Pagbabago at Pag-asenso (P3), eyes the 30 poorest provinces in the country, allowing MSMEs in those locations to have better access to finance and to reduce their cost of borrowing.

Lopez said the P50 billion budget would be “within the term” of President Duterte.

He, however, clarified that he was “just quoting” Duterte,who said in November that he wanted to support the sector.

Since the budget is for the entire MSME sector, Lopez said it would also be allotted for shared service facilities and international trade promotions.

This comes as the sector, in spite of comprising the majority of businesses today, only contributes up to 35 percent to the economy, a figure which Lopez wants to eventually raise to 55 percent.

“P30 billion is the [estimated value of the loan shark industry]. We have to replace that with a P3 loan. So, you can imagine that over that time, that should be the level of the P3 loan,” he explained in a mix of English and Filipino.

However, in a previous statement, DTI has said that P1 billion had been allotted for the P3 program next year. If the government wants to meet the estimated P30 billion value of the loan shark industry, that means DTI has four more years to do so.

Under the P3 Program, a micro enterprise can borrow between P5,000 up to P100,000, depending on its business need and repayment capacity, with no collateral requirement. Interest rate and service fees, all in, do not exceed 2.5-percent monthly, which is a huge relief from the 20-percent monthly rate under the 5-6 loan system, DTI said.

Small Business Corporation (SB Corp.), DTI’s micro-financing arm, accredits partner institutions such as non-bank micro finance institutions (MFIs), cooperatives and associations to serve as conduits for the P3 funds.

As of November this year, P3 has helped 16,210 micro entrepreneurs with four national micro finance institutions (MFIs) and 90 local conduits assisting in delivering the micro-loans in the countryside. Forty-five MFIs are in the pipeline. A total of P485.41 million has been released to partner conduits and P307.80 million released to microfinance borrowers.