The Asia Small and Medium Sized Enterprise Monitor 2020 reveals that the country only lent $11.6 billion in 2019. This is the lowest MSME bank loan total of the Association of Southeast Asian Nations (ASEAN) 5, which comprises Indonesia, Malaysia, Philippines, Singapore and Thailand.
In 2019, Thailand lent MSMEs $218.2 billion while Indonesia lent $79.9 billion. On the other hand, Malaysia and Singapore gave a total MSME credit of $68.1 billion and $56.85 billion, respectively. Data since 2011 shows that the Philippines has been consistently lagging behind its peer nations in terms of monetary assistance for small businesses.
“Access to finance is a chronic problem blocking MSME survival and growth [in the Philippines]. The share of MSME credit to total bank credit has been falling to a single-digit percentage share since 2013,” says the ADB in its report.
Republic Act 9501, which expired in 2018, mandates banks to allocate 10 percent of their total loan portfolio to MSMEs. But the percentage of Philippine MSME non-performing bank loans (NPLs) or overdue loans in the total MSME loan portfolio of banks is the highest among the ASEAN-5.
The country has a 5.8 percent NPL, followed by Thailand’s 4.7 percent, Singapore’s 4.2 percent and Malaysia’s 3.7 percent. Indonesia has the lowest NPL percentage at 3.6 percent of its MSME loan portfolio.
The Bangko Sentral ng Pilipinas (BSP) is carrying out measures to support MSMEs, which account for 99.5 percent of the country’s enterprises and 63.2 percent of the labor force. These courses of action include incentivized lending, extension of financial relief to borrowers and support for sufficient levels of domestic liquidity and economic activity.
As of the end of August this year, BSP governor Benjamin Diokno says that bank loans to MSMEs were at $10.8 billion or P527 million.
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