Romualdez: guide act to aid economic recovery

Martin Romualdez

THE House Defeat COVID-19 Ad Hoc Committee has approved a proposed law allowing government financial institutions to aid troubled business enterprises that are very critical to economic recovery in the aftermath of the coronavirus disease-19 (COVID-19) pandemic.

The DCC meeting presided by House Majority Leader and Leyte Rep. Martin Romualdez, panel co-chairman with Speaker Alan Peter Cayetano, adopted the motion of House Deputy Majority Leader and Zamboanga Sibugay Rep. Wilter “Sharky” Wee Palma II approving the draft substitute bill for the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery or "GUIDE" Act, which will provide P55 billion to the Land Bank of the Philippines (Landbank), Development Bank of the Philippines (DBP), and the Philippine Guarantee Corporation (PGC).

Under the bill, P35 billion will be given to Landbank, P15 billion to DBP, and P5 billion to PhilGuarantee to enable them to expand their respective credit programs in order to assist affected MSMEs in meeting their liquidity needs.

“Sa isang iglap, binura po ng COVID-19 ang lahat ng nagawa ng ating Pangulo para mabigyan ng trabaho ang mga kapwa nating Pilipino.

The virus outbreak offset the 14-year low unemployment and underemployment rates achieved in in the first half of President Duterte's fourth year in office,” Romualdez lamented.

Romualdez, chairman of the powerful House committee on rules, said the GUIDE Act is originally under House Bill (HB) 6795 and was endorsed for DCC’s approval by the House committee on banks and financial intermediaries chairman, Quirino Rep. Junie Cua.

He said the proposed measure seeks to increase the capacity of the government financial institutions (GFIs) to support distressed micro, small, and medium enterprises (MSMEs) will help the country’s immediate economic recovery. 

“With the GUIDE Act, sponsored by chairman Cua, we seek to provide financial assistance to distressed enterprises critical to economic recovery. We need to address the liquidity or solvency problems of medium and small-scale enterprises and strategically important industries.

We must move swiftly to encourage their continued operations and maintain employment levels. While we strive to reboot our economy, we also need to keep the spirits of our people high. It is incumbent upon us, the representatives of our people, to formally recognize the gallantry of all Filipino healthcare workers and other frontliners, here and abroad. These faceless and nameless heroes have valiantly responded to the call of duty to save precious lives and spare the nation from the devastation caused by COVID-19,” Romualdez told the panel hearing.

“Maraming salamat po sa malasakit ninyo sa mga kababayan nating nangangailangan ng tulong. Your swift action on these legislative measures is truly commendable, especially at the time that our nation reels from the economic meltdown caused by the COVID-19 pandemic,” Romualdez said in expressing his gratitude to the Cua panel.

“We really have no choice but to fast-track the approval of these vital measures if we want to spare millions of jobs threatened by this
global health emergency. As result of the lockdown imposed to contain the spread of COVID-19, an estimated 1.2 million workers were displaced and left dependent on the social amelioration package provided by the national government.

This number swelled further with the arrival from abroad of hundreds of thousands of overseas Filipino workers who also lost their jobs due to the ongoing global health crisis. No doubt, the coronavirus pandemic has brought the unemployment and underemployment rate in country to unprecedented levels. The pandemic caused the highest unemployment rate in the country on record, with 7.3 million Filipinos jobless. The Philippine statistics authority also reported that 13 million Filipinos had jobs, as of April 2020, but were not able to report to work. Nearly all of them attributed this disruption to the COVID-19 regulations,” Romualdez stressed.

Cayetano lauded the swift action of DCC led by Romualdez in the GUIDE Act for plenary approval. 

“Government needs to take the lead in helping small business owners survive the effects of this pandemic.

Both the SSS and the GSIS are  already doing a good job, but we need all hands on deck right now.

The DBP, Landbank, and other government financial institutions should also look into how it can extend credit and other assistance to our Kababayans,” said Cayetano.

Bangko Sentral ng Pilipinas (BSP)  Governor Benjamin Diokno had expressed support for the GUIDE bill during the pre-SONA forum of the Economic Development and Infrastructure held online on July 8, 2020.

"As I have said, if we want our country to thrive under the new normal, we have to focus on two things: lives and livelihood. Our MSMEs can easily adapt, innovate, and manage the requirements of the New Normal with wider access to credit from government financial institutions," Cayetano said in a statement.

Cua, who is also a principal author of the bill, said given the multiplier effect of every peso capital invested in banks, the infused paid-up capital of P55 billion can raise a minimum of P600 billion which can further address the credit needs of MSMEs and other companies.

In particular, Landbank and DBP are mandated to expand their credit and rediscounting facilities to affected MSMEs in the agriculture, infrastructure, and manufacturing industries.

The GUIDE bill authorizes Landbank and DBP to create a special holding company that aims to further reinvigorate these strategically
important companies heavily affected by the COVID-19 pandemic. The equity participation in this special holding company may be held by qualified private sector investors.

The special holding company will be exempted from the requirements under the Government Procurement Reform Act for three years and will be granted tax privileges.

Cayetano underscored the value of collaboration between the government and MSMEs in the process of rebuilding the economy and the preservation of jobs amid the COVID-19 crisis.

This developed as the House leadership also committed to pass the Bayanihan to Recover as One or Bayanihan II to augment the financial support for MSMEs.

In his fifth State of the Nation Address delivered on July 27, President Rodrigo “Rody” Duterte asked the government to intensify efforts to help MSMEs, many of which are currently facing "accumulated amortizations and payables" due to months of community quarantine in the whole country.

The DCC is set to sponsor the legislation’s still-unnumbered substitute bill to the plenary soon.