By EDU H. LOPEZ
The local banks are awash with cash but why are businessmen not borrowing?
The Bangko Sentral ng Pilipinas (BSP) wants to get to the bottom of the curious situation and is calling on the top bankers and industry leaders for some answers.
A recently completed study paper on the lending situation to small and medium enterprises (SMEs) made by the thinktank team IDEA, of former economic planning czar Cayetano Paderanga Jr. offers part of the answer.
The study was commissioned by the USAID-funded Partnership and Advocacy for Competitiveness and Trade (PACT) project of the De La Salle University and the the Philippine Exporters Confederation, Inc. (PHILEXPORT).
In part, the Paderanga study came to the conclusion that the private banking system is only scratching the surface of a big credit market, the 809,000 micro, small and medium enterprises (SMEs) in the Philippines that employ 5.4 million people.
Ninety out of one hundred of those enterprises are micro businesses while about eight or roughly 64,000 are SMEs. About half of them are concentrated in Metro Manila, the Southern Tagalog region and Central Luzon.
Paderanga used surveys made by the National Association of Trade and Credit Cooperatives Organization (NATCCO) and the Japanese International Cooperation Agency (JICA) plus field researches and personal interviews conducted by his people as the baseline of his study on SME lending.
In the NATTCO survey, 79.6 percent of the respondents wanted to expand their businesses while in the JICA survey 55 percent of them wanted to borrow money for expansion.
On the average, SMEs want to borrow P8 million each to expand, although about half of them borrow only up to P3 million for expansion. With 64,000 or so SMEs on record, it is a huge, multi-billion credit market crying to be tapped.
Those into electronics, metal products and food processing need loans for expansion while the fine jewelry, gifts and housewares industries need to borrow for their working capital.
They often borrow short-term from informal lenders that lend out at as high as 60 percent a year, and their long term from commercial, thrift and rural banks.
The biggest lenders are still government banks, the Land Bank of the Philippines and the Small Business Corp. Among the private banks, only the Planters Bank is heavy into SME finance. Most of the private bankers seem to avoid the SMEs as hardly bankable and comply with government requirements some other way except lending to the small businessmen.
Surprisingly, SME borrowers prefer to borrow from commercial banks than they do with thrift and rural banks.
The catch is, the Paderanga study showed, many of them get rejected for failing to comply with the general documentary requirements of the banks or for lack of land titles as collateral.
In fact, the study stressed, the respondents cited that the lack of collateral and inability to comply with requirements are the most common reasons given by banks for disapproving their loan applications.
The former NEDA chief suggests that a single financial institution that does nothing but lend to SMEs similar to Korea’s Small and Medium Industry Bank, may prove to be a worthwhile endeavor. He further says the SB Corp. may be fortified to do the job. (Edu Lopez)
No comments:
Post a Comment