PGMA's Speech during the National Launching of the National Small and Meduim Enterprise Development Program and the Conduct of SME Forum

Starland, Metropolis Starmall Alabang, Muntinlupa City (17 Feb 2003)
SABI NGA, NA PITUMPU NA ITONG SEMINARS NA GINAGANAP SA BUONG PILIPINAS PARA PINAPALIWANAG ITONG NUMBER ONE PROGRAM NG ATING ADMINISTRASYON -- IYUNG SMALL AND MEDIUM ENTERPRISE DEVELOPMENT. KAYA LANG SABI KO, DITO SA MUNTINLUPA AKO ANG MAGBIBIGAY NG SEMINAR. DAHIL KUNG SAAN AKO PUMUPUNTA KASAMA PARATI ANG NATIONAL MEDIA. KAYA IN OTHER WORDS, ITO ANG NATIONAL LAUNCHING NG ATING SMALL AND MEDIUM ENTERPRISE PROGRAM.

AT BAKIT KO PINILI ANG MUNTINLUPA? HINDI KO MAKALIMUTAN NA DALAWANG BESES NANG NANALO ANG MUNTINLUPA, TWO YEARS IN A ROW AS THE MOST BUSINESS FRIENDLY CITY IN THE COUNTRY. KAYA KUNG MERON ISANG LUGAR KUNG SAAN MAGTATAGUMPAY ITONG PROGRAMANG ITO, PARA MAGING HUWARAN SA IBANG MGA LUGAR, IYON NA NGA -- MUNTINLUPA NA NGA.

AND THAT'S WHY WITHOUT FURTHER ADO, LET ME NOW GO TO THE PRESENTATION OF THE NATIONAL SMALL AND MEDIUM ENTERPRISE DEVELOPMENT PROGRAM.

ETO HO, BAKIT, BAKIT KO SINABI... ETO IYUNG SINASABI KONG PANGUNAHING... KUNG NAALALA N'YO DOON SA PCCI CONVENTION, KUNG SAAN NANALO NA NAMAN ANG MUNTINLUPA BILANG BUSINESS FRIENDLY CITY, SINABI KO NA ANG ATING MACROECONOMIC GROWTH AY MAGANDANG IHAMBING SA IBANG MGA BANSA. IN FACT, FIVE PRECENT ANG ATING GROWTH RATE NG GNP NUNG 2002. TINATANONG KO SA MGA IBANG KAPIT BANSA, ANO'NG GROWTH RATE NILA: SINGAPORE 2 1/2; HALOS 2 1/2 MARAMI; THAILAND 4 PERCENT, MAS MATAAS TAYO. KANYA LAMANG, BAKIT HINDI... PARA MARAMING MAMAMAYAN ANG SINASABING HINDI PA RIN NILA NARARAMDAMAN. KASI KAILANGAN HINDI LAMANG ANG MACROECONOMIC GROWTH, KAILANGAN IYUNG MICRO MEASURES PARA DALHIN ANG NAGLALAGO NA EKONOMIYA DOON SA MGA LUGAR KUNG SAAN NARARAMDAMAN NG TAONG BAYAN. AT NUMBER ONE NGA DIYAN ANG SMALL AND MEDIUM ENTERPRISES. KAYA NARITO TAYO, MEDIUM ENTERPRISES DITO SA ATING... NATIONAL SMALL AND MEDIUM ENTERPRISE DEVELOPMENT PLAN.

BAKIT KO SINASABI NA KUNG PUPUNTA TAYO, LILIPAT NA TAYO, SABI KO SA PCCI MEETING, FROM MACRO MEASURES WE WILL GO TO MICRO MEASURES. WHY IS THE NUMBER ONE MICRO MEASURE, SMEs? WHY? BECAUSE THE SMEs ARE A VITAL ENGINE OF THE PHILIPPINE ECONOMY. ALMOST 100 PERCENT, 99.6 PERCENT OF TOTAL FIRMS ARE SMEs. THE SECTOR EMPLOYS 70 PERCENT OF THE LABOR FORCE. IT CONTRIBUTES ONE-THIRD OF THE VALUE- ADDED TO THE ECONOMY. AND IT'S 60 PERCENT OF EXPORTERS. AND SO, IF WE WILL BE ABLE TO PUSH FOR THE DEVELOPMENT OF SMEs... KASI KUNG IIWANAN LANG NATIN SA MARKET, KUNG MACRO LANG ANG AASIKASUHIN NATIN, ALAM BA NINYO KUNG ANO'NG SEKTOR ANG LUMALAKI? TELECOMMUNICATIONS LUMALAKI. UTILITIES KAGAYA NG MALAMPAYA LUMALAKI. PERO HINDI NAMAN DOON NANGGAGALING ANG EQUITY SA ATING BANSA. AND SO, WE NEED TO PUSH SMEs BECAUSE TELECOMS AND MALAMPAYA ARE BIG GIANT ENTERPRISES. BUT WE NEED TO PUSH SMEs TO HAVE A MORE EQUITABLE DISTRIBUTION OF INCOME AND DISPERSE ECONOMIC ACTIVITIES TO THE COUNTRYSIDE. BUT NOT JUST TO THE COUNTRYSIDE BECAUSE THE BIGGEST BULK OF UNEMPLOYEMNT IS RIGHT HERE IN METRO MANILA. SO THIS IS A POTENT FORCE IN THE WAR AGAINST POVERTY.

