Gov't should look at MSMEs as venture capital firms amid COVID-19 pandemic —Zobel De Ayala

Micro, small, and medium enterprises (MSMEs) should be given more assistance to recover from the effects of the coronavirus pandemic, Ayala Corp. chief executive officer Jaime Augusto Zobel De Ayala said Thursday.

Asked for his input on assistance to such industries, Zobel de Ayala said the government should look at MSMEs as venture capital companies.

"I think sometimes the executive side of government must look at this as the way we would look at, say, a venture capital company," he said in a virtual briefing with the House committee on economic affairs.

"Sometimes companies starting off in businesses in the venture capital world are going through negative cash flows and in a pandemic like this, really, the revenues have come down and almost closed up," he said.

Latest data from the Department of Trade and Industry (DTI) show that MSMEs account for 99.52% of the total 1.003 million business establishments in the country in 2018.

Micro enterprises with asset size of not more than P3 million are allowed to borrow from P10,000 to P200,000, while small enterprises with asset size of not more than P15 million may borrow up to P500,000.

In May, Trade Secretary Ramon Lopez said over 525,000 or 52.66% of MSMEs in the country had to stop operations due to the lockdowns.

"The venture capital world is full of negative cash flow companies in their own small world. Why not look at this crisis as that? As a need to help restart the MSMEs by providing some type of support, financial support during that period of time," said Zobel de Ayala.

The DTI has already rolled out its P1-billion COVID-19 Assistance to Restart Enterprises (CARES) program which grants loans to MSMEs, but the department is now seeking more funds as the program has already been oversubscribed.

"The MSMEs, the pain is gonna be felt more next year than it is this year. When you look at the non-performing components of banks, they tend to appear about a year later when any kind of crisis hits. We should be attuned to that," said Zobel de Ayala.

"I think we've tried to do our share in the private sector on that front by lessening the pain at least for a period of time," he added.

The Ayala Group allocated P2.4 billion for its emergency response package for its workforce hit by the disease, aside from waiving mall rental fees for tenants during the strict quarantine measures placed across the Philippines.

"Our balance sheets are not structured to do this forever but I think during the period of the lockdown many private sector groups managed to udnerstand that that painpoint was there," said Zobel de Ayala.

"We should as a nation be using our balance sheet perhaps a little more formally to give support to the MSME community that are far more vulnerable than many of us in the larger businesses where the savings are higher and the balance sheets are larger," he added.—AOL, GMA News