Bangko Sentral loans to MSMEs hit P1.74B

MANILA, Philippines – The Philippine central bank said Monday, July 20, that it has approved P1.74 billion ($38.38 million) worth of loans to micro, small, and medium enterprises (MSME) under a credit enhancement scheme.

The Bangko Sentral ng Pilipinas (BSP) said the total amount was accumulated over the past 7 years under the Credit Surety Fund (CSF) program, P1.47 billion ($32.42 million) of which have already been released.

Since 2008, participating cooperatives, local government units (LGUs), and partner institutions have been pooling cash contributions that serve as security for loans extended by banks to MSMEs participating in the CSF Program.

The CSF, through the issuance of a surety agreement, allows cooperatives and capital-short MSMEs to obtain loans from banks in the absence of hard collaterals.

The fund is expected to spur economic activities, create more jobs, increase income and push development in the countryside.

In ASEAN (Association of Southeast Asian Nations), small and medium-sized enterprises (SMEs) account for more than 90% of all enterprises, employ 50-99% of the domestic workforce and contribute around 32-77% of total domestic output in their respective countries.

In the Philippines, the number of SMEs grew by 66% from 492,510 in 1995 to 816,759 in 2011. The numbers of those employed by these firms have grown by 45.7% from 2.7 million in 1995 to 3.9 million in 2011. (READ: SMEs in the Philippines: Going beyond survival)

Thus in the Philippines’ hosting of the Asia-Pacific Economic Cooperation meetings this year, SMEs are taking center stage. (READ: SMEs to take center stage in APEC 2015)

New CSF in Cagayan

The expansion of non-bank financial institutions in the Philippines will be key in sustaining small and medium enterprises (SMEs) once the country integrates with its ASEAN neighbors this year, economists said. (READ: PH SMEs need more support from non-bank financial institutions)

Yet, the overall business environment, access to finance, access to markets, and productivity and efficiency remain the challenges faced by SMEs, making the sector more vulnerable as the ASEAN Economic Community sets in. (READ: ‘ASEAN integration an opportunity, not a threat to PH SMEs’)

Thus, programs such as CSF are put in place to help MSMEs.

As President Benigno Aquino III said in November to the ASEAN Business Advisory Council, competitive SMEs that are able to make the most of regional integration are “the key to the success of our economic integration.” (READ: Aquino to ASEAN: SMEs key to economic integration)

BSP has established CSF in 28 provinces and 10 cities all over the country.

The central bank is set to launch the Cagayan CSF at the Pulsar Hotel, Tuguegarao City, Cagayan on Tuesday, July 21.

The BSP is set to establish 5 more CSFs this year in Cabanatuan and Santiago in Nueva Ecija and the province as a whole, plus in the cities of Malaybalay and Valencia in Bukidnon. – Rappler.com

$1 = P45.35

SME concept image from Shutterstock