NINETY ONE PERCENT OF THE MICRO'S SMALL AND MEDIUM ENTERPRISES ARE MICRO ENTERPRISES. AND SO, WHAT WE WANT TO DO WITH THESE MICRO ENTERPRISES? WHAT'S THE DIFFERENCE BETWEEN A MICRO ENTERPRISE AND A SMALL AND MEDIUM ENTERPRISE? A MICRO ENTERPRISE LARGELY IS A ONE-PERSON OPERATION, EVEN LESS THAN A 'MOM OR POP' OPERATION. IT'S A SELF-EMPLOYMENT OPERATION. WHEREAS THE SMALL AND MEDIUM ENTERPRISE IS AN ENTERPRISE THAT HIRES OTHER PEOPLE. SO, THEREFORE, IT IS REALLY A BIGGER TOOL FOR DEVELOPING, FOR ADDRESSING WHAT I THINK IS THE MAIN PROBLEM WE HAVE TODAY. AND THAT IS EMPLOYMENT.

SO, INASMUCH AS 91.1 PERCENT OF THE SMEs ARE MICRO, BUT ALSO THE BULK OF ENTERPRISES ARE MICRO SMALL AND MEDIUM ENTERPRISES. TALKING ABOUT MICRO MEASURES MEANS THAT WE LOOK AT THAT SECTOR AND FIND OUT WHY IS IT THAT IF YOU LEAVE IT TO THE MARKET ALONE, THEY ARE NOT DEVELOPING AS MUCH AS WE WOULD LIKE THEM TO DEVELOP. WHAT ARE THE OBSTACLES IN THE CURRENT SITUATION? WHAT ARE THE STRUCTURAL ISSUES THAT CONFRONT THE MICRO SMALL AND MEDIUM ENTERPRISES? ONE OF THEM IS THAT THEY ARE CONCENTRATED IN THE NCR AND NEIGHBORING PROVINCE. BUT AS FAR AS I'M CONCERNED, THAT'S VERY IMPORTANT. BECAUSE THEN WE CAN USE THESE ENTERPRISES TO CREATE MORE EMPLOYMENT IN NCR AND THE NEIGHBORING PROVINCES WHERE THE UNEMPLOYMENT IS THE HIGHEST.

ALSO, MAJORITY OF THE MICRO SMALL AND MEDIUM ENTERPRISES ARE IN THE SERVICE SECTOR, BUT IN LOW VALUE-ADDED ACTIVITIES. EIGHTY FOUR PERCENT ARE IN SERVICES. BUT WHAT KIND OF SERVICES? SIGURO IYUNG KARITON, NAGBEBENTA NG MGA, YOU KNOW, 'YUNG MGA... BUT KUNG SERVICE, IT'S A SERVICE LIKE A RESTAURANT CATERING TO A TOURIST, THAT'S FINE. PERO KUNG KARITON- KARITON, THEN IT'S NOT SO PRODUCTIVE.

SO, THEREFORE, WE HAVE TO ENCOURAGE ENTERPRISES IN THE PRODUCTIVE SECTORS THAT GIVE MORE EMPLOYMENT. SO, IN HIGHER VALUE-ADDED ACTIVITIES THAT'S WHAT WE WOULD WANT TO DO.

SO, CONTINUING... ALSO, THE PRODUCTIVITY OF OUR MICRO SMALL AND MEDIUM ENTERPRISE IS LOW COMPARED TO OTHER ASIAN ECONOMIES. BUT LET ME SAY, THAT THERE ARE SMEs THAT ARE THE MOST EFFICIENT USERS OF CAPITAL. SO THAT'S WHY, WE WANT THIS LOW PRODUCTIVE MSMEs TO TRANSFORM THEMSELVES INTO THESE SMEs WHO HAVE A VERY EFFICIENT WAY OF USING CAPITAL.

THERE ARE OTHER CHALLENGES CONFRONTING MICRO SMALL AND MEDIUM ENTERPRISES, THIS IS A WORLD OF STIFF GLOBAL COMPETITION. WHETHER WE LIKE IT OR NOT, WE ARE IN A GLOBAL WORLD. WHETHER WE LIKE IT OR NOT, THE FINANCIAL ANTI-MONEY LAUNDERING TASK FORCE EXIST. WHETHER WE LIKE IT OR NOT, IF THE BANKS IN THE OTHER COUNTRIES DON'T WANT TO DEAL WITH OUR EXPORTERS UNLESS THEY BRING OUT OUR DOCUMENTS AND EXAMINE EVERY RECIPIENT OF EVERY REMITTANCE TO FIND OUT WHETHER HE IS A MONEY LAUNDERER OR NOT, IT HAPPENS. THAT'S THE WAY THE GLOBAL WORLD IS AND OUR ALTERNATIVE IS TO BECOME, WHAT? A MONGOLIA? AN ALBANIA? A NORTH VIETNAM, WHO DOESN'T WANT TO DEAL WITH OUTSIDE WORLD? WELL, WHAT WILL HAPPEN TO OUR OWN DEVELOPMENT?

SO, ANOTHER PROBLEM IS THAT THEY HAVE LIMITED ACCESS TO TECHNOLOGY AND MOST IMPORTANT LIMITED ACCESS TO FINANCING. AND THAT IS SO IRONIC, BECAUSE THE ASSETS OF THE BANKING SECTOR IS IN THE TRILLIONS NOT EVEN IN THE BILLIONS, WHY IS THERE LIMITED ACCESS TO FINANCING? AND THEREFORE, BECAUSE OF LIMITED ACCESS TO FINANCING, BECAUSE OF LIMITED ACCESS TO TECHNOLOGY, THE COST OF DOING BUSINESS IS HIGH. BECAUSE OF THE LIMITED ACCESS TO THE INSTITUTIONAL FINANCING, MANY OF THEM END UP WITH A "5-6" AND THAT IS CERTAINLY A HIGH COST OF DOING BUSINESS. MANY OF THEM STILL USE THE "MANO-MANO" METHODS BECAUSE OF LIMITED ACCESS TO TECHNOLOGY AND, THEREFORE, YOU HAVE A HIGH COST OF DOING BUSINESS. THESE ARE THE CHALLENGES CONFRONTING SMEs.

