GDP

Senate Bill No. 690: Magna Carta of the Poor

The country’s economic performance in recent years has been impressive and unprecedented. Its 7.2% GDP growth in 2013 was the highest in Asia earning the country improved investment grades. Its economic climate is now attractive, viable and profitable for investors to come in – doing business has become more fun in the Philippines.

Despite the accomplishments of the country, it still does face a myriad of challenges – around three million Filipinos do not have jobs and a fifth of the populace is poor.

The daunting task for the State is how to capitalize on its outstanding growth, the critically acclaimed reform efforts and the renewed global confidence, in order to make growth more inclusive and felt by all of the one hundred million Filipinos.

In the midst of this economic progress, it is essential for the State to craft policies so that every Filipino family is recognized regardless of the socio-economic status of its members, and to take care and provide for their needs.

The proposed measure thus seeks to ensure the protection and promotion of five basic rights of every Filipino: the right to food, employment, quality education, shelter and basic health care. It supports the creation of a just and dynamic environment where prosperity is shared through provision of adequate social services and enabling a rising standard of living and improved quality of life for everyone.

As the Philippines grows, no filipino should be left behind. 

In view of the foregoing, immediate approval of this bill is earnestly sought. 

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Senate Bill No. 354: Secured Transactions Act

Micro, small, and medium enterprises (MSMEs) are critical in the country’s drive to maintain strong economic growth and uplift millions who live in poverty considering that in 2014 they comprised 99.6% of all Philippine businesses, generated 62.8% of all jobs in the Philippines,1and contributed to around 35% to Philippine GDP.2

The challenge is to ensure that microenterprises grow into small business; and small businesses develop into medium-sized enterprises. We must provide these businesses with an enabling environment so they survive, grow, and expand to create better lives for their families and increase job opportunities for other Filipinos. Crucial to their growth is access to financing at reasonable rates.

While there is notable growth in the microfinance sector, there is still a major gap relative to financing small enterprises, whose loan requirements are beyond the scope of microfinance institutions. Despite being a growth area for banks, SME financing is still considered unattractive given the perceived risks, without traditional collateral such as land and other real property. However, MSMEs’ assets are mostly personal in nature (equipment, inventory, motor vehicle, accounts receivable,etc.), making it difficult for MSMEs to meet bank requirements to get loan approvals. 

As early as 1906, the Philippines has in place a secured transactions legal environment, the Chattel Mortgage Law, and a document-based movable collateral registry operated by the Register of Deeds. The current regime recognizes a diverse set of movable assets acceptable as collateral for loan purposes (e.g., motor vehicles, standing crops, like rice, sugarcane, and other agri-aqua commodities, equipment, etc.,); however, these assets are not being fully utilized nor preferred by banks as loan collateral, except motor vehicles, which leaves the law ineffective to increase trade or facilitate access to finance for MSMEs, and underscores the need to modernize these laws governing movable asset lending in the Philippines. 

The Secured Transactions bill seeks to enable financial institutions to rethink how they view collateral and reduce the perceived risks, by providing protection for framework to govern lending transactions that involve the use of personal property as collateral, as well as the design, establishment, and operation of a unified, centralized, online notice-basednational collateral registry to assure banks that the collateral being submitted has not already been utilized for another loan. These reforms have the potential to increase credit access for women and small businesses, reduce the risks of non-satisfaction of debt and thereby lower the cost of borrowing, and reduce the rate of non-performing loans of financial institutions. 

Jurisdictions like Mexico, Vietnam, and China have undertaken similar reforms and have seen their positive impacts. For example, in Mexico, similar reforms led to the creation of a national Accounts Receivable Finance Platform by the government’s development bank, which has supported at least 130,000 SMEs through accounts receivable financing. In Vietnam, the number of collateral registrations (each representing a loan) surpassed 6000,000 cumulatively over a period of four years. In China, loans with movable asset security are now disbursed at about USD 3.0 trillion per year. 

The bill can bring growth to both MSMEs and to our financial institutions, and enjoin our banks to take part in MSME development with less risk. This measure provides us an opportunity to create a win-win, balanced environment for financial institutions and small businesses, which will generate more employment and sustainable livelihood for Filipinos across the country. 

In view of the foregoing, immediate passage of this bill is earnestly sought. 


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Not a Victimless Crime

Boardrooms, dinner tables, and coffee shops are abuzz with theories explaining the $81-million heist, which involved funds of the Bangladesh central bank being transferred to local RCBC accounts and eventually into our Philippine casinos.

The public is visibly intrigued and the media has covered the story as eagerly as our national campaigns.

Who were involved? Who is the mastermind? Who are the hackers and how did they get past the U.S. financial system’s safeguards? What does the branch manager know? Are bank officials involved? Who profited from this audacious crime? Is there a political angle to this heist?

These and many more questions have our minds occupied and keep casual conversations lively and engaging.

We are hopeful that throughout the course of our investigation in the senate, the truth will be revealed, the perpetrators will be brought to justice, and most of these questions will be answered.

But, sadly, no one is asking about Bangladesh.

So for the next few paragraphs, allow me to write about the real victims of this crime – the Bangladeshi people.

There are nearly 160 million people in Bangladesh as of 2015 with over 30% or 48 million living in poverty. In the 2015 Rankings of the Poorest Countries in the World based on GDP, Bangladesh ranked 46th poorest, while the Philippines ranked 68th.

Like in the Philippines, Bangladesh is dealing with issues that are rooted in poverty, such as hunger, sanitation, improved access to education, severe congestion of urban areas, and delivery of basic government services, among others.

The Bangladesh government and civil society groups are aggressive in their efforts to create better opportunities and greater wealth for the masses and they have churned out interesting, effective solutions.

One example is the world-renowned Grameen Bank spearheaded by economist and social entrepreneur Muhammad Yunus that pioneered the principles of microcredit and microfinance utilized around the world today

The government has also made leaps in improving access to government services with their ‘Digital Bangladesh, Vision 2021’ program that seeks to make all government services, public records, and even text books accessible through online channels by 2021, which sounds like the Freedom of Information (FOI) and the Open Government Partnership efforts.

They hope that ICT and an all-encompassing digital system in government will curb corruption – another one of our common adversaries.

Naturally, like in the Philippines, there is still a lot of work to be done before Bangladesh can eradicate poverty. But a key element to getting things done is adequate funding.

Can you imagine how far the stolen 81-million US dollars, which is equivalent to 6.35-billion Bangladeshi taka, could have gone to address hunger, livelihood, education, or health?

Now imagine if the tables were turned.

Think of billions of pesos worth of Philippine tax money stolen and siphoned off to the pockets of unscrupulous foreigners.

Billions of pesos that could have been used to fund infrastructure projects, livelihood programs, or improvements in government services are hacked then digitally wired to foreign nationals.

Picture the outrage in our streets and the frenzy on our social media feeds. What racist remarks will spew? What will the Philippine public demand? And what could ever appease hearts broken by this injustice?

Many of us, including politicians like myself, are caught up with the audacity of this heist, the intriguing anecdotes of the revealed personalities, and the tarnished image of the Philippines.

It is our nature to focus on the Filipino side.

But as a member of the global community and as a country known for its heart and compassion, we must realize how valuable the stolen money is in improving the lives of the millions of poor Bangladeshis.

With this in mind, it is imperative that we continue to push for reforms in our financial system, institute tighter and stricter policies, ferret out the truth, bring the perpetrators to justice, and most importantly return the stolen 81-million US dollars to the Bangladeshi people.

If this happened to us, we would expect nothing less.’

First Published on Manila Bulletin

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