Exporters seek MSME financing overhaul over credit gap

Philippine Exporters Confederation, Inc. urged lawmakers to overhaul financing for micro, small and medium enterprises (MSMEs), warning that limited access to credit is hindering economic growth.

In a letter to Rodante Marcoleta, the group backed proposed amendments to the Magna Carta for MSMEs but said reforms must deliver easier loan access and greater investment.

“Our MSMEs remain the most underbanked in the whole of Asia, with a staggering 50% with no access to formal loans,” said PHILEXPORT president Sergio R. Ortiz-Luis Jr.

The organization noted that despite their critical role in the economy, MSMEs continue to face limited financing opportunities, placing the Philippines behind its Southeast Asian peers in developing the sector.

Data cited by the group show that while MSMEs account for 99.6 percent of businesses and employ about 65 percent of the workforce, they contribute only 35 percent to gross domestic product — a gap that reflects untapped potential.

PHILEXPORT said addressing financing barriers is key to unlocking growth, calling MSMEs the “lifeblood” of the economy.

Among its proposals is to allow the Small Business Corp. (SB Corp.), the financing arm of the Department of Trade and Industry, to operate with greater flexibility by removing it from Bangko Sentral ng Pilipinas regulation. This, the group said, would enable SB Corp. to design loan programs better suited for MSMEs.

The exporters’ group also pushed for lending models that move away from traditional banking requirements and instead consider factors such as job creation and business expansion.

“Instead, they should be designed based on criteria such as employment and business growth. It is high time that we seriously consider investing in our MSMEs,” the group said.

PHILEXPORT also proposed the creation of an enterprise rehabilitation fund to support businesses affected by disasters, as well as stricter rules to ensure banks comply with mandatory lending requirements for smaller firms.

It recommended limiting the share of loans allocated to medium enterprises to prioritize micro and small businesses, and called for penalties on non-compliant lenders to be retained, with fines contributing to SB Corp.’s funding.

The group also raised concerns over existing social assistance programs, arguing that financing productive enterprises would yield more sustainable economic benefits.

“Considering our fiscal position, this is unsustainable compared with supporting MSMEs to develop, grow and generate jobs and livelihood,” Ortiz-Luis said, referring to government dole-out initiatives.

PHILEXPORT backed several provisions in pending Senate bills seeking to amend the Magna Carta, including incentives for MSMEs, digitalization efforts, and risk-based lending using movable assets as collateral.