AND SO, WHAT DO WE DO SINCE THAT IS THE STATE OF PHILIPPINE SMEs? OUR RESPONSE THERE IS THE NATIONAL SME DEVELOPMENT PROGRAM. WHAT IS THIS GOAL OF OUR PROGRAM? WE WANT THE SME SECTOR TO BE A VIBRANT SECTOR PROVIDING A STRONG DOMESTIC SUPPLY BASE MANUFACTURING AND SERVICES FOR GLOBALLY COMPETITIVE INDUSTRIES, WHETHER THEY'RE FOR EXPORT OR WHETHER THEY'RE FOR THE DOMESTIC MARKET FIGHTING WITH THE INFLOW OF IMPORTS. WE WANT TO EXPAND ENTERPRISES. THIS MICRO AND SMALL ENTERPRISE... IF THEY ARE MICRO, WE WANT THEM TO BECOME SMALL. AND IF THEY ARE SMALL, WE WANT THEM TO BECOME MEDIUM. THAT IS WHAT WE WANT. AND WE WANT TO UPGRADE PRODUCTIVITY AND VALUE-ADDED CAPABILITIES.

AND SO, HOW ARE WE DOING THIS? FOR THE NEXT SIX MONTHS, THIS IS WHAT WE WANT TO DO. RIGHT NOW, THE SMALL AND MEDIUM SEGMENTS ARE 8.7 PERCENT. WE WANT THEM TO GRADUATE TO 10 PERCENT. BY GRADUATING, AS I SAID, THE MICRO ENTERPRISES WHO ARE READY TO GRADUATE INTO SMALL BUSINESSES AND ALSO TO GENERATE NEW SMALL AND MEDIUM ENTERPRISES. THERE WILL BE 20 SMALL AND MEDIUM ENTERPRISE CENTERS NATIONWIDE SO THAT YOU WILL HAVE THE IMPRESSION MARAMI NG PERA SA SME NGAYON, MARAMING TULONG SA SME NGAYON. THAT IS THE PERCEPTION THAT WE WANT YOU TO BE ABLE TO FEEL. AND IF THAT IS THE PERCEPTION THEN WE WILL FEEL THAT WE HAVE SUCCEEDED. NOW, THIS IS WHAT WE WANT TO DO FOR THE NEXT SIX MONTHS.

AND AS I'VE ALWAYS SAID, THE MAJESTY OF DEMOCRACY IS THAT ONE PRESIDENT SOWS, ANOTHER PRESIDENT REAPS. AND IF WE SOW THIS PERCEPTION IN THE NEXT SIX MONTHS AND THIS GRADUATION, THEN THE NEXT PRESIDENT WILL REAP THE BENEFITS BY HAVING AN INCREASE IN THE SHARE OF SMALL AND MEDIUM SEGMENTS IN THIS SECTOR FROM 8.7 PERCENT TO 12 PERCENT. AND PRODUCTIVITY IN TERMS OF GROSS VALUE-ADDED INCREASE FROM 32 PERCENT TO 40 PERCENT OF GDP. THAT IS WHAT WE HOPE CAN BE ACHIEVED IN THREE YEARS FROM THE FRUITS OF WHAT WE WILL BE PLANTING IN THE NEXT SIX MONTHS. SO, THAT IS OUR THREE-YEAR OBJECTIVE. HOW TO DO IT? BASIC STRATEGIES, COMPREHENSIVE APPROACH. NOT JUST FINANCING, NOT JUST TECHNOLOGY, NOT JUST MARKET BUT A COMPREHENSIVE APPROACH, SEAMLESS ACCESS GOVERNMENT SERVICES. HINDI 'YUNG PAG NANDUN SA NATIONAL GOVERNMENT MARAMING TULONG, PAG BABA SA LOCAL ANDAMI NG RED TAPE OR VICE VERSA. IN THE CASE OF MUNTINLUPA, VICE VERSA. PAG DATING SA MUNTINLUPA ANDAMING TULONG, PAG AKYAT SA NATIONAL GOVERNMENT THEN RED TAPE. NO, WE DON'T WANT THAT. WE WANT THAT AS FAR AS THE SMEs IS CONCERNED GOING FROM NATIONAL TO LOCAL, FROM LOCAL TO NATIONAL PAREHO LANG ANG KANYANG EXPERIENCE. PARANG ISANG UNIT LAMANG TALAGA. 'YAN ANG IBIG SABIHIN NG SEAMLESS ACCESS GOVERNMENT SERVICES.

VIRTUAL ORGANIZATION. MARAMING GAGAMITIN NATING COMPUTER. ALAM BA N'YO NUNG APEC SUMMIT NUNG 1993, ASIDE FROM HOSTING IT, ANG ATING CONTRIBUTION SANA AY WE WERE GONNA PUT UP A SMALL AND MEDIUM ENTERPRISE CENTER FOR ALL APEC ECONOMIES. KAYA LANG NANDOON SA LOS BAŅOS, SA LIBLIB NG LOS BAŅOS. WALANG GUSTONG PUMUNTA DOON. SAYANG ANG TRANSPORTASYON, PATI 'YUNG MGA RESOURCE PERSONS AYAW PUMUNTA. WELL, THAT WAS 1993, THAT WAS TEN YEARS AGO. BETWEEN THEN AND NOW, WE HAVE DEVELOPED I.T. KAYA IMBES NA MAGLO-LOCATE NG CENTER DIYAN SA LOOB, LIBLIB NG LOS BAŅOS, ILO-LOCATE SA HARD DISK NG ATING MGA COMPUTER. SO, IT WILL BE A VIRTUAL ORGANIZATION.

