RECEIVED
Republic of the Philippines 30 UN

HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

Introduced by Representative MARLESA “DOC MARLY” HOFER-HASIM.

EXPLANATORY NOTE

Micro and small enterprises (MSEs) serve as the backbone of the Philippine economy,
contributing significantly to employment generation, regional development, and poverty
reduction

The Department of Trade and Industry reports that MSMEs generated a total of 6,351,466
jobs, accounting for 66.97% of total employment in the country. However, despite their economic
importance, MSEs continue to face serious challenges, particularly in accessing affordable and
sustainable financing, This lack of access often pushes micro entrepreneurs to rely on informal
lenders, such as the notorious “5-6” lending system, which imposes usurious interest rates and
traps borrowers in cycles of debt.

In recognition of this problem, this bill secks to institutionalize the Pondo sa Pagbabago at
Pag-asenso (P3) Program, which has been implemented on a pilot basis by the government since
2017. The proposed “P3 Act” aims to establish a stable and inclusive financing mechanism that
will provide micro and small enterprises with an accessible, affordable, and simple alternative to
informal lending systems.

By institutionalizing the P3 Program, this proposed legislation will not only strengthen the
financial ecosystem for MSEs, but also help drive economic resilience, reduce dependency on
informal lenders, and build a more inclusive entrepreneurial environment in the Philippines.

This legislation was approved by the House of Representatives on third and final reading
last 19" Congress

In view of the foregoing, the favorable passage of this measure is earnestly sought.

Rhan

MARLESA “DOC MARLY” HOFER-HASIM
Representative, 2" District of Zamboanga Sibugay



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

‘TWENTIETH CONGRESS
First Regular Session

179

House Bill No. _~

Introduced by Representative MARLESA “DOC MARLY” HOFER-HASIM

AN ACT
PROMOTING ENTREPRENEURSHIP BY ESTABLISHING A SUSTAINABLE FINANCING
PROGRAM FOR MICRO AND SMALL ENTERPRISES THROUGH THE PONDO SA
PAGBABAGO AT PAG-ASENSO PROGRAM, AND APPROPRIATING FUNDS THEREFOR

Be it enacted by the Senate and House of Representatives of the Philippines in session assembled:

SECTION 1. Short Title. — This Act shall be known as the “Pondo sa Pagbabago at Pag-asenso
Act” or the “P3 Act”.

SEC. 2. Declaration of Policy. —It is the declared policy of the State to foster national development,
promote inclusive growth, and reduce poverty by promoting the growth of micro and small enterprises
(MSEs) that facilitate local job creation, production and trade in the country.

Towards this end, the State shall develop policies, plans and programs, and initiate means to
encourage entrepreneurial activities, and to ease the constraints and challenges to MSEs, particularly on

access to financing,

SEC. 3. Objectives. ~ The objectives of this Act are:

a. To provide an affordable, accessible, and simple financing program for the country’s MSEs,
especially those in the poorest populations and underserved areas;

b. To provide a better alternative to informal lenders or the so-called “5-6” money lending system
availed of by micro enterprises;

c. To bring down the interest rate at which financial services is made available to MSEs;

d. To boost the development of entrepreneurship and the micro, small and medium enterprise
(MSME) sector, particularly the MSEs; and

SEC. 4. Creation of the Pondo sa Pagbabago at Pag-asenso (P3) Fund. — There is hereby created
the Pondo sa Pagbabago at Pag-asenso Fund, hereinafter referred to as the “P3 Fund”, which shall be lent
‘out to qualified MSEs under such terms and conditions that will meet the purposes of this Act.


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The beneficiaries of the P3 Fund shall be the micro and small enterprises, as defined under
Republic Act No. 6977, as amended, otherwise known as the “Magna Carta for Micro, Small and Medium
Enterprises (MSMEs)”.

The fund shall be accessible through the Small Business Corporation (SB Corp.) and through
accredited partner financial institutions (PFIs) such as rural banks, thrift banks, development banks,
cooperative banks, cooperatives, non-stock savings and loan associations, microfinance non-government

organizations, or lending companies.

