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The P3 difference

The Duterte Administration, through the Department of Trade and Industry, is determined to bring about change in the financing realities of micro, small and medium enterprises (MSMEs) in the our country.

Insufficient capital and difficult access to affordable credit facilities are among the key reasons why already operational MSMEs cannot realize their growth potentials and why would-be entrepreneurs are effectively barred from pursuing their business ventures.

The challenge faced by many MSMEs is not access to reasonable credit. MSME owners can gain easy and ready access to “5-6 credit” scheme because the sources of the same are abundant even if such scheme is technically usurious (and thus illegal). It is common knowledge that the 5-6 credit scheme continuous because as the same operates in the “underground financial market,” the government appears to ne uninterested in putting a stop to it.

The Duterte Administration is obviously different from others that held power before it. Other than pursuing efforts to solve the illegal drug and corruption problems in our society, the Duterte Administration is clearly serious in driving the 5-6 financing schemers out of business.

The current Administration is allotting P18 billion for the credit needs of MSMEs through a program aptly dubbed, Pondo para sa Pagbabago at Pag-asenso or P3. Credit amounting to as low as P5,000 to as high as P200,000 will be made available to MSME at market rates, which are definitely lower than usurious rates charged by loan sharks who are the architects of the 5-6 financing scheme.

The Department of Trade and Industry will course the funds for this program through its financing arm – the Small Business Corp. (SB Corp.) that will in turn channel funds through micro financing institutions that the DTI will accredit.

DTI will launch the program in 2017 with an initial fund of P1 billion and will roll out the rest of the allotted fund in the succeeding years depending on the program’s performance in the first year.

If one of the key objectives is to free MSMEs from loan sharks, making P3 available can surely deliver the desired result but only if the credit extended will be sufficient for the capital needs of MSMEs.

(To be continued) (Dr. Ramon Ricardo A. Roque, CESOI, Diplomate)

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