Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
NINETEENTH CONGRESS
First Regular Session
House Bill No. _______
Introduced by REPRESENTATIVE RICARDO S. CRUZ, JR.
AN ACT INSTITUTIONALIZING MICROFINANCE PROGRAMS AND
ACCESS TO CAPITAL TO SUPPORT AND GROW MICRO ENTERPRISES,
APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Persistence, optimism, and being hardworking are often associated with Filipino
culture, and the same can be said when it comes to describing the characteristics of
business owners in the Philippine setting. While Micro, Small, and Medium Enterprises
may have access to affordable financing, the costs and interests related to it may be
prohibitive. Business loans are an important accessory for getting funds to boost business,
and the State should likewise institutionalize a micro-financing program with a simplified
process that can provide members of the working class in need of capital with sufficient
funds to start their own businesses.
The Philippine Statistics Authority (PSA) in 2021 recorded a total of 1,080,810
business enterprises operating in the country. Of these, 1,076,279 (99.58%) are MSMEs
and 4,531 (0.42%) are large enterprises. Micro enterprises constitute 90.54% (978,612) of
total establishments, followed by small enterprises at 8.63% (93,230) and medium
enterprises at 0.41% (4,437).1 In terms of value added, the MSME sector contributed
35.7% of the total with manufacturing contributing the largest share of 6.87%. Wholesale
and retail trade and repair contributed 6.58% followed by financial intermediation with a
share of 6%. Within the sector, small enterprises accounted for the largest share of 20.5%.
Medium enterprises followed with a share of 10.3% while micro enterprises registered a
share of 4.9%. Among small enterprises, wholesale and retail trade and repair contributed
the most with a share of 4.07% followed by manufacturing with a share of 3.82% while
financial intermediation was next with a share of 3.35%.2
It is evident that MSMEs largely contribute to our country’s economic
performance, however, our micro-entrepreneurs are not provided adequate assistance by
2 https://www.dti.gov.ph/resources/msme-statistics/
1 https://www.dti.gov.ph/resources/msme-statistics/
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the government. No other country has as extensive a grassroots business like ours in
terms of its social and economic system. Notably, there are some 1,300,000 sari-sari
stores nationwide and are visited by 94% of the population.3 The sari-sari store is a
common part of Filipino life in which it is an innovative business venture that generates
income with a minimal capital outlay.
The increasing number of micro enterprises in the country has significantly
afforded livelihood opportunities especially for struggling Filipino households. Retail
stores, widely known as sari-sari stores have flourished in the Philippines. Sari-sari stores
are Micro Enterprises. Economic research shows that a robust MSME sector could bring
higher income growth, greater employment of domestic resources, more gainful
integration with global and regional trade and investment, and greater equity in access,
distribution and development.4 In many countries who have exhibited exceptional
economic growth in recent years, MSMEs are a big part of their economic success.5
This is one program inspired and adopted by MSME programs by our neighboring
Southeast Asian countries. The proposed measure further creates a comprehensive
development and assistance program for MSMEs, which is national in scope but tailored
fit for each administrative region. The goal of the program is to give access to capital to
small proprietors, ensure the success of their MSMEs, and transform these MSMEs into
five-star businesses by providing them with assistance and the necessary resources in
order to help their businesses flourish. Puhunan Tungo sa Kaunlaran (PTK) Act
embodies the Filipino Bayanihan spirit and sense of community where every Filipino
would lend a hand to help each other out. Thus, collectively progressing economically.
In view of the foregoing, approval of this bill is strongly recommended.
Hon. Ricardo “Ading” S. Cruz, Jr.
Representative
1st District, Taguig-Pateros
5 International Finance Corporation, MSMEs: International Comparisons, 2010.
4 http://opinion.inquirer.net/12421/smes-for-inclusive-growth , last accessed 15 July 2019.
3 https://app.adpc.net/news/never-too-small-for-hope-part-i-sari-sari-store/
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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
NINETEENTH CONGRESS
First Regular Session
House Bill No. _______
Introduced by REPRESENTATIVE RICARDO S. CRUZ, JR.
