By Kyle Aristophere T. Atienza
FUNDING to boost lending by government financial institutions (GFIs) has been reduced to P10 billion from the original P55 billion in a committee-level decision made on House Bill (HB) No. 7749, the panel’s chairman said.
Quirino Rep. Junie E. Cua, chairman of the House Committee on Banks and Financial Intermediaries, told BusinessWorld Monday that HB No. 7749, or the proposed GFIs Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act, will go to plenary in January.
The measure expands the lending capacity of the Development Bank of the Philippines (DBP) and the Land Bank of the Philippines (LANDBANK) as well as the ability of the Philippine Guarantee Corp. to issue guarantees on loans taken out by small firms in the agriculture, infrastructure, manufacturing and service industries.
Mr. Cua said the committee reduced the bill’s appropriations to P10 billion from the previous P55 billion to take into account the funding allotted by Republic Act 11494 or the Bayanihan to Recover as One Act (Bayanihan II) to the Small Business Corp.
Under Bayanihan II, some P10 billion was set aside for the CARES (COVID-19 Assistance to Restart Enterprises) program of the SB Corp. to lend to micro-, small-, and medium-sized enterprises (MSMEs).
Of the P10 billion in GUIDE funding, P2.5 billion and P7.5 billion are earmarked for the DBP and LANDBANK, respectively, for their loan assistance and rediscounting programs to qualified MSMEs.
The version in committee authorizes the DBP and LANDBANK to create a Special Holding Company to help firms facing solvency issues.
Citing data from the Philippine Statistics Authority, Mr. Cua said MSMEs comprise 99.5% of the country’s total of 1,003,111 business establishments and employ 63% of the workforce.
“Micro enterprises constitute 88.45% with 887,272 of total MSME establishments, followed by small enterprises at 10.58% with 106,175 establishments, and medium enterprises at 0.49% with 4,895 establishments,” he said.
House Ways and Means Committee Chairman Jose Maria Clemente S. Salceda said the changes to the new version have limited “tax incentives to transactions directly related to loans under the law.”
“The (special) holding company will limit its interventions to companies that were viable pre-COVID,” he told BusinessWorld in a Viber message Monday.