AND, AS I SAID, ASIDE FROM THE DEMAND -- WHICH MEANS THAT FOR YOU WHO HAVE VIABLE PROJECTS, YOU WILL GET APPROVALS -- HINDI LANG 'YON, EVEN ON THE SUPPLY SIDE. THE DTI IS BEING REENERGIZED AND REENGINEERED TO ACTIVELY SEEK OUT AND HELP DEVELOP PROJECTS THAT WILL QUALIFY FOR THIS FINANCING. KASI KUNG HINDI SAYANG NAMAN 'YUNG PERA BAKA MABABA 'YUNG ABSORPTIVE CAPACITY KUNG PALENGKE LANG ANG ATING AASAHAN. THAT WAS WHAT WE MEAN BY SUPPLY SIDE PUSH. AND WE LOCALIZE THE PLAN. HINDI LAHAT PUPUNTA KAY MEL SA SB CORPORATION DOON SA MANILA. DAPAT DITO SA MGA BANGKO NINYO DOON KAYO MAKAKAHIRAM NG PERA. HINDI NA KAILANGAN PUPUNTA SA DTI. THAT IS LOCALIZATION OF THE PLAN.

THE ELEMENTS OF THE PLAN ARE THE HUMAN RESOURCE SIDE, THE MARKET SIDE, THE TECHNOLOGY SIDE, ADVOCACY FOR POLICY, AND OF COURSE, ANG NAPAKAIMPORTANTE, 'YUNG FINANCING, PINAKAIMPORTANTE SA LAHAT. SO, WHAT ARE SOME OF THE DETAILS OF THE ELEMENTS OF THE PLAN? 'YUNG HUMAN RESOURCE KASI ANG DAMING TRAINING INSTITUTES NG GOBYERNO: MAY TESDA, MAY TLRC, MAY LIVECOR, MAY KUNG ANU-ANO DIYAN. LAHAT SILA MAGIGING BAHAGI NG TRAINING PROGRAM PARA MAGKAKAROON NG EITHER GEOGRAPHICAL OR SECTORAL DIVISION OF LABOR. PARA MA-STREAMLINE 'YUNG TRAINING PROGRAMS AT SAKA 'YUNG FEES PARE-PAREHO, STANDARDIZATION OF FEES. AND THERE WILL BE... DAHIL ANG ISANG MALAKING PROBLEMA, SABI KO NGA KAY MAR, NATUTO NAMAN SILA GUMAWA NG SABON, HINDI NAMAN MARUNONG GUMAWA NG PROJECT PROPOSAL, 'DI WALA RING PERA. SO, THERE WILL BE 50 SME BUSINESS COUNSELORS NATIONWIDE, WHO WILL TEACH YOU HOW TO DO YOUR PROPOSAL, HOW TO PUT YOUR FINANCING DOCUMENTS TOGETHER, SO THAT YOU CAN ACCESS THIS FINANCING BECAUSE THAT IS THE OBSTACLE. AND THEN, AS FAR AS CHED IS CONCERNED THE SCHOOLS, WE WILL REVIEW THEIR ACADEMIC CURRICULA TO PROMOTE ENTREPRENEURSHIP. SO THAT IS AS FAR AS THE HUMAN RESOURCE DEVELOPMENT IS CONCERNED.

NOW, THE MARKET. WE HAVE DOMESTIC MARKETS. WE HAVE FOREIGN MARKETS. WE'VE BEEN HAVING TRADE FAIRS BUT WE DON'T NEED TO HAVE A PHYSICAL TRADE FAIR ALL THE TIME. WE WILL HAVE THE VIRTUAL TRADE FAIR BECAUSE WE WILL HAVE THE INTERNET AS THE CENTER, THE EXCHANGE BETWEEN BUYERS AND SELLERS. AND WE WILL BE ORGANIZING, CONTINUE TO ORGANIZE BUYING ANG SELLING MISSIONS. THE SMEs    WILL HAVE DISPLAY CORNERS AND THERE WILL BE BUYER AND SUPPLIER MATCHING SERVICES AND THE SME TEAM WILL BE MOVING AROUND THE COUNTRY. KAYA NGA MAYRON NG 70 SEMINARS IN ORDER TO PROMOTE AND LET YOU KNOW ABOUT ALL THESE ELEMENTS OF OUR DEVELOPMENT. ALSO TO PROMOTE THE MARKET. AND THEN OF COURSE, SMEs PRODUCE SMALL AMOUNTS BUT THE MARKET SOMETIME REQUIRE BIG AMOUNTS. SO THIS SERVICE ALSO IS PART OF INCLUDING THE CONSOLIDATION OF PRODUCTION INPUTS FOR SMEs, THAT IS AS FAR AS MARKET DEVELOPMENT IS CONCERNED.

