SMEs seen thriving on investment grade from Fitch

Small and medium enterprises (SMEs) are expected to thrive from the recent credit rating upgrade by Fitch Ratings which is expected to usher in more investments and liquidity into the country. “What we’re seeing now, thanks to the credit rating upgrade, is a huge amount of capital inflow, which is translated into liquidity,” Navin Uttamchandani, chief executive officer of lender Esquire Financing Inc. (EFI), in an e-mailed statement Wednesday. According to the lender, the situation is an opportunity for SMEs to ride on government initiatives. “The government is expected to begin spending more and promoting SMEs more... by investing in infrastructure, in creating more jobs and more businesses. SMEs will eventually get more access to finance and capital than before,” Uttamchandani said. Peter Lee U, University of Asia and the Pacific (UA&P) School of Economics dean told GMA News Online the benefits of the credit rating upgrade will be felt by SMEs indirectly and in terms of access to credit from local banks and non-bank lenders. "The investment grade is more for borrowing money in international scale. Though investors may have a positive outlook in the country, SMEs in the Philippines may not be known to international firms," he said. "But then there's liquidity in the country and there will be a number of local sources for capital. The government banks may have more windows for lending and might probably have facilities for SMEs while non-banks have programs for SMEs," he added. In March, debt-watcher Fitch gave the Philippines its first ever investment grade rating, citing a resilient economy and better fiscal management. Department of Trade and Industry data showed SMEs account for more than 90 percent of all registered businesses in the Philippines and contribute about 30 percent to the gross domestic product. — VS, GMA News