AN ACT INSTITUTIONALIZING MICROFINANCE PROGRAMS AND
ACCESS TO CAPITAL TO SUPPORT AND GROW MICRO ENTERPRISES,
APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:
SECTION 1. Short Title. – This Act shall be known as the “Puhunan Tungo sa
Kaunlaran (PTK) Act.”
SECTION 2. Declaration of Policy. – It shall be the policy of the State to
promote genuine inclusive growth and alleviate poverty. It is likewise the policy of the
State to promote a just and dynamic social order that shall ensure prosperity, promote
full employment, a rising standard of living and an improved quality of life for all. In
pursuit of this, the State shall endeavor to develop a program that will ensure that all of
its citizens are equipped with or can readily access the necessary capital to pursue
opportunities and uplift their lives.
All sectors of the economy and all regions of the country shall be given optimum
opportunity to develop. The development of Micro, Small, and Medium Enterprises
(MSMEs) in all productive sectors of the economy–private enterprises, including
corporations, cooperatives, and similar collective organizations–shall be encouraged to
create livelihood for Filipinos and create a broader tax base. Disadvantaged sectors of
the society and economy, such as public market vendors and owners of micro-enterprises,
shall be priority targets of government assistance.
SECTION 3. PTK Five-Star Program. – The Department of Trade and Industry
(DTI), in coordination with the Department of Interior and Local Government (DILG),
Department of Agriculture (DA), Department of Science and Technology (DOST),
Department of Tourism (DOT), National Economic and Development Authority (NEDA),
and the Technical Education and Skills Development Authority (TESDA), shall develop a
comprehensive program for the development of micro, small and medium enterprises
(MSMEs) in all regions of the country. The goal of the program is to give access to
capital to small proprietors, ensure the success of their MSMEs, and transform these
MSMEs into five-star businesses by providing them with assistance and the necessary
resources in order to help their businesses flourish.
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The DTI shall be guided by the following principles in the development of the
PTK Five-Star Program:
a. The Program shall be national in scope but shall be tailored fit to the business
environment, market demands and available resources of each administrative
region;
b. The DTI shall create a registry of all MSMEs per region based on their size
category (i.e., micro, small or medium) and business area (i.e., agriculture,
livestock, fisheries, food processing, fabric and clothing, eco-tourism activities,
pottery and handicrafts, furnitures and hardwood, information and technology,
etc.);
c. Each region shall choose a maximum of five (5) priority business areas to
develop in order to reap the benefits of efficiency and specialization;
d. As much as possible, each region shall be encouraged to choose a diversified
priority business portfolio in order to hedge for risks brought about by natural
calamities and changing market demands;
e. To facilitate the implementation of this Act, each region shall establish a
proprietor’s guild for each of their priority business areas;
f.
Free technical and administrative support, including, but not limited to, product
development, skills and leadership training, packaging and design, quality
control, market promotion, client or supplier matching, and financial literacy
and planning, shall be made available to MSMEs falling under the five (5)
priority business areas in their respective regions;
g. Every year, the five (5) top-performing enterprises per size and category in
each region shall receive a Five-Star award and shall be eligible for grants, not
less than ten percent (10%) of their current capital, to be used solely for further
business capitalization;
h. Every medium-sized enterprise that evolves into a large enterprise through the
help of the PTK Five-Star Program shall likewise be eligible for a one-time
grant of Twenty-Five Thousand Pesos (Php 25,000) to be used solely for
further business capitalization; and
i.
There shall be a mandatory review of the PTK Five-Star program every three
(3) years in order to ensure that the program meets the present market
demands.
SECTION 4. PTK Assistance Program. – In addition to the PTK Five-Star
Program, the DTI, in consultation with the National Anti-Poverty Commission (NAPC)
and the Bangko Sentral ng Pilipinas (BSP), shall develop a cash assistance program
catering exclusively to micro-enterprises in need of capital, whether or not they fall under
the priority business areas of their respective regions under the previous section.
