DTI appeals for more funds for MSME programs

The Department of Trade and Industry (DTI) on Wednesday again appealed for more funding for the agency for 2021, specifically for its financing program for micro, small, and medium enterprises (MSMEs).

During budget deliberation, Trade Secretary Ramon Lopez said the agency can only support establishments as accommodated by the budget.

"We can support but only to a certain extent," he told lawmakers during a budget hearing.

Under the National Expenditure Program (NEP), the DTI is granted P5.35 billion for 2021, significantly lower than the department's proposed budget of around P10 billion.

Out of the budget, some P2.2 billion will be for MSMEs hit by the slowdown of economic activities due to the coronavirus disease 2019 pandemic.

Broken down, the amount for MSME development program includes P1.302 billion in maintenance and other operating expenses (MOOE); P569.720 million in capital outlays; and P362.804 million for procurement services.

Micro enterprises are defined as those with total assets worth less than P50,000; cottage enterprises with assets worth P50,001 to P500,000; small with P500,001 to P5 million; and medium from over P5 million to P20 million.

According to Lopez, there is a need to increase allocation for the funding of programs for such businesses, given the high availment and the number of firms hit by the pandemic.

"Kung talagang mapapahiram natin ang mas maraming kumpanya, ang mga SMEs, ay 'yung P1.5 billion na 'yun, kung mapapalaki po 'yun," he said.

"Otherwise, kung hindi ho tayo kasi nandoon, ang nagpapahiram po ay 'yung mga 5:6 sa mga maliliit na negosyante, 'yung mga micro," added Lopez.

He was referring to the government program where MSMEs are granted loans, as part of efforts of the department to curb the "5:6 industry" in the Philippines.

Headed by DTI's attached agency Small Business Corp. (SB Corp.), Pondo sa Pagbabago at Pag-asenso is a fund designed to be lent out to MSMEs with asset size not exceeding P3 million, at interest rates not more than 1.5% per month.

In May, SB Corp. also started accepting applications for its COVID-19 Assistance to Restart Enterprises (CARES) Program, which grants loans to micro and small establishments operating for at least a year prior to March 16, 2020.

Under the program, 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.

"The system right now is basically first come first serve," said Lopez, who noted that loans average P100,000.

To recall, Lopez in June already appealed for more funds as the program was oversubscribed, and more businesses still needed assistance.—LDF, GMA News