NOW, FOR TECHNOLOGY. WE HAVE THE DESIGN CENTER OF THE PHILIPPINES SO WE WILL RENDER ADVISABLY SERVICES FOR SMEs TO CONFORM TO STANDARDS. SOMETIMES THE SIZES ARE NOT STANDARD. SOMETIMES THE WEIGHTS ARE NOT STANDARD, ONE IS THE WEIGHT IN THE SHELF ANOTHER ONE IS THE WEIGHT IN THE FARM GATE. SO THERE HAS TO BE STANDARDS. AND THERE WILL BE PRODUCT CLINICS IN DESIGNING AND PACKAGING, PRODUCT TECHNOLOGY, AND ALSO DESIGNING AND TECHNICAL INFORMATION. THERE ARE RESEARCH OUTPUTS THAT ARE GOOD. WE WILL HELP COMMERCIALIZE THEM ESPECIALLY THE ALTERNATIVE USES OF INDIGENOUS RAW MATERIALS. AND TECHNOLOGY IMPROVEMENT, IMPROVING RAW MATERIAL PREPARATION SO THAT WE WILL HAVE TO HAVE TRAINING TO SUSTAIN THE QUALITY OF RAW MATERIAL INPUTS. AND WE WILL SET UP AND STRENGTHEN COMMON SERVICE FACILITIES. THAT IS FOR PRODUCT.

AND THEN, OF COURSE, WE HAVE TO ADVOCATE FOR THE GOOD CARRIAGE OF POLICY. FOR INSTANCE, I CONGRATULATE THE CONGRESS BECAUSE THEY PASSED THE BARANGAY ENTERPRISE LAW. ONE IMPORTANT FEATURE OF THIS LAW IS THAT IT EXEMPTS FIRMS WHO HAVE AN ASSET BASE OF 3 MILLION PESOS AND BELOW FROM THE MINIMUM WAGE LAW. NOT MANY KNOW THAT. BUT FOR THOSE OF YOU WHO GET TO FIND OUT ABOUT THAT, WHAT A BIG FLEXIBILITY IT GIVES YOU, DOESN'T IT? IF YOU ARE ABLE TO AVAIL OF THIS EXEMPTION.

WE WILL HARMONIZE, SIMPLIFY, STANDARDIZE BUSINESS FORM AND FEES, HOPEFULLY, AMONG LGUs BUT... AND PEOPLE... ENTERPRISE, THERE IS BIG ENOUGH FOR THE MARKET IT'S NOT YOU WHO SHOULD MAKE A DECISION. YOUR ONLY CONCERN IS WHETHER PEOPLE WILL SUFFOCATE PHYSICALLY THERE OR NOT. IN WHICH CASE, IT'S AN ENVIRONMENTAL HAZARD. BUT OBVIOUSLY IT WILL NOT, BECAUSE WE WERE MANY INSIDE THAT ROOM AND WE WERE NOT SUFFOCATING. SO THAT'S WHAT I MEAN, THE ONLY... ESPECIALLY IF THERE IS NO INCENTIVE INVOLVED, NO FRANCHISE INVOLVED, NO GOVERNMENT CONTRACT INVOLVED, THE ONLY CONCERN OF THE REGULATING AUTHORITY IS THAT THE BUSINESS DOES NOT DO HARM TO THE COUNTRY. OTHERWISE, THEY SHOULD GIVE OUT THOSE LICENSES AND PERMITS. SO THAT'S MY MARCHING ORDERS TO THE DTI.

NOW, FINALLY, WHAT I'M REALLY AFTER -- BECAUSE YOU CAN ACCESS ALL OF THOSE OTHER THINGS, BUT IF YOU CANNOT ACCESS THE MONEY, THE TRILLION PESOS IN THE BANKING SYSTEM THAT'S THERE, DOING NOTHING, SO MUCH LIQUIDITY, AND THEN SO MUCH NEED, THEN WE ARE NOT GONNA PUSH OUR SMEs -- THAT'S THE BIGGEST. AND THAT'S WHY OUR PROGRAM IS INTENDED TO RELEASE 10 BILLION PESOS TO THE SMEs IN THE NEXT SIX MONTHS.

HOPEFULLY, IF WE SUCCEED IN THE FIRST SIX MONTHS, ANOTHER SIX MONTHS. SO THAT WOULD BE 20 BILLION FOR ONE YEAR. AND IN MY SUCCESSOR'S TIME, HOPEFULLY, 30 BILLION IN ONE YEAR.

HOW DO WE DO IT? ONE OF THE REASONS WHY YOU DON'T GET ACCESS IS THAT LAND BANK, DBP, etc. ARE NOT PRESENT EVERYWHERE. SO YOU HAVE TO GO TO MAKATI IN THOSE FORBIDDING WALLS AND CORRIDORS TO ASK FOR A LOAN. THE ONES THAT GO DOWN TO THE PEOPLE, DOWN TO THE SMALL COMMUNITIES ARE THE THRIFT BANKS AND THE RURAL BANKS. THEREFORE, THE MONEY MUST GO THROUGH THEM. UNFORTUNATELY, TODAY, LESS THAN ONE-HALF OF THRIFT AND RURAL BANKS ARE ACCREDITED TO BE CONDUITS FOR ALL THESEBIGGER MONEY.

WHAT'S THE REASON? IN 1997, WHEN WE HAD A CRASH IN ASIA THE... UNDERSTANDABLY, THE FINANCIAL INSTITUTION BECAME VERY CONSERVATIVE AND PUT UP ALL THESE VERY STIFF ACCREDITATION REQUIREMENTS TO THE POINT THAT THEY ARE NOW HIGHER THAN WHAT IS CALLED, THE SO-CALLED INTERNATIONAL CAMEL'S RATING STANDARD. SO WHAT WE HAVE DONE IS TO BRING THE ACCREDITATION REQUIREMENTS TO THE INTERNATIONAL CAMEL'S RATING STANDARD. IN THAT WAY NOW MORE OF THE RURAL BANKS AND THE THRIFT BANKS WILL QUALIFY TO BE CONDUITS. AND THEY WILL BE YOUR MAIN SOURCES OF FINANCING WHEREVER THE MONEY ORIGINALLY CAME FROM. THEY WILL BE YOUR MAIN CONDUITS. BECAUSE THEY MAY HAVE COME FROM DBP, FROM CENTRAL BANK, FROM ADB, FROM... BUT THEY WILL GO THROUGH THIS MECHANISM.

