HOUSE BILL NO. 5 and SENATE BILL NO. 1421: PUHUNAN, TULUNGAN, KAUNLARAN (PTK) ACT – Proposed Bills to Institutionalize Microfinance Programs and Access to Capital to Support and Grow Micro, Small, and Medium Enterprises (MSMEs)
From the Explanatory Notes of each Bill, it can be gathered that MSMEs make up an immense portion of the business sector, with the large enterprises consisting of a small percentage of the business pie in the Philippines. Despite recognizing the vital and important role of MSMEs in the economic growth of the Philippines, however, this sector has not seen growth itself, as evident by the fact that MSME owners are limited to borrowing money for capital from lenders and money-lending agencies that charge high-interest rates on the principal amount borrowed. To address the challenges to MSMEs in the Philippines, the proposed PTK Act mandates the DTI, with the help of other government agencies concerned, to implement the PTK Five-Star Program and the PTK Loan Program.
An MSME is defined by Republic Act 9501 as any business activity or enterprise engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership, or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity’s office, plant, and equipment are situated, have value falling under the following categories: (a) micro: not more than P3,000,000; (b) small: P3,000,001 – P15,000,000; and (c) medium: P15,000,001 – P1,000,000,000.
Under the PTK Five-Star Program, each administrative region in the country shall identify a maximum of five (5) priority business areas to develop in order to reap the benefits of efficiency and specialization and provide the MSMEs falling under them free technical and administrative support. It will also incentivize, annually, the five (5) top-performing enterprises per size and category in each region by giving a Five-Star award and eligibility for grants, not less than ten percent (10%) of their current capital, to be used solely for further business capitalization. Every medium-sized enterprise that evolves into a large enterprise through the help of the PTK Five-Star Program shall likewise be eligible for a one-time grant of Twenty-Five Thousand Pesos (P25,000.00) to be used, also, solely for further business capitalization.
The PTK Loan Program, on the other hand, will be catering exclusively to micro-enterprises in need of capital, whether or not they fall under the priority business areas of their respective regions. The loan proceeds, which shall be exclusively used for capital and subject to qualifications of the borrower under the proposed Act, shall not exceed Ten Thousand Pesos (P10,000.00) for first time borrowers; Thirty Thousand Pesos (P30,000.00) for second time borrowers; and Two Hundred and Fifty Thousand (P250,000.00) for those borrowing for the third time or oftener subject to the requirement that the latter shall be borrowers in good standing.
The loan program shall also not require any collateral from borrowers and the period for repayment shall be mutually agreed upon by the borrower and the lender provided that the same shall be at least three (3) months for a first-time borrower; at least six (6) months for a second-time borrower; and at least one (1) year for those borrowing for the third time or more oftener.
The proposed PTK Act would facilitate the development and/or recovery of MSMEs in the Philippines, especially now that this sector of the business realm is currently taking a toll from the ongoing CoViD-19 pandemic, and would hopefully, to a degree, address the present situation of the MSMEs. The PTK Act likewise encourages first-time business owners and people who want to venture into a business to enter into an enterprise, by providing ready capital to start their business whether of the micro, small, or medium size.
With the proposed financial and non-financial assistance, together with private sector participation and the several laws previously passed to lift the status of MSMEs in the business sector, it can be safely said that the future of MSMEs in the Philippines may be better than its current situation.