DTI eyes additional P1.5-billion budget for MSME lending

MANILA, Philippines — The Department of Trade and Industry (DTI) is looking at an additional budget of P1.5 billion to bring the total available loanable funds for micro, small and medium enterprises (MSMEs) to P3.5 billion this year under the Pondo sa Pagbabago at Pag-asenso (P3) program.

Trade Secretary Ramon Lopez said the DTI intends to continue the implementation of the P3 program this year with an additional P1.5 billion budget.

He said the target is to extend loans to 60,000 new or additional borrowers.

“But we have to wait for the 2019 budget approval for the new P1.5 billion fund to cover more borrowers,” he said.

This, as the national government is working based on last year’s budget as Congress is still unable to pass this year’s P3.757 trillion budget amid questions being raised by some lawmakers on the expenditure program.

“Anyway, we look with optimism that the budget will be approved soon,” Lopez said.

At present, he said there are 62,000 borrowers under the P3 program.

“We can hit about 80,000 with the current P2 billion funding,” he said, noting some loans have been repaid and extended to other borrowers.

The P3 program is among the initiatives being undertaken to support MSMEs as access to financing has been raised as one of the sector’s concerns.

The program was launched in line with President Duterte’s directive to eliminate the “5-6” lending system which has resulted in many individuals falling into a debt trap.

In the “5-6” system, individuals can get loans without collateral or any documentary requirements, but have to pay exorbitant interest rates of 20 percent or even higher.

Under the P3 program, the amount of  P5,000 up to P200,000 can be borrowed, depending on the requirement and repayment capacity with no collateral requirement.

The interest rate and service fees, all in, would not exceed 2.5 percent per month.