AND SO, WE INVITE -- IF THERE ARE THRIFT BANKS AND RURAL BANKS IN MUNTINLUPA -- WE INVITE YOU, IF YOU ARE NOT YET ACCREDITED TO GET YOURSELF ACCREDITED AS A CONDUIT OF THE GOVERNMENT FINANCIAL INSTITUTIONS. AND THEN FOR ALL OF THESE CONDUITS, WHOEVER ARE THE CONDUITS AND WHATEVER IS THE SOURCE ULTIMATELY OF THE MONEY, THERE'LL BE UNIFIED COMMON GUIDELINES AND RATES, AND THAT COMMON BUSINESS LOAN APPLICATION FORM. SO YOU SHOULDN'T CARE WHETHER THE MONEY COMES FROM CENTRAL BANK, DBP, LAND BANK, ALL THE SAME -- ALL THE SAME REQUIREMENTS, ALL THE SAME FORMS.

AND SO, WHAT ARE THESE ALL THE SAME? WHAT ARE THESE DETAILS OF THE ALL THE SAME? WHERE IS THE MONEY GONNA COME FROM? IT MAY COME FROM DBP, LAND BANK. IT MAY COME FROM THE NATIONAL LIVELIHOOD SUPPORT FUND. IT MAY COME FROM THE EXIM BANK. IT MAY COME FROM QUEDANCOR. IT MAY COME FROM SB CORPORATION. BUT YOU SHOULDN'T CARE WHERE IT COMES FROM. BECAUSE WHEN YOU GO TO A THRIFT BANK AND YOU BORROW MONEY, IT DOESN'T MATTER WHERE IT COMES FROM BECAUSE THE REQUIREMENTS WILL ALL BE THE SAME.

WHAT ARE THESE REQUIREMENTS? FOR SHORT-TERM LOANS, 9 PERCENT; FOR MEDIUM-TERM LOANS, 11.25 PERCENT; FOR THREE-YEAR LOANS, 12.75 PERCENT. SO SINGLE DIGIT FOR SHORT-TERM LOANS.

THE PROGRAM WILL NOT DECLINE A LOAN ONLY ON THE BASIS OF INADEQUATE COLLATERAL. BUT SURELY, IF YOU BORROW, YOU WILL BE ABLE TO ACQUIRE CERTAIN ASSETS THAT CAN BE USED AS COLLATERAL. THEREFORE, YOU MUST BE ABLE TO HACK THAT PARTICULAR ASSET.

FOR INSTANCE, WHAT CAN YOU USE AS COLLATERAL? YOU DON'T HAVE REAL ESTATE. WHAT CAN YOU USE AS COLLATERAL? POST DATED CHECKS. THE REGISTERED, UNREGISTERED REMCHM. THE ASSIGNMENT OF THE LIFE INSURANCE AND GUARANTEE COVER. IF YOU ARE A FRANCHISEE, THE CORPORATE GUARANTEE OR YOU ASSIGN YOUR LEASE RIGHTS TO THE BANK. OR IF IT'S FOR EXPORT PACKING, THE ASSIGNMENT OF THE LETTER OF CREDIT OR PURCHASE ORDER, OR THE SALES INVOICE. ALL OF THESE ARE ACCEPTABLE AS COLLATERAL.

WHEN WE SAY SHORT-TERM LOAN, PAYABLE IN ONE YEAR. AND THEN, OF COURSE, YOU HAVE YOUR EXPORT FINANCING AND YOUR CREDIT LINE FOR TEMPORARY WORKING CAPITAL.

THERE ARE ALSO LONG-TERM LOANS UP TO FIVE YEARS. AND FOR PERMANENT WORKING CAPITAL. ALSO TO PURCHASE EQUIPMENT, A LOT OR CONSTRUCT A BUILDING OR A WAREHOUSE. OF COURSE, IN THAT CASE, YOUR COLLATERAL WILL BE THE WILL TO BUILDING THE WAREHOUSE, THE LOT, etc.

AND HOW MUCH WILL THIS SYSTEM FINANCE FOR A SHORT-TERM LOAN, UP TO 70 PERCENT ON A VALUE OF THE LETTER OF CREDITOR P.O. OR 70 PERCENT OF THE WORKING CAPITAL REQUIREMENT FOR A MAXIMUM OF FIVE MILLION PESOS. IF IT'S A LONG-TERM LOAN, 80 PERCENT OF THE INCREMENTAL PROJECT COST FOR A MAXIMUM OF FIVE MILLION PESOS. IT'S THE ISSUE OF NOT AT LEAST, AT MOST. AT MOST A DEBT EQUITY RATIO OF 80-20. IF YOU ARE A FRANCHISEE, 70-30. AND FOR THE PRECEEDING YEAR, WE SHOULD HAVE BEEN MAKING PROFIT. BECAUSE WE DON'T WANT TO FINANCE LOSING ENTERPRISES, WE WANT ENTERPRISES THAT ARE DOING WELL TO GET MORE FINANCING. THAT'S THE PURPOSE, BECAUSE THEY ARE THE MOST EFFICIENT USERS OF CAPITAL.

AND IF YOU WERE NOT MAKING MONEY LAST YEAR BUT YOU WERE MAKING MONEY FOR THE LAST TWO OR THREE YEARS ON THE AVERAGE. THEN THAT CAN ALSO BE CONSIDERED. THOSE ARE THE HURDLES FOR PROFITABILITY.

