Philippines leads regional plan for MSME financing

MANILA, Philippines - The Philippines is collaborating with leading international organizations to help transform financial systems in the Asia-Pacific, expanding the reach of credit and other financial-services for a more inclusive regional economy.

The collaboration, which was launched yesterday, was formalized through the establishment of the Financial Infrastructure Development Network (FIDN), a multi-sectoral platform for promoting initiatives to make financial services in the region more accessible, especially to micro, small, and medium enterprises (MSMEs).

The establishment of the FIND comes at a time when Asia-Pacific continues to face the challenge of making financial services accessible to more MSMEs and low-income households.

“Given that their scale is not that strong but their needs are high, the role of the government is to create an infrastructure that would give bias toward more inclusive financing for MSMEs,” Finance Secretary Cesar Purisima said.

“Accounting for 97 percent of APEC enterprises, MSMEs employ more than half of the total workforce of the region and therefore could be considered as the life-force of the regional economy. However, about 40 percent of the financing needs of MSMEs are unserved. At the same time, we are fully convinced of the power of finance as a tool to reduce poverty. We are putting our money where our mouth is in putting more fuel to Asia-Pacific’s growth engine,” he said. Purisima served as chairman of the APEC Finance Ministers’ Process that produced the Cebu Action Plan last September.

Led by APEC, FIDN groups the International Finance Corp. (IFC) of the World Bank, the APEC Business Advisory Council, the SME Finance Forum and the Organization for Economic Cooperation and Development.

Under the plan, the FIDN will be geared toward four areas namely establishing credit information systems, secured transactions frameworks, insolvency mechanisms and the so-called factoring for MSMEs.

The first part of the plan is already being undertaken in the Philippines with other countries likely to follow suit, Finance Assistant Secretary Ma. Teresa Habitan said in a briefing after the launch in Makati City.