WTO tells Philippines to ease up credit access for MSMEs

CEBU, Philippines — The World Trade Organization has advised the Philippines to ease up credit access to smaller enterprises to enable the country to compete head-to-head amid the growing competition in the world market.

WTO's latest study revealed that improving the credit market can improve the competitiveness of domestic firms by lowering the cost of borrowing and making it easier for enterprises to finance their expansion or their requirements for working capital.

In his recent visit to Cebu, Presidential adviser for entrepreneurship Jose Ma. ‘Joey’ Concepcion III, mentioned the Philippines’ lack of support to the smaller enterprises and micro entrepreneurs in supporting the growth of their businesses.

Thus, Concepcion urged the banking sector to open up their doors to small time businesses, specifically those that are serviced by the underground lending trade or the 5/6.

According to WTO, by opening the credit access to these small businesses, competitiveness in the country will be strengthened, thereby the majority of local businesses will be able to maximize the benefits of technological change and trade.

Concepcion hit on the impossible requirements asked by the banks from small-time borrowers, the reason why 5/6 still remains a "booming business of our Indian-friends."

"Collateral is the problem," said Concepcion adding that in China and India, micro and small businesses can borrow money from legitimate financial institutions, even from banks without any collateral.

"Bring down interest rates. Do not require collaterals. This is where we can bring about the inclusive growth," Concepcion called out to the banking sector.

Concepcion further mentioned the recent strategy made by BDO to buy rural banks in order to reach out to greater number of MSMEs and help them with their financial requirements, without having to pay expensive interest to lenders,

Meanwhile, in an interview with Bank of the Philippine Island (BPI) president and chief executive officer Cezar P. Consing in his recent visit to Cebu, he said that BPI is also now penetrating the micro businesses, through the establishment of BPI Bangko.

BPI Bangko, which now has over 70 branches around the country will serve the businesses in the wet market, sari-sari stores, and the like.

Consing vowed that BPI Bangko will also serve as a better alternative to 5/6. (FREEMAN)