WHO CAN BORROW? ANY SMALL AND MEDIUM ENTERPRISE EXCEPT THOSE WHO IMPORT, BECAUSE THAT'S NOT CREATING REALLY JOBS. THOSE WHO SELL LIQUOR AND CIGARETTES, BECAUSE WE DON'T WANT TO FOSTER UNNECESSARILY MORE VICES. AND ALSO MINING AND OTHER EXTRACTIVE INDUSTRIES, BECAUSE WELL... MINING TO BE ENVIRONMENT-FRIENDLY REALLY CANNOT BE SMALL AND MEDIUM. THERE HAS TO BE ECONOMIES OF SCALE. AND THE ENTERPRISES SHOULD BE FILIPINO ENTERPRISES, AND YOUR ASSETS SHOULD NOT BE MORE THAN A HUNDRED MILLION. OTHERWISE, YOU'LL ALREADY BE CONSIDERED A LARGE ENTERPRISE AND NOT ELIGIBLE FOR THIS SPECIAL FINANCING WINDOW.

OF COURSE, YOU WILL HAVE TO PAY YOUR FEES -- 2,000 FOR EVERY ONE MILLION YOU BORROW. AND THEN YOU GIVE... WHEN YOU APPLY, AN UPFRONT FEE OF ONE-HALF OF ONE PERCENT OF THE APPROVED LOAN, AND IF YOU DON'T USE THE LOAN AND YOU DON'T HIRE WORKERS THEN THAT MEANS THAT YOU WILL HAVE TO PAY A COMMITMENT FEE OF 0.125 PERCENT OF THE UNAVAILED BALANCE FOR LONG-TERM LOANS.

ASIDE FROM THE LOANS THE GOVERNMENT IS ALSO WILLING TO ENTER INTO JOINT VENTURES, VENTURE CAPITAL INVESTMENT. AND THAT'S WHAT MEL ALONZO WILL BE DOING. SO WE CAN DO, WE CAN DO EQUITY RATHER THAN LOAN FINANCING.

AND THE OLD "TULONG SA TAO PROGRAM" OF DTI, WHICH WAS REALLY GOOD, AND I FELT BAD ABOUT THAT WHEN I BECAME SENATOR BECAUSE WHEN I WAS UNDERSECRETARY OF TRADE AND INDUSTRY I WAS THE ONE WHO GOT THE LOAN FROM ADB TO MAKE IT SPREAD THROUGHOUT THE COUNTRY. WHEN I WAS A SENATOR I FOUND OUT THAT THE REPAYMENTS WERE BEING SENT TO THE TREASURY AND NOT BEING REFLOWED ANYMORE. SABI NILA BECAUSE OF E.O. 138. ANO BA 'YANG E.O. 138? AS PRESIDENT, I'M THEREFORE REVOKING E.O. 138 TO REVIVE THE "TULONG SA TAO PROGRAM."

I WANT TO MAKE SURE... AH, I THINK THE REALITY IS THAT A LOT OF THE LOANS WILL BE HERE AROUND METRO MANILA, REGIONS III AND IV, BECAUSE THIS IS WHERE THE SMEs ARE. AND THIS IS WHERE THERE'S A LARGE UNEMPLOYMENT. BUT I WANT TO MAKE SURE THAT EVERY TOWN HAS AT LEAST ONE PRODUCT PRODUCED BY SMEs, AND EVERY TOWN WILL HAVE AT LEAST A ONE-MILLION PESO LOAN FOR SOME ENTERPRISE OR OTHER. THAT IS THE MINIMUM REQUIREMENT. THAT IS OUR... WHAT YOU CALL AFFIRMATIVE ACTION ASPECT OF THIS PROGRAM. BUT OVER AND ABOVE THAT AFFIRMATIVE ACTION ASPECT, IT WILL BE MARKET- DRIVEN IN THE SENSE THAT THOSE WHO ARE VIABLE ARE THE ONES WHO WILL GET THE LOANS.

SO, WE THANK THE MONETARY BOARD BECAUSE STUDYING THIS ISSUE, THE BIGGEST REASON WHY THE TRILLION PESOS WAS NOT REACHING THE SMEs WAS ORIGINALLY BECAUSE OF CERTAIN MONETARY BOARD STRINGENT REQUIREMENTS. BUT THEY HAVE RELAXED IT. YOU HAVE CHAMPIONS IN THE MONETARY BOARD FOR SMALL AND MEDIUM ENTERPRISES. THEY HAVE REDUCED THE RESERVED REQUIREMENTS OF RURAL AND THRIFT BANKS. THEY HAVE ALSO MADE THE RISK WEIGHING ON SMALL AND MEDIUM ENTERPRISE LOANS ALSO MORE LIBERAL. AS I SAID, YOU KNOW, IN THE PAST -- I HOPE THIS HAS BEEN CARRIED OUT -- IN THE PAST, FOR INSTANCE, THERE WERE SO MANY DOCUMENTS REQUIRED OF THE SMEs INCLUDING BIR FORMS. BUT MANY SMEs DON'T... YOU KNOW, DON'T HAVE SUCH SOPHISTICATED RECORDS. AND AS I SAID... AND THE JOB OF A BANK IS TO DETERMINE WHETHER THE SME CAN PAY BACK THE LOAN OR NOT. SO I SAID, WHY ARE YOU REQUIRING A BIR FORM, A BIR RETURN? AND HE SAID, BECAUSE WE WANT TO MAKE SURE THEY'RE PAYING TAXES. I THINK THAT'S THE JOB OF THE BIR. THAT'S NOT THE JOB OF THE BANK THAT'S LENDING MONEY. THE MAIN JOB OF THE BANK LENDING MONEY IS TO MAKE SURE THAT IT LENDS MONEY TO A CREDITWORTHY ENTERPRISE. AFTER ALL, THE BIR UNDER WILLY PARAYNO, HAS ITS OWN NEWLY-COMPUTERIZED SYSTEM WHICH IS DOING VERY WELL IN CATCHING THE TAX EVADERS. LET'S NOT MIX UP THE SMEs BECAUSE AFTER ALL THE TAX EVADERS ARE REALLY NOT THE SMEs, THEY ARE THE BIGGER FIRMS. SO I THINK THAT THE SMEs SHOULD NOT REALLY BE... AND BESIDES YOU HAVE SO MANY TAX EXEMPTIONS. SO WHAT'S THE USE OF REQUIRING ADDITIONAL FUNDING AND THEREFORE ADDITIONAL REQUIREMENTS FOR CREDITWORTHINESS. SO THAT'S WHY THE RISK WEIGHING ON SME LOANS IS NOW MORE LIBERAL, ALLOWING THE BANKS THEMSELVES TO DETERMINE. BECAUSE AFTER ALL THESE BANKS IF THEY ARE CAMEL'S RATED THEYTHEMSELVES KNOW WHAT THEY NEED TO KNOW TO DETERMINE WHETHER A LOAN WILL TURN BAD OR GOOD. NOW, IF THEY ARE LESS THAN CAMEL'S RATED THEN YOU HAVE TO DICTATE TO THEM. BUT WE'RE ONLY MAKING THE CAMEL'S RATED BANKS THE CONDUITS. SO THEREFORE THEY SHOULD BE THE ONES TO DETERMINE MORE OF THE RISK RATHER THAN THE CENTRAL BANK SO THE CENTRAL BANK HAS MINIMIZED THE RATIOS ON RISK WEIGHING.

