New bill seeks to allocate 10% of all govt procurement to micro, small, medium entrepreneurs

The House of Representatives has approved on third and final reading a measure which seeks to further promote, strengthen and encourage the growth and development of micro, small and medium enterprises (MSMEs) in the country.

All 212 members of the House in plenary session cast their votes for the approval of House Bill 8714. The bill aims to strengthen and enhance the financing programs for MSMEs, amending for the purpose Republic Act No. 6977, as amended, otherwise known as the “Magna Carta For Micro, Small and Medium Enterprises”.

Rep. Maximo Rodriguez Jr. (2nd District, Cagayan de Oro City), principal author of the bill explained there is a need to strengthen the Magna Carta for MSMEs.

“The MSME Sector accounts for 62.8 percent of total jobs generated by all types of business establishment in 2014. Of the total number of MSMEs, 90.3 percent are micro enterprises, 9.3 percent are small enterprises and 0.4 percent are medium enterprises,” Rodriguez said.

He said that despite its importance to the economy of MSMEs, the lack of access to financing and related forms of support continue to be a major handicap to them.

Rep. Michael Romero (Party-list, 1-PACMAN) another author of the bill, said there is a need to create a more effective financial institution that is better geared to the meet the needs of the MSMEs.

Under the bill, the National Government, its bureaus, offices and agencies are mandated to allocate at least 10 percent of all its procurement opportunities for goods and services to eligible MSMEs in accordance with the provisions of Republic Act No. 9184, otherwise known as the “Government Procurement Reforms Act”, and its implementing rules and regulations.

The proposal expands the membership of the Micro, Small and Medium Enterprises Development (MSMED) Council with the inclusion of the Secretary of Finance, three representatives from the MSME sector to be designated by a national organization representing and dominated by MSMEs as members.

Likewise, the Executive Director of the Cooperative Development Authority; a representative of a national organization representing and dominated by MSMEs; a representative of the microfinance nongovernment organizations (NGOs) designated by the Microfinance NGO Regulatory Council; one representative from the women sector designated by the Philippine Commission on Women; one representative from the youth sector designated by the National Youth Commission and a representative from non-stock savings and loan associations designated by the Alliance of Non-stock Savings and Loan Institutions, Inc. (ANSLI) shall form part of an Advisory Unit to the council.

The bill also states that the Small Business (SB) Corporation shall have a Board of Directors to be composed of 13 members which shall include among others, the President of the Government Service Insurance System (GSIS); and the President of the Social Security System (SSS).

All members of the Board so appointed, except for the ex-officio members, shall serve for a term of three years and may be reappointed to another term unless earlier revoked.

If the term of the incumbent member has expired, the member shall continue to function in a holdover capacity until a replacement has been appointed and qualified.

Included in the specific powers and authorities of the Board of Directors is providing for the organizational structure, staffing pattern and compensation of employees and personnel of the SB corporation, for submission to the Governance Commission for GOCCs.
One of the provisions of the bill is that the SB Corporation can extend all forms of financial assistance, except grants and subsidies to eligible MSMEs, and not preclude retail lending in areas where private banks are not able to serve, subject to consultation with the private banks.

The SB Corporation is mandated to submit an annual report to the MSMED Council, the Congress of the Philippines and the Governance Commission for GOCCs on the performance and financial condition of the corporation.

The measure stipulates that the SB Corporation shall be exempt from securing prior BSP authorization for engaging in quasi-banking activities and shall not be subject to BSP supervision and regulation for such activities.

On the other hand, the Board of the SB Corporation, through its Chairman, shall be fully responsible and accountable for the performance of the Corporation’s mandate.

To ensure this, the Board shall be constituted as a Managing Board, led by its Chairman, to conceptualize the strategic plans and policies of the Corporation.

Furthermore, SB Corporation shall adopt a balanced scorecard approach, subject to the review and approval of the Governance Commission for GOCCs, in its strategic management to enable it to manage its financial performance while pursuing their public policy objectives of supporting micro, small and medium enterprises development.

The bill states that the National Government shall provide for the full capitalization of the SB Corporation within a period of five years from the approval of the Act.

A seed money of at least 10 percent of the additional equity contribution of the National Government to the capitalization of the small business corporation but not more than P500 million shall be set aside to fund the venture capital and micro finance trust fund.

For the period of another 10 years from the date of the effectivity of the amendatory Act, all lending institutions as defined under Bangko Sentral ng Pilipinas rules, whether public or private, shall set side at least eight (8) percent for micro and small enterprises and at least two (2) percent for medium enterprises of their total loan portfolio based on their balance as of the end the previous quarter, and make it available for MSME credit.

The bill increases the penalties on lending institutions for non-compliance with the mandatory lending and requires the MSMED Council to submit to the Congress of the Philippines an annual report on the status of the penalties remitted and how the same were used or being used in relation to the implementation of services to MSMEs in the areas of capacity building, technology information, collection dissemination, and other interventions for MSME development, growth and sustainability.

Authors of the bill are Majority Leader Rolando Andaya Jr., Minority Leader Danilo Suarez, Deputy Speaker Ferdinand Hernandez, Deputy Majority Leader Ann Hofer, Reps. Enrico Pineda, Jose Antonio Sy-Alvarado, Salvador Belaro Jr., Peter Unabia, Carmelo Lazatin II, Gary Alejano, Ricardo Belmonte, Carlos Isagani Zarate, Dennis Laogan, Jocelyn Limkaichong, Rodrigo Abellanosa, Carlito Marquez, Jose Enrique Garcia III, Bernadette Herrera-Dy, Teodoro Montoro, Maria Carmen Zamora, Federico Sandoval II, Celso Lobregat, Fernando Gonzalez, John Marvin Nieto, Johnny Ty Pimentel, Orestes Salon, Victor Yap, Marlyn Primicias-Agabas, Rodante Marcoleta, Cristina Roa-Puno, Vini Nola Ortega, Wilter Wee Palma, Victoria Isabel Noel, Rogelio Espina, Marlyn Alonte, Deogracias Victor Savellano, Rossana Vergara, Jericho Jonas Nograles, Jose Atienza Jr., Joseph Stephen Paduano, Anthony Bravo, Aniceto Bertiz III, Luis Campos Jr., Benhur Lopez, Francisco Jose Matugas II, Mylene Garcia-Albano, Conrado Estrella III, Doy Leachon, Ramon Durano VI, Franz Alvarez, Cheryl Deloso-Montalla, Jesus Nonato Sacdalan, Deogracias Ramos Jr., Ruby Sahali, Mauyag Papandayan Jr., Ruwell Peter Gonzaga, Rene Relampagos, Juliette Uy, Jose Christopher Belmonte, Renato Unico Jr., and Jose Carlos Cari.

SOURCE: Ma. Victoria Palomar (2018). House approves on final reading bill further promoting entrepreneurship. House of Representatives. Press Releases. Press and Public Affairs Bureau. 19 December 2018 09:16:11 AM.