PRESIDENTIAL Management Staff director
general Cerge Remonde yesterday directed lending agencies for
microfinance and small businesses to study the possibility of
lowering their interest rates to encourage more domestic
activity.
Remonde, oversight official for the
government's Micro, Small and Medium Enterprises (MSME) program,
said lower lending rates would make microfinance more
attractive. He issued the directive to the People's Credit and
Finance Corp. (PCFC) and the Small Business and Guaranty and
Finance Corp. (SB Corp) but the agencies have no commitment or
estimates yet as to how big a cut in interest rates would be
made because of "serious ramifications."
Remonde said the move to raise the number of
small businesses is part of President Arroyo's pump-priming
program in the light of the US economic slowdown.
SB Corp. president and CEO Benel Lagua said
the interest rate for the SME Unified Lending Opportunities for
National Growth (SULONG) is 9-14 percent while PCFC president
and CEO Edgar Generoso said his corporation charges 10-12
percent per annum.
Lagua said his agency cannot set an interest
rate lower than the T-bill rate but there are moves to push down
rates in the Bangko Sentral ng Pilipinas.
Remonde said government's P200-billion surge
program, which primarily involves frontloading infrastructure,
also includes MSMEs in the "economic firewall."
Generoso said P40 billion to P50 billion is
expected to be used for microfinance for MSMEs.
Remonde also ordered the credit agencies for
MSMEs to look into the expansion of the program in the conflict
areas.
Generoso said only 42 towns do not have
microfinance and most of these are in Mindanao, particularly the
Autonomous Region in Muslim Mindanao. He said the most common
business for microfinance is still the sari-sari store but this
has dropped to 60 percent because of growth in the cellular
phone Pasaload and repair business.
Remonde said P203.61 billion has been
released to 3.65 million microfinance clients and SME accounts
from 2004-2007, which generated 2.1 million jobs or 70 percent
of the targeted new jobs to be created by 2010. He said the
P203.61 billion is 65.69 percent of the P309.98 target for 2010.
He said MSMEs, which are considered the
backbone of economic activities in the countryside, comprise
99.6 percent of registered companies.
He said the trade department reported that
value added contribution of MSMEs to the economy is at 30
percent, compared to the 40 percent target by 2010. -
Regina Bengco
