Press Release
May 21, 2008


Congress has ratified a bill that will further strengthen the micro, small and medium enterprise (MSME) sector through greater financial assistance.

Senator Mar Roxas , primary author of the "Magna Carta for Micro, Small and Medium Enterprises," urged the President to immediately sign into law this bill that seeks better access to financial resources for small entrepreneurs.

"Thanks to the collaborative efforts of our fellow policymakers, our small entrepreneurs will soon be equipped with better tools to realize the potential of their businesses. The ball is now in the executive's court, to enact the bill and to ensure its proper implementation," the Chairman of the Senate Committee on Trade and Commerce said.

"Our MSMEs comprise over 90% of our enterprises and employ 70% of the work force, and are thus an important force in bringing about meaningful growth in our economy and ensuring jobs for our countrymen. Their main constraint from contributing more to our country's productivity is financing," he said, pointing out that MSMEs at present only contribute 30% of gross value added to the economy.

The new law strengthens the present Magna Carta for Small and Medium Enterprises by requiring lending institutions to allocate at least 8% of their total loan portfolio to micro and small businesses and 2% to medium enterprises. The present law requires only a 6% minimum allocation for these, and a minimum 2% allocation for medium enterprises.

Under the MSME Magna Carta, the definition of micro, small and medium businesses is also adjusted. Micro enterprises will be those which have total assets worth not more than P3 million, from the previous threshold 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.

The new law also gives the Small Business Corp.--the government financial institution focused on assisting MSMEs--an authorized capital stock of P10 billion for the implementation of its programs assisting MSMEs.

Roxas noted that the bill has been prioritized during previous meetings of the Legislative Executive Development Advisory Council.

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