Nat’l ID spells ‘5-6’ demise

Arnulfo Rivera runs a small food stall in Potrero, Malabon catering mostly to tricycle drivers plying the streets in the community.

With a daily capital of P5,000, Rivera’s daily net profits average P2,000 — just enough to provide for the needs of his family, including house rental, food, water, electricity, children’s education and other basic needs. Because his capital and daily income is so meager, Rivera does not have a bank account, or no access to formal financial institutions to back his small business.

“I’m just a small businessman,” he said in an interview. “I don’t need a bank account and I don’t want to take out loans from banks. I heard the process [of obtaining loans] is so strict and rigorous and the interest is too high,” he said in Pilipino.

When capital is tight, Rivera relies on “5-6” money lending, which is run mostly by Indian nationals who issue uncollateralized small loans to businesses like him at a 20 percent interest rate, with payments collected on a daily or weekly basis.

Rivera belongs to the 70 percent of Filipino adults who remain unbanked and underserved by the country’s financial institutions, both private and public. Businesses like him comprise 99.6 percent of all business establishments in the Philippines that are categorized as micro/small/medium enterprises (MSME).

President Rodrigo Duterte signed the Philippine Identification System (PhilSys) Act on 6 August to establish a national ID system in the Philippines. The law took effect on Saturday.

One of the major benefits of PhilSys is it is seen to strengthen financial inclusion as the ID will also serve as the de facto national identification number which every Filipino could use in applying loans from formal lenders.

At its monthly media briefing, National Economic and Development Authority (NEDA) Undersecretary Rosemarie Edillon said PhilSys “shall serve as the government’s central identification system [while] PhilID “shall be [the] official proof of identity.” By eliminating the hassle of presenting multiple IDs, Edillon said the PhilID would simplify public and private transactions.

In addition to simplifying transactions, this integration “shall improve efficiency, transparency and faster target delivery of public and social services [and] enhance administrative governance,” explained Edillon.

She added marginalized groups such as indigenous peoples and the poor will benefit the most from the PhilID as it will facilitate better access to government assistance and services.

According to Edillion, the PhilID simplifies public and private transactions by enabling everyone to have a valid proof of identity. This is in sync with the administration’s main development agenda of “leaving no one behind towards wider economic inclusion.”

In short, the PhilID could hasten loan application of MSME with formal lenders like banks and eliminate the long process to allow them to start or expand their businesses.

The PhilID shall streamline and expedite applications for the availment of, among others, social welfare and benefits from the government; tax-related transactions; opening of bank accounts; and transactions for employment purposes,” she said.

“The government values each Filipino and is working constantly to provide easy access to public goods and services. Establishing a safe and secure means to prove identity is a step towards that direction. The PhilSys Act is all about inclusivity; it promotes our aspiration for every Filipino to enjoy a safe, prosperous and peaceful living,” Edillon said.

With the introduction of a national ID system, it is hoped that informal credit system, particularly those 5-6 loan shark lending will finally be put out of business and given no space in the country future as MSME shifts to formal credit institutions and banks.