The DTI shall be guided by the following principles in the implementation of the
program:
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a. The assistance shall be extended only to beneficiaries who have satisfied the
requirements under this Act;
b. Each cash assistance shall be from Five Thousand Pesos (Php 5,000) to Fifty
Thousand Pesos (Php 50,000), depending on the number of employees, number
of years in business, financial hardship, and such other criteria as determined
by the DTI. The DTI is hereby authorized to amend these amounts, after the
mandatory review provided in this Act, in order to meet present market
demands;
c. Priority shall be given to micro-enterprises falling under the priority business
areas of their respective regions, particularly the public market vendors to
strengthen their financial capabilities and improve public services;
d. There shall be a mandatory review of the program every three (3) years in
order to ensure that the program meets the present market demands.
In the pursuit of inclusive growth and poverty alleviation, pertinent rules and
regulations promulgated in the implementation of this Act shall provide for the details,
conditionalities, and other schemes in the operationalization of the program, such as, but
not limited to, penalty rates upon default and the dispensation of the proceeds from the
program.
SECTION 5. Eligibility for Financial Assistance Program. – To qualify for the
program under this Act, the beneficiary must be:
a. At least eighteen (18) years of age;
b. Each natural person shall receive financial assistance under this Act only once,
notwithstanding the number of businesses owned;
c. A member in good standing of the duly-registered cooperative or association,
or a resident of the local government unit (LGU), from which he/she intends to
avail of the financial assistance;
d. Delivery of the program shall be through partner institutions which are
cooperatives and/or associations that are registered with the Cooperative
Development Authority (CDA), or the Securities and Exchange Commission
(SEC), and the DTI. In the absence of such participating partner institutions in
the area, government institutions, centers or facilities, now existing or may be
created by law, which are dedicated to the promotion of inclusive growth and
anti-poverty objectives, are mandated to implement the program;
e. The partner institution shall have a mechanism, whereby cash assistance are
made on a weekly or monthly basis;
f.
Willing to state under oath the facts establishing the foregoing;
g. Comprehensive feasibility study of the business proposal; and
e. Has attended a DTI-accredited livelihood seminar, as evidenced by a certificate
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of participation, and possesses credit-worthiness, as likewise proven by a
certificate issued by the DTI for that purpose.
SECTION 6. Registration of Cooperatives and Associations. – The DTI shall
keep a registry of all participating cooperatives and associations for monitoring and
record keeping purposes. Cooperatives and associations which are eligible to participate
in programs provided for in this Act must register to be included in the database.
SECTION 7. Local Government Unit Participation. – Local Government Units
may partner with the DTI for the efficient implementation of this Act.
Any law, executive order, department order, ordinance and the like, to the contrary
notwithstanding, local government units, through the local sanggunian, as defined in the
1991 Local Government Code, are hereby authorized to provide a financial assistance
program
in
cooperation
with
the
cooperatives/
associations,
non-governmental
organizations, and peoples’ organizations that are providing assistance to MSMEs within
their jurisdiction.
Provided, that in cities or municipalities where there are no such cooperatives/
associations, the local government unit shall, within one year from the effectivity of this
Act, require the municipal/city social welfare and development office or the local trade
and industry office or livelihood development office in the city or municipal government
concerned, to develop and implement a cash assistance program consistent with the
provisions of this Act, under the supervision of the DTI.
Provided, further, that each participating LGU must prepare a comprehensive
feasibility study for the development of a financial assistance program. Each LGU must
fund, from its internal revenue allotment, at least Five Million Pesos (Php 5,000,000),
where possible and practicable, or Thirty Percent (30%) of the total funding cost related
to small business improvement, agricultural improvement, institutional advancement and
consumer protection, whichever is higher. Likewise, for this purpose, the LGU shall
maintain a separate and dedicated office which shall be responsible for the over-all
implementation of the program in the locality.
