EDITORIAL

A P50 billion loan for small-scale entrepreneurs

The plight of poor and middle class sectors of this Banana Republic’s economy may soon experience a boost to their livelihood with Malacanang targeting them as recipients of a large loan package to be distributed to different sectors nationwide. President Gloria Macapagal-Arroyo has ordered an increase of up to P50 billion in the loan facility for micro, small and medium enterprises (MSMEs) this year to accelerate the growth of small-scale enterprises and boost the government’s anti-poverty and anti-hunger programs.

The President also directed Presidential Management Staff Director-General Cerge Remonde, who is also the oversight official for MSMEs, to study the possibility of further lowering the interest rates on loans to micro enterprises.

The presidential directive was also addressed to government financial institutions (GFIs). He said the President issued the order in a move to “sustain their (MSMEs) indispensable contributions to the country’s overall economic growth and generate more jobs and income for the people.”

Last year, P25 billion was allocated for the administration’s microlending program. This year’ credit facility for MSMEs has been raised to P40-P50 billion, P32 billion of which will be made available to SMEs.

At the same time, Remonde called on Congress to finally pass the amendment to the Magna Carta for Entrepreneurs now in the bicameral conference committee.He explained that the President’s order on “frontloading of MSMEs” came in tandem with her directive on the “frontloading” of infrastructure projects to strengthen the government’s anti-poverty and anti-hunger programs.

The PMS chief cited the success of the MSMEs program, which covers almost all municipalities nationwide, mostly in conflict areas, including the Autonomous Region in Muslim Mindanao. This success, Remonde said, was reflected in a recent survey which showed a decline of self-rated poverty from 57 percent three months ago to 46 percent -- the lowest since 1987.

Remonde described the survey result as solid proof that government efforts to fight poverty is “gaining ground.” The MSMEs development thrust is very much a part of the poverty-alleviation program, he added.

So far, 1,458 municipalities are already covered by the MSMEs program. The areas still not yet covered will be given priority this year, Remonde added. The PMS head also pointed out that the proposed amendment to the Magna Carta for SMEs would further boost MSMEs as it would require banks to set aside 10 percent of their total loan portfolio for SMEs. Current loan interest rates for SMEs range from 9 percent to 14 percent, while those for microfinance range from 10 percent to 12 percent per annum.

If plans don’t miscarry, the media would have something good to report on instead of the numerous scandals tainting the administration.