AND LOANS TO SMEs ARE ALSO NOW SUBJECT TO A REDISCOUNT RATE. THAT IS ONE PERCENTAGE POINT LESS THAN OTHER LOANS. IN ORDER TO MAKE THE BANKS MORE... HAVE MORE INCENTIVE TO LEND TO SMEs.

NOW, MEL ALONZO'S SB CORPORATION IS GOING TO PROVIDE COLLATERAL SUBSTITUTE GUARANTEE. SO THAT'S THE REASON WHY YOU WILL NOT BE REQUIRED ALWAYS TO PUT UP THE FULL COLLATERAL OF THE LAND OR THE REAL ESTATE, BUT JUST THE COLLATERAL OF THE PROCEEDS OF THE LOAN. BUT IT WILL BE SUPPLEMENTED BY GUARANTEES FROM SB CORPORATION.

AND, ALSO IN ORDER TO HELP THE THRIFT BANKS AND THE RURAL BANKS DETERMINE CREDITWORTHINESS, WE ARE GOING TO DO A CREDIT BUREAU SERVICE. SO THAT YOU WILL HAVE IN YOUR INTERNET, HOPEFULLY, A MASTER LIST OF SMEs AND THEIR RESPECTIVE CREDIT STANDING. JUST LIKE A CREDIT CARD. LIKE WE, WHEN WE GO TO A STORE, THE GIRL WHO PUTS THE CREDIT CARD THROUGH THAT MACHINE IS REALLY CHECKING ON OUR CREDITWORTHINESS. THAT'S THE SAME SYSTEM WE WANT TO USE. AND THAT WILL CERTAINLY SPEED UP THE LOAN APPLICATION. SO, THESE ARE THE THINGS THAT WE ARE DOING IN ORDER TO MAKE THE FINANCING MORE AVAILABLE TO THE SMEs.

SO, I WOULD LIKE THEREFORE TO BE ABLE TO ASK ALL OF YOU, TO BE ABLE TO JOIN IN THIS PROGRAM, BECAUSE WE NEED TO HAVE THE 10 BILLION PESOS NOT IN THE BANKS BUT IN THE HANDS OF THE SMEs AND ULTIMATELY IN THE HANDS OF THE PEOPLE THAT YOU ARE GIVING JOBS TOO. AND I HOPE THAT THIS PROGRAM WILL TOUCH ONE-FOURTH OF THE SMEs IN THE COUNTRY. BECAUSE 10 BILLION PESOS WILL BE ABOUT ONE-FOURTH OF THE FINANCING NEEDS OF SMEs. I HOPE THAT YOU'LL BE ABLE TO INCREASE YOUR SALES, YOUR CUSTOMER BASE. I HOPE THAT YOU'LL BE ABLE TO IMPROVE YOUR TECHNICAL AND MANAGERIAL SKILLS BY PARTICIPATING IN THE PROGRAMS. I HOPE THAT YOU WILL BE ABLE TO UPGRADE YOUR PRODUCT OFFERINGS TO THE HIGHER STANDARDS.

FOR INSTANCE, OUR MESSAGE TO THE JEWELRY MANUFACTURES IN BULACAN -- YOU CAN BE BETTER ORGANIZED AND THEREFORE GET BETTER PRICES FOR YOUR PRODUCTS. FOR THE PRODUCERS IN NEGROS -- YOU CAN HAVE A WIDER MARKET REACH. FOR THE FURNITURE INDUSTRY IN CEBU -- YOU CAN BECOME EVEN MORE COMPETITIVE. AND IN AREAS WHERE THERE ARE MANY SMEs, AND THAT'S IN NCR, REGIONS III AND IV, WE HOPE TO HAVE AN EXPANSION OF COMMON SERVICE FACILITIES.

AND SO, THIS IS OUR MESSAGE TO YOU -- THERE'S 10 BILLION DOLLARS AVAILABLE, USE IT AND CREATE JOBS FOR OUR PEOPLE.

THANK YOU.

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