House panel okays financial aid for distressed enterprises

The panel approved House Bill 6795 or the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act. (File Photo: House of Representatives of the Philippines/Facebook)

MANILA – The House of Representatives’ Defeat Covid-19 Committee on Tuesday approved a measure seeking to provide financial assistance to distressed enterprises critical to economic recovery in the aftermath of the coronavirus disease (Covid-19) crisis.

The panel approved House Bill 6795 or the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act.

The bill aims to strengthen the capacity of government financial institutions — Philippine Guarantee Corporation (PGC), Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) — to provide the needed assistance to micro, small and medium enterprises (MSMEs) and other strategically important companies.

Majority Leader Martin Romualdez, who co-chairs the committee, stressed the need to address the liquidity or solvency problems of these distressed enterprises.

“We must move swiftly to encourage their continued operations and maintain employment levels,” Romualdez said.

The bill proposes to increase the maximum loan guarantee coverage per borrower, reduce guarantee fees, and other similar schemes of the PGC to benefit MSMEs heavily affected by the pandemic.

It also expands the loan assistance programs, and other credit accommodation facilities of LBP, DBP, Small Business Corporation (SBC) and Agriculture Credit Policy Council (ACPC).

The targeted sectors for LBP include players in the agricultural supply chain such as farmers, fisherfolk, traders, suppliers, processors and aggregators; and for DBP, eligible MSMEs engaged in infrastructure, services and manufacturing business.

The LBP and DBP shall be mandated to create a special holding company, known as Accelerate Recovery to Intensify Solidarity and Equity (ARISE), for the purpose of reinvigorating strategically important industries to meet their liquidity needs.

Equity participation in the special holding company may be held by qualified private sector investors, but LBP and DBP will have to maintain at least a majority ownership over the firm until such time that they have recovered their investment.

The special holding company shall be authorized to invest or place funds in equity, execute convertible loans or purchase convertible bonds and other securities in strategically important companies, as well as to incorporate subsidiaries.

To increase the capitalization of these government financial institutions, the bill seeks to appropriate PHP5 billion to PGC as paid-up capital, PHP35 billion to LBP, and PHP15 billion to DBP.