A bill that would equip government banks to grant more loans to micro, small, and medium enterprises (MSMEs) heavily affected by the coronavirus pandemic hurdled the committee level in the House of Representatives.
The House Defeat COVID-19 committee approved on Tuesday, July 28, the still-unnumbered substitute bill on the proposed Unified Initiatives to Distressed Enterprises for Economic Recovery (Guide) Act.
This now means the measure will soon be sponsored in the plenary, where it will have to be approved on 2nd and 3rd readings by the entire chamber.
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. (READ: ‘Sariling diskarte’: The heavy impact of lockdown on micro, small businesses)
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.
Quirino Representative Junie Cua, who sponsored the Guide bill during the hearing, said the measure aims to increase the paid-up capital of the PGC, DBP, and Landbank.
“These 3 financial institutions of the government will have to work together and raise the necessary funding to be able to address the requirements of the MSMEs and the strategic companies impacted by the crisis,” said Cua.
MSMEs are among the hardest hit by the lockdown imposed across the country to help quell the spread of COVID-19, which has infected close to 84,000 so far.
President Rodrigo Duterte did not specifically include the Guide bill in the 21 priority measures he cited during his 5th State of the Nation Address.
Still, he asked the government to intensify efforts to help MSMEs, many of which are still reeling from the effects of the pandemic.
“We need your help to prevent the collapse of companies saddled with accumulated amortizations and payables caused by the closure of their businesses at the height of the strict quarantine periods,” Duterte said on Monday, July 27.
Red flags over Arise Inc
The Guide bill, 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.
But the Philippine Competition Commission earlier issued a warning against Arise Inc, arguing it may distort the market and encourage anticompetitive behavior.
Finance Secretary Carlos Dominguez III disowned the provisions on Arise Inc and said these did not come from Duterte’s economic team. – Rappler.com