Rep. Jaime Lopez (Lakas-3rd district Manila), chairman of the House committee on banks and financial intermediaries, through House Bill 2048 which he co-authored with Speaker Jose De Venecia, observed the Asian financial crisis has left many banks holding billions of pesos worth of NPAs, mostly real and industrial estates all over the country.
He said as of June 30, 2001 P292 billion in non performing loans (NPLs) are held by Philippine banks which also hold P175 billion in foreclosed collateral mostly real estate properties.
"The cost of doing business has become artificially high because bank resources are tied up in unproductive financial holdings while real estate assets lie idle. The accumulation of NPAs in the financial system prohibits the circulation of assets in the economy," Lopez said.
The proposed measure seeks to create a legislative framework to encourage private sector to participate in the SPAV program which will allow them to invest and take over NPAs including loan assets and real and other properties, currently burdening the financial sector.
Lopez said the bill is patterned after the South Korean and Thailand economic recovery program where the two countries successfully generated a total of $17.6 billion and $5.9 billion in foreign investment over the last four-year years, which dramatically contributed to their economic recovery from the ashes of the Asian financial crisis.
The congressman from Manila said at least three giant American firms have pledged to invest P150 billion in the NPA’s to be used for the mass housing program of the government.
He said the bill which is expected to be approved at the committee level next week will help the Philippine economy pull itself out of its current sluggishness brought about by the financial crisis that swept the Asian region.
"It will jumpstart the infusion of fresh capital in the banking system industry and will also help in the government’s housing program by stimulating more funding for the housing and other sectors in the country," Lopez said.