amando m tetangco, jr : the credit surety fund – sustaining economic growth through increased credit flows speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the launching of the credit surety fund program, trece martirez city, cavite, 27 august 2008. * * * governor ayong maliksi, distinguished board members of the sangunihang panlalawigan ng cavite and other officials from cavite ’ s local government units – mga mayors at vice mayors, officers and members of cavite ’ s cooperatives, our partners from the micro, small, and medium enterprises sector or what we call msmes, representatives from the industrial guarantee loan fund, representatives from the banking sector, fellow workers in government, special guests. magandang umaga po sa inyong lahat! kami po sa bangko sentral ng pilipinas ay natutuwa dahil ngayon ang panimula ng isang mahalagang programa na tinatawag nating credit surety fund. at dahil mahalaga ito, karamihan sa mga opisyal ng bangko sentral ay nandirito ngayon. ipakikilala ko po sila, umpisa sa mga miyembro ng ating monetary board : kasama po natin si monetary board member alfredo antonio, dating chairman ng development bank of the philippines ; at si monetary board member ignacio bunye, dating press secretary at presidential spokesman. kasama ko rin po ang management team ng bangko sentral, kabilang si deputy governor diwa guinigundo, si assistant governor & general counsel juan de zuniga, jr., at si assistant governor rene carreon, at iba pang mga opisyal ng bsp. the level of our participation in this event speaks volumes about the way we at the bangko sentral ng pilipinas value our msmes. the msme sector represents the backbone of our economy as 99 per cent of registered firms belong to this sector. a recent report of the international finance corporation of the world bank group indicated that loans to msmes comprise twenty - five percent ( 25 % ) of the total loans of the banking system. malaking bahagi po ito ng pautang ng ating mga bangko. kaya

workers and contribute 32 % of our gross domestic product. in fact, msmes are considered as a seedbed for nurturing entrepreneurial skills and new ideas. msmes therefore are critical engines of economic growth and development. the entry of large banks to the sme sector therefore... is a most welcome development. globally, providing smes access to finance is gaining renewed momentum. for instance, the association of the world ’ s biggest economies... under the so - called g20... has created a global partnership for financial inclusion... which is working on principles for innovative financial inclusion... as well as sme finance. while the philippines is not a member of the g20, the bangko sentral ng pilipinas has been invited to join this important global undertaking. at first glance, the msme sector may not seem to be a natural market for large banks, given the high transaction costs relative to small loans and their lack of familiarity with the msme landscape. nevertheless, we have seen many jurisdictions address these concerns... in a timely and cost - effective manner. bis central bankers ’ speeches the philippine microfinance sector is one such success story. developing innovative product design and delivery channels have proven to be a viable and sustainable model to serve a sector.... previously seen as difficult to serve. rcbc itself has made inroads into microfinance. moving forward, we at the bsp will continue to create an enabling policy and regulatory environment that will allow both the financial institutions and the msmes to grow... on a sustained basis. to achieve this, the bsp will develop and adopt more market - oriented solutions to promote sme lending. so far, the bsp has instituted certain regulatory incentives, among which, are the reduction in the risk weight for sme loans from 100 % to 75 % and the extension to december 31, 2014 of the exemption of micro - and small - enterprises from the submission of additional documentary requirements, such as income tax return and / or audited financial statements... when they apply for bank loans. within the bsp, we are implementing a capacity building program for bsp examiners to familiarize them with the many methodologies and technologies banks can use to effectively lend to smes. the bsp also actively supports the development of a comprehensive credit information bureau and the creation of a collateral registry to spur the growth of msme lending. finally, the bsp