For efficient implementation and operation, cooperatives except cooperative banks and insurance
cooperatives shall be under the sole supervision and examination of the Cooperative Development
Authority (CDA); all other financial entities, corporations and financial intermediaries, such as non-
government organizations, financing companies, non-stock savings and loan associations, microfinance
non-government organizations, and lending investors shall be under the Securities and Exchange
Commission (SEC); banks shall be under the Bangko Sentral ng Pilipinas (BSP); and insurance

companies shall be under the Insurance Commission (IC).

Cooperative banks shall be under the supervision and examination of the CDA and BSP; while
insurance cooperatives shall be under the supervision and examination of the CDA and Insurance

Commission (IC)

SEC. 5. Lead Implementing Agency. - The SB Corp., the financing arm of the Department of
Trade and Industry (DTI), shall be the lead implementing agency for the P3 Fund. The SB Corp. shall
handle the fund delivery to MSEs through the following modes:

a. Direct lending for forty percent (40%) of the P3 Fund; and

b. Lending through accredited PFls for sixty percent (60%) of the P3 Fund.

The SB Corp. shall prioritize lending to underserved and unserved areas and MSE segments of the
country, subject to the review and approval of the Micro, Small and Medium Enterprise Development
(MSMED) Council.

With the goal to achieve greater outreach to all provinces and barangays of the country, financial
technology-enabled systems and processes can be utilized in the implementation of the P3 program.

An amount sourced from the accumulated P3 Fund of not more than five percent (5%) of the total
loans disbursed for the period can be used by the SB Corp. to support its annual administrative and
operating expenses for the P3 Fund, inclusive of the cost of regular plantilla personnel, up to the extent

of their involvement in developing and managing the P3 loan portfolios.

SEC. 6, Features of the P3 Fund. - The P3 Fund shall have the following features:
a. The loanable amount for individual loans shall be set and regularly reviewed by the MSMED

Council;


b. The effective interest rate to be imposed on the loan availed of by the P3 Fund beneficiaries
shall not exceed one percent (1%) per month for direct lending, and shall not exceed two and a half’
percent (2.5%) per month for lending through accredited PFIs;,

¢. The interest earnings shall accrue to the P3 Fund;

d. There shall be no collateral requirement from the P3 Fund loan beneficiaries; and

e. The lenders shalll have a collection mechanism, whereby payments are made on a daily, weekly,
or monthly basis, or depending on the livelihood project income cycle. It shall be the duty of the lender
to collect the loan principal and the interest payments from the borrower.

SEC. 7. Policy Oversight Function. - The MSMED Council shall monitor the utilization and
disbursements of the P3 Fund. It shall submit to the President of the Philippines and to Congress, through.
the Congressional Oversight Committee on Micro, Small and Medium Enterprise Development (COC-
MSMED), a quarterly report on the status of the P3 Fund

SEC. 8. Appropriations, — The initial amount for the implementation of this Act shall be charged
against the current year’s appropriations of the SB Corp. Thereafter, such amount necessary shall be

included in the annual General Appropriations Act.
SEC. 9. Implementing Rules and Regulations, — Within sixty (60) days from the approval of
this Act, the DTI, in consultation with the stakeholders concerned, shall formulate and promulgate the

necessary rules and regulations to implement the provisions of this Act.

SEC. 10. Separability Clause, — If any part or section of this Act is declared unconstitutional,

such declaration shall not affect in any manner other parts or sections hereof.

SEC. 11. Repealing Clause. ~ Section 22 of Republic Act No. 8367, otherwise known as the
“Revised Non-Stock Savings and Loan Association Act of 1997” is hereby repealed.

All laws, decrees, proclamations, issuances, or ordinances that are contrary to or inconsistent

with the provisions of this Act are hereby amended, repealed or modified accordingly.

SEC. 12. Effectivity. — This Act shall take effect fifteen (15) days after its publication in the

Official Gazette or in a newspaper of general circulation.

Approved,