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More credit access eyed for small biz

More credit access eyed for small biz

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More credit access eyed for small biz

Topic |  
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The key to inclusive and stable economic growth comes with more credit access for small entrepreneurs.

Third District Rep. Arthur Yap emphasized this as he presented House Bill 3682 which he authored in facilitating inclusive and stable economic growth.

HB 3682 is an act strengthening the secured transactions legal framework in the Philippines, which shall provide for the creation, perfection, determination of priority, establishment of a notice registry, and enforcement of security interests in personal property.

Noting on Yap’s Bill, the APEC International Finance Corporation (IFC)/World Bank Group and the Department of Finance invited the Bohol solon as one of the reactors during the December 7 forum on “Strengthening Credit Infrastructure: A Roadmap to MSME Innovation”. Another reactor was Sen. Cynthia Villar. 

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Yap’s HB 3682 aims to enable more credit flow to Micro, Small and Medium Enterprises (MSMEs), support growth of supply chains and help this country achieve inclusive and stable growth.

“We must also realize that Philippine corporations and business entities are predominantly Micro, Small and Medium Enterprises.  MSME’s in the Philippines create the most jobs and have the biggest percentage share of the Philippine GDP.  Unfortunately, securing working funds for them remain a great challenge as outlined in a study by the IFC because our personal property collaterals laws are out-dated,” according to Yap.

He added that there exists no modern framework nor regime to establish a registry and securing transactions or enforcing of security interests for personal properties.

“Banks all want land to secure transactions when it is in scarce supplies. Yet out MSME’s have other resources like receivables, equipment, vehicles and other personal properties that are valuable no less and can be used for business and transactions. The time has come to pass a new Personal Property Collateral Act (HB 3682),” Yap added.

HB 3682 is an act strengthening the secured transactions legal framework in the Philippines, which shall provide for the creation, perfection, determination of priority, establishment of a notice registry, and enforcement of security interests in personal property.

During the 2015 APEC Meeting, the critical role of MSMEs in reducing poverty and achieving inclusive development was highlighted.

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Yap said that with a more liberalized trade and investment environment brought about by various regional cooperation initiatives, it is imperative for MSMEs to be more competitive to be able to connect to the global supply chains. Addressing the concerns of MSMEs is critical for them to have greater participation in the global market.

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The forum on Wednesday last week was an initiative under the APEC Financial Infrastructure Development Framework (FIDN).

The FIDN is envisioned to promote the development of effective credit information systems, as well as secured transactions and insolvency frameworks that would facilitate the use of movable assets as collaterals in the credit markets.

This collaborative effort among APEC member economies, APEC Business Advisory Council (ABAC), International Finance Corporation/World Bank Group (IFC), SME Finance Forum, and the Organization for Economic Co-operation and Development (OECD) brings together experts from the public and private sectors, including international organizations and industry associations, to support APEC economies in undertaking financial infrastructure reforms.

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During the forum, Yap stressed that the country must move away from a system of perennial and wholesale government dole-outs in agriculture by facilitating private-sector based mainstream financing of the agricultural sector.

He said that he has filed several house bills to support this objective such as House Bill 3560 (Over-haul of the crop insurance system of the Philippines by shifting the system to index based direct insurance and re-insurance policies); House Bill 3394 (providing a network of warehouses, storage and post-harvest services for farmers via the re-structuring of the National Food Authority and the creation of a National Food Service Corporation); House Bill 2459 (institutionalizing and expanding an Agricultural Guarantee Fund Pool) and House Bill 3682 (Personal Property Collateral Act).

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House Bill 3560 aims to mandate the Philippine Insurance Crop Corporation (PCIC) and encourage private insurance companies to offer index based insurance as one of their products.

Index-based insurance is an innovative and technically-sound approach to manage risks especially for our poor and highly-vulnerable farmers in the Philippine rural countryside.

Unlike traditional crop insurance in which indemnity payments are linked to individual farmer yields and losses, index insurance links payments to independently established data such as local rainfall, wind speed, temperature, typhoons, cyclones, and historical yield data as trigger events to release payments and compensation to affected farmers and fisherfolks.

Meanwhile, House Bill 3394 seeks to reorganize the National Food authority by creating a National Food Service Corporation, which will henceforth undertake all trading and security buffer stocking functions of NFA.

The NFA will survive with all regulatory functions intact.  For the NFA, the removal of its proprietary functions will enable it to focus more on its regulatory one, right-sizing its current organization, redefining its tasks, strengthening its procedures and processes, and update its regulatory powers vis-à-vis current trade concepts.

The Agricultural Guarantee Fund Pool, which is now sought to be institutionalized through the passage of HB 2459, has been used to mitigate the risks involved in agriculture lending by the guaranty of unsecured loans made by lending institutions or their conduits to small farmers and fisher folks engaged in small-scale livestock, poultry or fisheries.

It covers up to 85 percent of the loan exposure of accredited lending institutions against all types of risks of non-repayment by farmer-borrowers, except fraud.

 

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