The House of Representatives gave its final approval to the bill equipping government banks to grant more loans to micro, small, and medium enterprises (MSMEs) heavily affected by the coronavirus pandemic.
Voting 185-16-2, lawmakers approved House Bill (HB) No. 7749, or the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act on 3rd and final reading on Tuesday, February 9.
The GUIDE bill would provide a total of P55 billion to 3 government financial institutions – the Philippine Guarantee Corporation (PGC), Development Bank of the Philippines (DBP), and Land Bank of the Philippines (Landbank) – so they could better help MSMEs get back on their feet.
The PGC would be allotted P5 billion to increase its maximum loan guarantee coverage per borrower as well as reduce guarantee fees and other similar schemes.
Another P15 billion would be given to the DBP to expand its loan programs for MSMEs engaged in the infrastructure, service, and manufacturing industries.
The remaining P35 billion would go to Landbank for the expansion of its loan programs to benefit MSMEs engaged in agriculture.
HB 7749, however, would also create the controversial Accelerating Recovery to Intensify Solidarity and Equity Incorporated or Arise Inc, a state-backed holding company which would authorize the DBP and Landbank to enter into joint venture agreements with struggling businesses.
The resulting joint venture company would enjoy exemptions from procurement and competition laws, as well as tax exemptions and fee privileges.
Several legislators who voted against the GUIDE bill were particularly opposed to Arise Inc.
Economist turned Marikina City 2nd District Representative Stella Quimbo warned Arise Inc could lead to monopolies, since the holding company could end up selling the assets of a rescued company to one of its competitors.
“These types of situations could lead to monopolies in the market. More monopolistic markets ultimately mean higher prices and poorer service, and it’s the everyday consumer that suffers,” Quimbo said in a mix of English and Filipino as she explained her no vote.
Arise Inc would also be exempted from the review of the Philippine Competition Commission (PCC), where Quimbo used to be commissioner before she became congresswoman.
“A blanket exemption from PCC’s scrutiny and supervision, as proposed in the current GUIDE bill, undermines an important policy of the state and poses the risk of harm to competition down the line, whether intentionally or not,” said Quimbo.
The PCC itself previously issued a warning against Arise Inc, arguing it may distort the market and encourage anticompetitive behavior