MANILA – The World Bank’s corporate arm, the International Finance Corp. (IFC), has urged the Philippines to give priority to the passage of legislation increasing access to finance micro, small and medium enterprises (MSMEs), and to make doing business easier for them.
Yuan Xu, IFC Country Manager for the Philippines, said that secured transactions reform could effectively promote greater financial inclusion.
“If the Philippines truly wants to increase access to finance to MSMEs and increase its competitiveness in doing business, this bill needs to be prioritized so that a sound institutional framework will be in place to give financial institutions more confidence to lend to MSMEs,” she said.
Xu was referring to the Secured Transactions bill which is now moving towards second reading in both Senate and Congress.
She cited the example of China, where the implementation of comprehensive secured transactions reform mobilized USD 3 trillion initially to MSMEs.
Secured transactions reform entails strengthening the legal framework to enable financing based on movable assets, establishment of a modern centralized registry for both movable assets held as collateral and credit information, and institutionalization of systems for dealing with insolvencies.
Gay Santos, Senior Financial Sector Specialist at IFC World Bank Group, said the passage of such legislation could help boost the Philippine ranking in ease of doing business.
“(This) aligns well with the 10-point socioeconomic agenda on focus on rural finance, MSMEs as well as increasing competitiveness in doing business. This is already a priority legislation under the PDP (Philippine Development Plan) but not at NEDA (National Economic and Development Authority) level yet,” she said.
The country on Wednesday hosted the 5th Financial Infrastructure Development Network (FIDN) Conference which tackled how the region can move forward after setting up foundations for a financial environment supportive of MSME and agricultural development.
FIDN is composed of Asia-Pacific Economic Cooperation (APEC) member countries, IFC, APEC Business Advisory Council (ABAC); SME Finance Forum; and the Organization for Economic Cooperation and Development (OECD).