The National Competitiveness Council (NCC) said that the ratification of the Magna Carta for Small Enterprises will help the Philippines boost its competitiveness in the global business arena.
“We are devising ways as to how we can make lending to MSMEs (micro, small and medium-sized enterprises) worthwhile for banks,” NCC chairman Cesar Bautista said in an interview.
Private banks have generally avoided lending to MSMEs because such is more expensive than transacting with large companies. This is because financial institutions need to process numerous MSME loans before they can earn what they get from lending to a few big firms.
“In the past MSMEs find it hard to get capital but the money is there. The only problem is how to get it out,” Bautista stressed.
He said around 90 percent of the businesses operating in the country are SMEs but they contribute only 30 percent to gross domestic product (GDP).
“The goal is to make it at least 45 percent or more,” Bautista said.
He said the lending program for MSMEs will be piloted in Pampanga, Laguna, Region IV and Region I.
“The products that they, the small entrepreneurs, will be making will be dependent on the needs and the products available in their locality,” the former Trade Secretary said.
The MSME centers that will be built will have the capacity to train the locals in the area.
“We will be looking for volunteers from the business sector to help the government develop this sector,” Bautista said.
“If possible, we would like to get an established firm act as a big brother and support the MSMEs of a particular locality,” he added.