Thursday, October 11, 2007 Exporters bat for credit act review
EXPORTERS batted for a review the Credit Information System Act (Cisa) since some of its provisions may be disadvantageous to micro, small and medium enterprises (MSMEs).
The Cisa aims to put in place an efficient credit information system that would provide banks with background information on financial capability of borrowers.
Such information is expected to increase the banks' volume of lending to underserved sector such as MSMEs.
However, Philippine Exporters Confederation, Inc. (Philexport) president Sergio Ortiz-Luis, Jr. told Philexport News and Features they are worried that some of the conditions of the proposed law might "work against the MSMEs."
At present, only 100,000 of a total 800,000 MSMEs in the country have access to commercial banks despite compliance with the Magna Carta for SMEs. This happened as many banks shy away from the sector for fear that borrowers would not be able to pay their loans.
Ortiz-Luis expressed concern that more MSMEs might be disqualified from accessing bank loans with the creation of the credit bureau.
"From 1997-2007, few of them have no past due loans and healthy balance sheet. Some of them were only able to access banks because their present performance is okay but if you look at their track record, they will be classified as substandard," he said.
"So, we feel that there should be revisiting of the way it (CISA) was written and it should not be passed prior to the passage of the Magna Carta," he added.
Several bills, including the CISA, are now pending in Congress.
Spurring the growth of the MSMEs sector is deemed crucial in improving the country's competitiveness. The sector comprises over 97 percent of all Philippine business and provides over 80 percent of employment, yet, does not have access to financing.
Meanwhile, Ortiz-Luis bared they are in talks with various banks, including the Asian Development Bank and Citibank, if they are willing to adopt new ways of extending loans for MSMEs.
"We have models from South America, Australia, India and Vietnam that are working to lending to MSMEs. Most of them have been proven to work in other countries," he said.
Ortiz-Luis noted some of these lending models are similar to micro-lending and loans for women. (Danielle Venz/PNF)
