By Ben Rosario
The Department of Trade and Industry (DTI) on Friday urged Congress to institutionalize the “Pondo sa Pagbabago at Pag-asenso (P3) program designed to end usury that has victimized micro, small and medium enterprises (MSMEs) in the country.
Appearing at the budget hearing before the House Committee on Appropriations, Trade Secretary Ramon Lopez said the P3 program will eliminate the “5-6” lending scheme by offering MSMEs an alternative source of funding.
Lopez briefed lawmakers on the DTI’s 2020 national budget that will allocate P4 billion annually to implement the P3.
But for 2020, the DTi has proposed P1.3 billion for the development of the government’s micro-financing program.
“We are asking you [congressmen) to institutionalize the P3 so that we can stop the 5-6 scheme,” Lopez told lawmakers.
According to Lopez, the P3’s objective is to dismantle the P30 billion market of 5-6 lenders.
As intended, the P3 program should replace the 5-6 lending scheme by allowing MSMEs to borrow up to P300,000, depending on business needs and repayment capacity.
Borrowers will be charged a maximum interest rate of 26 percent per annum with no collateral requirement. This rate is lower than the 20 percent per day, week, or month interest charged by 5-6 lenders, as well as those applied by most microfinance institutions (MFIs).
The Lower House approved on second reading the P3 bill during the 17th Congress. But the measure failed to hurdle final reading, thus, prompting congressmen to make a fresh bid to have it passed this Congress.
Quezon City Rep. Precious Hipolito-Castelo filed House Bill 3699 or the proposed Pambansang Pondo Para sa Pagbabago at Pag-Asenso Act of 2020, which was also proposed by her husband, former Rep. Winston Castelo.
Under the bill, the amount of P50 billion chargeable against the 2020 appropriations of DTI shall be appropriated to effectively carry out the intent of the proposal.
Hipolito-Castelo said the Duterte administration has launched the P3 to counter the “5-6” loan scheme.
“P3 program aims to provide microenterprises with an alternative source of funding. Borrowers can take out a loan of P5,000 to P100,000 with no collateral and with a maximum monthly interest of 2.5 percent,” the neophyte solon said.