The proposed Secured Transaction Systems bill will improve access to credit in the Philippines and also raise the country’s competitiveness standing, the Finance department said on Friday.
“The passage of this bill will strengthen the Philippines’ position in the ‘Getting Credit’ indicator in the Ease of Doing Business and boost it by about 100 notches—from rank 142 among 190 countries to 42,” the agency said in an economic bulletin.
The measure is currently up for second reading in the Senate and is scheduled for third reading approval at the House of Repersentatives.
The Finance department said that the bill, if passed, would:
* encourage more lending to micro, small, and medium enterprises (MSMEs) and agriculture since it offers entrepreneurs opportunity to use movable collaterals;
* develop a professional, regulated warehousing industry that issues receipts that can be used as collateral and can be traded by investors and industry players;
* develop an automated movable collateral registry wherein announcements/information on transfers and pledges of collateral can be made and accessed by participants; and
* develop the backbone of an efficient commodities market that will stabilize prices and expand transactions.
Other that undertook the r eform saw lending to MSME increased by between 50 percent to 100 percent, the Finance department said.
It added that in China alone, $3.58 trillion in lending was spurred four years after the reform. Movable collaterals now account for 45 percent of commercial lending in China and 30 percent in Vietnam, it said.
Local government agencies are already preparing for the bill’s approval.
The Land Registration Authority has announced the establishment of an automated collateral registry and the Securities and Exchange Commission is drafting regulations regarding the operation of warehouses that wish to join the secured transactions system.