Credit data boosts business

MANILA, Philippines - Philippine cooperatives and small entrepreneurs will benefit from the availability of credit information, which is expected to ease credit flow, according to the Credit Information Corp. (CiC).

Speaking at the 11th National Cooperative Summit held recently in Cagayan de Oro City, CiC president Baltazar N. Endriga said having a reliable and state-of-the-art credit database will also help lower bad debts and defaults, thus strengthening the country’s financial system, increasing credit activity, and boosting investment. 

Since 78 percent of cooperatives in the Philippines deal with financial services, CiC’s work will benefit the sector greatly. This also goes for small and medium enterprises (SMEs), which employ 98 percent of the country’s labor force. 

“There is a need for our credit facilities to make better and faster decisions regarding credit. The lack of easy access to credit continues to be a major roadblock in entrepreneurship,” Endriga added.

 The CiC was created with the enactment of Republic Act (RA) 9510, or the Credit Information Act, in 2008. It is a newly created government-owned and -controlled corporation that is envisioned to be the leading provider of independent, reliable and accurate credit information in the Philippines. 

Endriga also raised concerns over the country’s credit infrastructure, which he said has lagged behind its neighbors in Asia. 

“The Philippines remains to be among the few countries in the region where credit data sharing is still in the works. Singapore, Malaysia, and Thailand have fully functioning credit bureaus at the moment, while even Mongolia and Bhutan are almost there,” he added. 

A recent World Bank study ranked the Philippines 126th among 183 economies in terms of ease of getting credit, well behind regional peers Malaysia (1st), Vietnam (24th), and Thailand (67th). The study also cited credit availability as an area where the country fared badly, dropping 10 places from 116th in 2011 to 126th in 2012. 

The CiC chief executive said there has been a long history of private sector initiatives to establish credit bureaus. But being a private initiative, this didn’t have the teeth to compel other institutions for the information that they need. 

“Their coverage was very limited, and their databases were not comprehensive,” he added. 

Banks, credit card companies, microfinance groups, and even local cooperatives have all set up credit bureaus of their own. This indicates the long-standing need for a comprehensive and centralized framework, Endriga added. 

As mandated by RA 9510, CiC is 60 percent owned by the government, and 40 percent by the private sector. 

The private sector ownership is composed of the Philippine Cooperatives Center (PCC), Bankers Association of the Philippines (BAP), Credit Card Association of the Philippines (CCAP), Chamber of Thrift Banks (CTB), Rural Bankers Association of the Philippines (RBAP), and the Philippine Credit Reporting Alliance (Philcrea).