Saturday, May 21, 2005

Magna Carta for SMEs

Roxas proposes changes in Magna Carta for SMEs
By Mary Ann Ll. Reyes
The Philippine Star 05/15/2005
The chairman of the Senate committees on trade and commerce and on economic affairs has filed a bill seeking to promote entrepreneurship by strengthening development and assistance programs to micro, small and medium-scale enterprises (MSME).

"There is a need to strengthen MSMEs because these are the backbone of our economy. It is a well-known fact that it is these small businesses, and not the multinational corporations, who employ more people," Sen. Mar Roxas said.

MSMEs account for 69.9 percent of the country's labor force, comprise 99.6 percent of all registered companies, and contribute 32 percent to the growth of the economy.

"We are determined to push for the growth and development of local small businesses. With more businesses, more people are employed," Roxas said.

Roxas' bill proposes amendments to Republic Act 6977 (otherwise known as the Magna Carta for Small Enterprises) establishing guidelines, institutional support and organizational support to MSMEs.

One of the amendments proposed is the increase in the mandatory allocation of credit resources from six to eight percent. This means all public and private lending institutions shall set aside eight percent (for micro and small enterprises) and two percent (for medium enterprises) of their total loan portfolio to make available for MSMEs.

Another proposed amendment is the increase in the authorized capital stock of the Small Business (SB) Corp., which is tasked to extend all forms of financial assistance to MSMEs, from P5 billion to P10 billion. This would mean more money available for lending to MSMEs.

"These amendments are intended to encourage people to become entrepreneurs rather than be ordinary workers. Entrepreneurs create new wealth and jobs," Roxas added.

Roxas initiated the SME Unified Lending Opportunities for National Growth or "SULONG", a lending program for small and medium-scale entrepreneurs when he was still Secretary of the Department of Trade and Industry.

Among the government financial institutions (GFIs) involved in the SULONG project, the Land Bank of the Philippines topped in the amount of loans released with P2.2 billion to some 2,550 SMEs.

The Development Bank of the Philippines came second with a total of P1.089 billion worth of releases to some 192 SME borrowers.

Next was the Small Business Corp. (SB Corp.), with P192.75 million released to 152 SME borrowers; Quedan Guarantee and Credit Corp. (Quedancor), with P90.41 million to 6,406 SME borrowers; and the National Livelihood Support Fund (NLSF), with P34.25 million to 754

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