Go into agri modernization, Camacho tells thrift banks

Finance Secretary Jose Isidro Camacho asked the members of the Chamber of Thrift Banks (CTB) yesterday to participate in agriculture modernization to ensure improvements in rural incomes and help in the administration’s war against poverty.

Delivering the keynote speech during the CTB meeting at Dusit Hotel, Camacho said the government is looking at innovative financial schemes to attract large private investments in agriculture such as through the Farmers Trust Enterprise System, which is aimed at promoting voluntary consolidation of small scale agricultural landholdings into larger scale, more competitive farm business units. Camacho and Monetary board member Antonio Alindogan made separate reports on the same financial and economic directions taken by the administration at the CTB forum.

Camacho said the purpose of the system is to bring together farmers groups, private enterprise service professionals and agri-based companies to collaborate and consolidate their raw material production base, integrate them with post harvest and processing facilities under one integrated business unit principally owned by the farmer-workers.

"This consolidation of resources and integration under a unified business entity enjoying professional management, will make investments in modernization viable and enable the adoption of modern technologies, facilities and best farming methods to bring productivity and costs to global standards," Camacho said.

Camacho noted that an exiting regulation requiring banks to set aside 25 percent of their portfolios for agri agra lending has been "ineffective" and have "not met the very goals they sought to serve. Banks are given the option to invest this fund to treasury bills instead of the farming sector," Camacho said although he did not give any alternative to this regulation.

Another area where thrift bankers should venture, he said, is micro-finance lending aimed towards a viable and sustainable microfinance market. Micro-financing is the policy thrust being pushed by the Bangko Sentral ng Pilipinas and by the Monetary Board.

Camacho said the National Credit Council, which his department chairs, is now working on the appropriate regulatory framework on micro finance to include features such as the provision of transparent information, portfolio quality, efficient and sustainable operation as well as outreach issues affecting micro finance institutions.

To encourage private sector into micro finance lending, Camacho said the government will pursue the privatization of the People’s Credit and Finance Corp.

He said the government will also support non legislative measures help micro finance enterprises (as committed in the Economic Summit) using the micro enterprise access to banking services (MABS) model, simplying procedures for fund availments from government financial institutions and establishing a Development Center for micro finance enterprises that will provide information, best practices and training to them.