Senator Win Gatchalian underscored the need to simplify the procedures and reduce the transaction costs to encourage Micro, Small, and Medium Enterprises (MSMEs) to seek government loans to restart their businesses which in turn will help shore up the economy.
Gatchalian, who sits as Chairperson of the Senate Subcommittee on Banks, Financial Institutions and Currencies tackling the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) bill, said the measure seeks to provide aid to companies severely impacted by the COVID-19 pandemic, including the MSMEs, by reducing taxes and transaction costs making it easier on the pockets to secure a loan.
This will make borrowings cheaper for small businesses through the Land Bank of the Philippines (LDP) and Development Bank of the Philippines (DBP), he said.
“The documentary stamp tax, capital gains tax, creditable withholding income tax, value-added tax, gross receipts tax are usually shouldered by the borrowers. If these will be lifted, it will lower the overall cost of borrowings of MSMEs and entice them to seek financial assistance from government banks. I also hope that the bill will effectively streamline the process,” Gatchalian said.
“A number of MSMEs continue to face cash flow issues due to prolonged lockdown. Providing the needed access to credit and financial assistance to distressed businesses, particularly the MSMEs, will boost their confidence in continuing with their operations and help in maintaining employment levels which are critical in reviving the country’s economy,” he added.
Gatchalian noted that the country’s economy lost about P1.5 trillion in economic value or approximately 9.5 percent of Gross Domestic Product (GDP) last year and approximately three million Filipinos lost their jobs at the end of 2020, a reduction of 7.2 percent of the employment rate. He found out from the Landbank representative that 58,000 MSMEs involving 1.2 million jobs could be saved if the bill is enacted into law.
“The GUIDE bill will supplement the financial assistance to MSMEs that Congress has granted through the Bayanihan laws enacted last year. This will help jumpstart the economy,” the senator added.