Easy credit access remains elusive for MSME players

CEBU, Philippines - Easy access to credit remains the biggest and long-running hurdle for the micro, small and medium enterprises (MSME) sector.

While there are few banks that initiate to partner with small-scale businesses, Filipino-Cebuano Business Club Inc. (FCBI) president Rey Calooy expressed the group’s continuing concern on the access to credit of MSMEs.

He said that more opportunities should be provided to cater to the lending needs of the sectors that account for more than 90 percent of the total enterprises in the country.

He cited that the annual loan portfolio provided by banks in neighboring Asian countries is higher at 60 percent than the 20-percent bank exposure in the Philippines.

In the country, the Magna Carta for MSMEs requires all lending institutions to allot at least two percent for medium firms and at least eight percent for micro and small enterprises of their total loan portfolio based on their balanced sheet as of the end of the previous quarter.

Such allocation should be made available to MSMES for credit purposes. Banks who fail to comply shall pay a penalty of at least P500,000.

Even with such law, Calooy added that it is sad to note how banks prefer to pay the P500,000 penalty than to lend MSMEs as the former still considers the latter as high-rate borrowers.

“They do not consider how many we are and how big our presence in the Philippine trade market. We have to level the playing field for all players, no matter how big or small the business is,” he said.

He suggested that government and financial institutions should address the unsolved challenge among small-scale businesses taking into account the sector’s large contribution to the generation of employment for Filipinos.

He further expressed hope that the government must enforce and monitor strict implementation of the Magna Carta for MSMEs.

Aside from the difficulty on the access of credit, the MSME sector also appealed to grocery store operators and supermarket owners to exempt them from paying listing fees to give them better chances of accessing a wider market.

According to Calooy, such listing fees imposed by large-scale establishments are too high for small-scale manufacturers and suppliers, making it difficult for them to comply and sell their products. 

A manufacturer has to pay a listing fee, ranging from P5,000 to P10,000 per stock keeping unit per store outlet, for his products to be listed in the database of the grocery store.

Calooy cited that such exemption shall further boost the potential of MSMEs in generating employment and contributing to the economic growth of the country since it would be easier for small entrepreneurs to market their products.

He said that the group remains hopeful that the other party shall consider the provision of 20-percent space of their supermarkets to be allotted for MSMEs.

Calooy recommended that if a product manufactured by a small-scale business shall not be a hit to the buying public, grocery operators could have the right to pull it out in their establishment.

Last October 11, FCBI members convened with the Cebu City local government officials, supermarket owners, representatives of government agencies to discuss on the imposition of the listing of products for MSMEs.

The supermarket and mall owners will be given fifteen days to reply to the position paper submitted by FCBI before the Cebu City Council shall pass an ordinance to the national MSME Development council that will possibly be effective in Cebu and other regions. /JOB (FREEMAN)