Go refiles bill on distressed firms
‘MSME support is a critical job-saving intervention as these enterprises hire approximately nine million people or 63 percent of the workforce.’
Senator Christopher “Bong” Go has reintroduced Senate Bill 1182 or the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery Act in a bid to strengthen the capacity of government financial institutions to provide the needed financial assistance to micro, small and medium enterprises and other strategically important companies.
“No Filipino should be left behind in our road towards full and inclusive economic recovery,” Go said.
The senator underscored that providing timely and sufficient support to MSMEs and SICs is crucial to ensuring a strong economic recovery. Many businesses in the country were hard hit by the ongoing global health crisis and government must step in to provide all necessary assistance for these to fully recover.
To this end, the GUIDE aims to strengthen the capacity of the Land Bank of the Philippines and the Development Bank of the Philippines in order to provide much-needed access to credit and financial assistance to distressed businesses, including MSMEs, SICs and other businesses affected by the pandemic.
Under the proposed measure, LandBank and DBP are mandated to create a special holding company that shall assist in the rehabilitation of SICs heavily affected by the Covid-19 pandemic.
To ensure that the policies and objectives under the proposed bill are effectively carried out, LandBank and DBP are further mandated to maintain at least a majority ownership over the special holding company until such time that they have recovered or will be able to recover their investment.
The special holding company shall be authorized to invest or place funds in equity, execute convertible loans, or purchase convertible bonds and/or other securities, in said SICs. To ensure that such investments are properly utilized, as well as to ensure the successful rehabilitation of SICs, the measure imposes strict conditions on the investee company such as requiring that the number of employees are not reduced beyond a certain level, limiting its ability to declare dividends, restricting the increase in salary and other benefits of the board and its senior executive officers, and ensuring that investments of LandBank and DBP are not diluted and time bound with a definite exit mechanism.
The bill will also help lower the overall cost of borrowing for MSMEs. Government financial institutions shall be mandated to expand their credit programs in order to assist affected MSMEs in meeting their liquidity needs. In particular, Land Bank and DBP shall expand their loan programs as well as rediscount loans and other credit accommodations to affected MSMEs in the agriculture, infrastructure, service and manufacturing industries.
“MSME support is a critical job-saving intervention as these enterprises hire approximately nine million people or 63 percent of the workforce,” Go pointed out, adding that the proposed GUIDE is among the priority measures mentioned by President Ferdinand “Bongbong” Marcos Jr. during the latter’s first State of the Nation Address.
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