In his speech during the signing of a multi-sectoral memorandum of understanding (MOU) that seeks to strengthen access to finance for MSMEs, Trade Secretary Gregory Domingo stressed the need to propose major changes in the budget to ensure inclusive growth.

“We had two major proposals that were submitted. One is to give MSME financing a big push and the idea was to spend P2 billion a year not in terms of loan size but in terms of actual assistance and subsidy the government would spend to support lending to MSMEs,” he said.

The second proposal, Domingo added, is the program on shared service facilities aimed at providing MSMEs with new technologies to improve the quality of goods and productivity.

The DTI chief said that by identifying industry clusters in the country and providing the clusters with the needed tools and equipment, not only the quality of goods but also the volume and efficiency of production will improve.

He added that the shared service facilities proposal has been approved but the MSMEs financing failed to get the go-signal. However, Domingo said that the DTI will continue to push for the MSMEs financing assistance adding, “It is critical that we get direct funding for MSMEs.”

DTI reported that 84,851 new MSMEs have been recorded that have generated P24.67 billion in domestic sales and $586.04 million in export sales. DTI said that a total of 66,501 MSMEs expanded their operations with P43.51 billion in total investments.

DTI also spearheaded the signing of the MOU with two line agencies and nine government financial institutions involved in the development of the country’s MSME sector.

Through the understanding, stakeholders will launch a revitalized government-led MSME financing program that will absorb the existing Microfinance Program Committee and the new SME Finance Program Committee.

The MOU addresses the soft infrastructure needed to improve MSME lending access. It also provides for the development of a mechanism for information sharing on credit status of common clients aimed at addressing the information asymmetry problem in MSMEs. The MOU is expected to share models with the private banking sector on approaches to MSME lending to attain lending ratios higher that what is mandated by law.

Domingo said that the DTI will be submitting its budget proposal next week, before or after the State of Nation Address of President Benigno Aquino 3rd.