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President Rodrigo Roa Duterte delivers his 5th State of the Nation Address at the House of Representatives Complex in Quezon City on July 27, 2020 / PCOO

Duterte asks banks, landlords to help small businesses

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The Bangko Sentral ng Pilipinas (BSP) and the banks should extend financial relief to micro, small and medium enterprises (MSMEs) to help them cope with the pandemic, according to President Rodrigo Duterte.

In his fifth State of the Nation Address (SONA), Duterte urged both the central bank and financial institutions to extend loan accommodation for MSMEs without imposing additional fees or changes.

“We need your help to prevent the collapse of companies saddled with accumulated amortization and payables caused by the closure of their businesses at the height of the strict quarantine period,” he said.

He explained that “as we embark on this effort towards inclusive recovery we should acknowledge that all forms of government support will go to naught if the new MSMEs do not thrive because of lack of consumer support.”

“Ito ang panahon para suportahan natin ang ating mga kababayan na nagnenegosyo at gumawa ng mga produktong sariling atin (This is the time to support businessmen who produce local goods),” he said.

The government has been aiding MSMEs hardly hit by the pandemic since MSMEs account for about 99 percent of businesses in the country and employs about 60 percent of workers.

Last May, the BSP announced several relief measures that supports MSMEs.

These include the treatment as compliance to the regulatory capital requirement banks’ exposure to MSMEs to increase banks’ liquidity for lending to the sector.

In particular, credit risk weight on MSME loans was cut to 50 percent from 75 percent for diversified MSME portfolio and 100 percent for non-diversified MSME portfolio.

BSP said the reduction on credit risk weight “is subject to review” at the end of this year.

It also assigned a zero percent risk weight on MSME loans that have guarantees from the Philippine Guarantee Corporation, the Agricultural Guarantee Fund Pool and the Agricultural Credit Policy Council.

BSP also deferred the implementation of revised risk-based capital framework for stand-alone thrift banks (TBs), rural banks (RBs) and cooperative banks (Coop banks) to January 1, 2023 instead of January 1, 2022 for the latter to extend more loans to MSMEs.

It also extended the reporting period for past due and non-performing loans (NPL) of borrowers affected by the pandemic from March 8, 2021 to December 31, 2021 “subject to reporting to the BSP.”

Relatively, BSP Governor Benjamin Diokno, in a virtual briefing Monday, said domestic banks “remain on stable footing to weather the health crisis.”

He said the sector’s asset quality “has remained steady, while capital adequacy ratios have stayed above prescribed standards.”

“The banking system has also exhibited asset and deposit growth, allowing them to provide intermediation services during the lockdown. Hence, there is enough reason to expect bank lending to pick up in the coming months with the gradual reopening of the economy,” he said.

Diokno said monetary authorities believe that “keeping monetary policy sufficiently accommodative amid a benign inflation environment will continue to mitigate strong downside risks to growth and boost market confidence.”

He said “the BSP recognizes that addressing the pandemic requires a “whole-of-government” approach to limit any scarring on the economy.”

“For this reason, we reiterate our support for the health and fiscal programs already being rolled out by the National Government in responding to the needs of Filipino households and businesses. At the same time, we remain committed to deploying our full range of monetary instruments and regulatory relief measures as needed in fulfillment of our mandate to promote non-inflationary and sustainable growth,” he added.

Landords 

Duterte also appealed to the landlords to help small businesses bounce back from the pandemic.

“Nananawagan po ako sa ating mga lessors – nananawagan po ako sa ating mga lessors: malasakit at bayanihan po sana ang pairalin natin ngayon (I am calling on our lessors – I am calling on our lessors, be fair and have compassion during these times). This is not the time to drive away lessees," Duterte said In his fifth State of the Nation Address (SONA) delivered at the Batasang Pambansa in Quezon City, adding that it is during this critical time that everyone needs to be more understanding.

Duterte said now, more than ever, is the time to be fair and compassionate.

”Come up with an amenable arrangement with your tenants. Huwag po natin silang ipagtabuyan, tanggalan ng tubig, kuryente, at bubong (Let’s not drive them away, turn off their water and electricity services or even the roof under their heads)," he said.

As early as April, Duterte already made an appeal to lessors, even saying that he will “go against the law” to protect these tenants.

Duterte requested owners of these commercial establishments to extend grace periods and allow deferred payments, most especially for the MSMEs that were forced to close down during the quarantine period. “Let us help them recover,” he said. 


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