BANGUED, Abra – The Cordillera Regional Development Council (RDC-CAR) approved a resolution encouraging cooperatives, non-government organizations (NGOs) and local government units in the region to establish their respective credit surety fund (CSF) to cater to the needs of micro-business and small and medium enterprises in the future.
The region’s policy-making body chaired by Baguio City Mayor Mauricio G. Domogan stated that to date, Benguet and Baguio City have already established their credit surety fund where a good number of member micro, small, and medium (MSM) enterprises in the area have availed of the services of such facilities to sustain their operations and increase their capitalization for expansion among other purposes.
Republic Act (RA) No. 10744, otherwise known as the “Credity Surety Fund Cooperative Act of 2015”, mandates the Bangko Sentral ng Pilipinas to spearhead the promotion, encouragement, creation and organizational development of CSF cooperatives all over the country.
The CSF is a program aimed to increase the credit worthiness of MSM enterprises which cannot obtain loans from banks and other financial intermediaries due to the lack or insufficient acceptable collaterals, credit knowledge, and credit track records that impede the growth of the enterprises in the countryside.
Under the law, the CSF was created by pooling the contribution of cooperatives, NGOs, partner institutions such as the Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP), Industrial Guarantee and Loan Fund (IGLF) and other government agencies.
The RDC-CAR admitted that the establishment of the CSF is a big boost to the various enterprises which are believed to be the backbone of the Philippine economy aside from the CSF being supportive of the Regional Development Plan of 2017-2022, which aims to significantly improve access of the MSM enterprises to market and financing as well as technology.
Based on the guidelines of the credit surety fund cooperatives, NGOs, and LGUs can access up to 10 times of its contribution to the existence of the facility and the same could be paid within a reasonable time prescribed by the facility.
Reports from the Cordillera office of the Department of Trade and Industry (DTI-CAR) stated there are over 9,000 MSM enterprises in the region last year which are engaged in services and manufacturing activities employing over 33,000 persons on the average on an annual basis.
From 2011 to 2015, MSM enterprises had exports ranging from $3 to $12 million and that the same had been allegedly declining over the period, possibly due to their difficult access to credit from formal financial institutions given the latter’s imposition of higher interest rates apart from stringent requirements.
The RDC-CAR underscored the role of the enterprises cannot be over emphasized and to improve their productivity, innovation and sustain their operations, the regional development plan highly recommends enhancing their access to financing and technology as well as financial assistance.
By Dexter A. See