SECTION 8. Tax Exemption for Private Support. – Any person or corporate
entity may donate funds, equipment, materials or services for the improvement of the
PTK Five-Star and/or PTK Assistance program. Such donations shall be done through a
memorandum of agreement between the cooperative or association, LGU, and the donor.
The agreement shall expressly state the value of the donated funds, materials, or services.
All income, legacies, gifts, and donations for the benefit of the program shall be
exempt from the payment of all forms of taxes, fees, assessments, and other charges of
the government, its branches, and subdivisions. Subject to the issuance of the appropriate
revenue regulations by the Bureau of Internal Revenue, the value of the donation shall
also be deductible as an expense in the determination of the taxable income of any donor.
SECTION 9. Funding. – The total amount of One Hundred Billion Pesos (Php
100,000,000,000) for the next two (2) years upon implementation of this Act, or Fifty
Billion Pesos (Php 50,000,000,000) per year for the next two years upon implementation
of this Act, shall be appropriated for the initial implementation of the PTK Five-Star
Program and the PTK Assistance Program. Said amount shall at all times be divided
equitably among each administrative region of the country. Thereafter, such sums as may
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be necessary shall be included in the General Appropriations Act.
In addition, the amount of Five Hundred Million Pesos (Php 500,000,000) is
hereby appropriated as a Special Development Fund to generally support the initial
implementation of this Act.
The funds shall be held in trust by the DTI in collaboration with the Development
Bank of the Philippines (DBP), Land Bank of the Philippines (LBP) and other
government financial institutions. The DTI may likewise allocate a portion of the funds to
the People’s Development Trust Fund (PDTF) under Republic Act No. 8425, provided
that the funds to be allocated to the PDTF shall be used solely for microfinance-related
organizing activities.
SECTION 10. Primary Implementing Government Agency. – The DTI shall be
the lead agency, which shall ensure the implementation of this Act.
SECTION 11. Role of Government Financial Institutions. – All government
financial institutions (GFIs) shall set aside funding for microfinance operations to
complement the purposes of this Act. Participating government financial institutions shall
include the DBP, LBP, and other GFIs.
SECTION 12. PTK Task Force. – There shall be a PTK Task Force in charge of
coordinating with banks and financial institutions on their existing programs on
microfinancing. This shall be consolidated and submitted to DTI to be taken into
consideration for the PTK Assistance Program.
SECTION 13. Reports. – The DTI Secretary shall submit to the President of the
Philippines, the President of the Senate and the Speaker of the House of Representatives,
an annual accomplishment report on projects covered in this Act, detailing the amount of
appropriations released by end of the calendar year, the extent of the work accomplished,
further work to be done, and any recommendations for additional appropriations or
charges thereof.
SECTION 14. Full Financial Disclosure, Accountability and Transparency. –
The DTI, as lead agency of the program, and the LGU concerned shall quarterly publish,
print, and disseminate at no cost to the public and in an accessible form, in conjunction
with Republic Act No. 9485, otherwise known as the “Anti-Red Tape Act of 2007”, and
through their websites, timely, true, accurate, and updated key information relating to the
program. Likewise, they shall endeavor to translate key information and present them in
popular form and means.
SECTION 15. Implementing Rules and Regulations. – The DTI, in consultation
with relevant government agencies, shall prepare such rules and regulations for the
proper and effective implementation of this Act, within sixty (60) days from the date of
publication. The DTI shall publish such rules and regulations once a week for two (2)
consecutive weeks in two newspapers of general circulation.
SECTION 16. Separability Clause. – If any provision of this Act is declared
unconstitutional, the same shall not affect the validity and effectivity of the other
provisions hereof.
SECTION 17. Repealing Clause. – All laws, decrees, orders, issuances or
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portion thereof, which are inconsistent with the provisions of this Act are hereby repealed
or modified accordingly.
SECTION 18. Effectivity – This Act shall take effect fifteen (15) days after its
publication in two (2) newspapers of general circulation.
Approved,
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