Press Release

Public Relations and Information Bureau (PRIB)


March 4, 2008

Senate, House ratify bicam version of Magna Carta for Small Enterprises bill

The Senate on Monday night ratified the bicameral conference committee report on a bill seeking to amend Republic Act 6977, otherwise known as "The Magna Carta for Small Enterprises," that will provide greater assistance to Filipino entrepreneurs and allow them to play a bigger role in the growth of the economy.

At the same time on Monday, the House of Representatives ratified the reconciled version of the bill that seeks to promote entrepreneurship by strengthening government assistance programs to micro, small and medium enterprises (MSME) and ensuring their continued viability and growth.

The Senate panel in the bicam conference committee was headed by Sen. Loren Legarda while the House penal was chaired by Rep. Danilo Lagbas.

Sen. Mar Roxas, a principal author of the measure, said he was confident that President Gloria Macapagal Arroyo would immediately sign the bill into law since it was listed as a priority item in the Legislative-Executive Development Advisory Council (Ledac) meeting last December.

Senate President Manny Villar said the ratification of the bill was in line with the desire of Congress to promote entrepreneurship as a means to reduce unemployment. Small and medium scale businessmen could very well serve as the backbone of the economy, he said.

The Senate President noted that "since not all Filipinos can be entrepreneurs, the government should support companies or businesses that produce more jobs in order to improve the worsening unemployment situation in the country."

Roxas said the approval of the bill showed that despite the political crisis, Congress was working to improve the welfare of small entrepreneurs, in particular through improved access to much-needed financing.

"MSMEs are indeed the backbone of the economy, as they comprise more than 90 percent of all registered firms and employ 70 percent of the workforce," Roxas said. "We want to see them reach their full potential and contribute more to the economy in terms of jobs, income and livelihood for the people."

"At a time when oil prices are at record-highs and exporters struggle with reduced earnings as a result of the strong peso, MSMEs need this help more than ever to secure and even increase the jobs they provide to Filipinos," Roxas added. "The next step after this bill is enacted is to communicate with small entrepreneurs on how they can take full advantage of this new law."

Once signed into law, Roxas said he expected the measure to improve the local business environment by increasing financial institutions' required allocation to small and medium enterprises

, as well as strengthening the Small Business (SB) Corp., created in 2001 through Executive Order 28, which merged the Small Business Guarantee and Finance Corp. and the Guarantee Fund for Small and Medium Enterprises.

He said the changes to the SME Magna Carta will encourage entrepreneurs to invest, who will in turn produce more jobs and more wealth. "With each entrepreneur is a promise of hope for the private sector. The effect is exponential. I see no end in sight to what these entrepreneurs, fired up by available prospects, can achieve," Roxas said.

The bill will require lending institutions to allocate at least eight percent of their total loan portfolio to micro and small businesses. At present, the law requires only a six percent minimum allocation for these, and a minimum two percent allocation for medium enterprises.

The category of micro, small and medium businesses is also adjusted. Firms will now be considered as micro enterprises when they have total assets worth not more than P3 million, from the previous threshold amount of P1.5 million. Small enterprises will be those with total assets worth P3 million to not more than P15 million, and medium enterprises are those with total assets worth P15 million to not more than P100 million, from the previous threshold amount of P60 million.

Under the proposed law, government must provide adequate support to MSME through effective credit facilities that do away with burdensome collateral requirements, access to new technologies and regular entrepreneurship training programs for workers and a comprehensive development plan that would ensure the viability and growth of small and medium businesses in the country.

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