Gov’t to counter '5:6 industry' with P1-B facility for MSMEs

The government is rolling out a P1-billion loan grant to businessmen involved in micro, small and medium Enterprises (MSMEs) starting next year, as part of efforts by the Department of Trade and Industry (DTI) to curb the "5:6 industry" in the Philippines.

“Meron nang makukuhang pondo starting 2017 na P1 billion, kaya maguumpisa tayo sa P1 billion for the whole country,” Trade and Industry Secretary Ramon M. Lopez told reporters on the sidelines of the Philippine Manufacturing Summit 2016 in Makati City.

Under the planned government financing scheme, businessmen may borrow from P5,000 to P20,000 at an annualized interest rate of 20 to 26 percent.

“Malaking difference ‘yan,” Lopez said, noting that under that '5:6' scheme, lenders are given a 20-percent daily or monthly interest rate.

“MSMEs need capital – and they are the ones biting the so-called 5:6 – so they look for alternative financing," he said.

According to Cabinet official, the government will roll out the service in key MSME cities such as Metro Manila and Davao, and eventually nationwide.

From the initial budget of P1 billion for the whole country, the plan is to eventually allocate P1 billion per region, until the allocation reaches P18 billion, Lopez noted but declined to elaborate other than saying that the Department of Trade and Industry is still doing the feasibility studies. — VDS, GMA News