MANILA, Aug 31 (Mabuhay) — A House of Representatives panel on Tuesday approved a measure seeking to expand the government’s lending programs to provide financial assistance to small enterprises to drive a stronger economic recovery from the coronavirus disease 2019 (Covid-19) pandemic.
The House Committee on Banks and Financial Intermediaries, chaired by Representative Irwin Tieng, approved the consolidated version of House Bills 1, 685, 3460, and 3700, or the proposed “Government Financial Institutions (GFIs) Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act.”
The bill aims to strengthen the capacity of government financial institutions –the Land Bank of the Philippines (LBP), and the Development Bank of the Philippines (DBP) — to provide the needed financial assistance to micro, small, and medium enterprises (MSMEs), and other strategically important industries.
The committee invoked Section 48 of the House Rules, which allows the immediate approval of measures that already hurdled third reading in the previous Congress.
Tieng said the approved bill will be referred to the House Committee on Appropriations and Committee on Ways and Means for funding and tax provision requirements, respectively.
“As a matter of procedure, we have to submit our approved committee report to the appropriations for funding and of course for ways and means for tax provision,” Tieng said.
Tieng noted that many businesses and critical industries, including MSMEs, were disrupted due to lockdowns brought about by the pandemic.
He emphasized that it is crucial for the government to offer these businesses with the needed financial assistance to keep them viable, and in so doing protect the jobs of Filipinos.
Tingog Party-list Rep. Jude Acidre, author and sponsor of the measure, stressed the need to support small businesses as they are critical for Covid-19 economic recovery.
“The pandemic has placed a severe strain on our economy. The previous Congress successfully passed several versions of the Bayanihan to Heal as One Act to cushion the economic impact of the Covid-19. Nevertheless, our micro, small and medium enterprises remain struggling to survive the deleterious effects of the pandemic. In view of the foregoing, it is our humble but firm belief that we need to create a more enabling environment for financial access for our MSMEs,” Acidre said.
In his explanatory note to HB 1, Speaker Martin Romualdez said the bill would mandate the LBP and DBP to expand their credit and rediscounting facilities to affected MSMEs in the agriculture, infrastructure, manufacturing, and service industries to help them meet their liquidity needs.
Additionally, the LBP and the DBP would be authorized to create a special holding company, which Romualdez explained would provide support with solvency or liquidity issues caused by the health crisis to strategically important companies.
ACT-CIS Party-list Rep. Jeffrey Soriano cited that MSMEs make up 99.5 percent of business establishments in the country, provide employment to 63 percent of the country’s workforce, and contribute 40 percent to the gross domestic product of the Philippines.
Soriano said the measure would help the MSME sector through tax exemptions, registration discounts, and loan assistance programs.
The measure proposes an allocation of PHP7.5 billion to LBP and PHP2.5 billion to DBP or a total of PHP10 billion to carry out their mandates.
“To this end, the government financial institutions are mandated to expand their credit programs in order to assist MSMEs to meet their liquidity needs. In particular, the LBP and DBP are mandated to expand their credit and rediscounting facilities to affected MSMEs in the agriculture, infrastructure, manufacturing, and service industries,” the bill read.
The bill also seeks to increase DBP’s capital stock from PHP35 billion to PHP100 billion divided into one billion shares of PHP100 each to be fully subscribed by the national government.
This is among the priority measures enumerated by President Ferdinand Marcos Jr. in his first State of the Nation Address. (MNS)