Senate Minority Leader Franklin Drilon yesterday questioned the inadequacy of the P10 billion allocation for assistance to companies in danger of insolvency due to the COVID-19 pandemic.
Drilon stressed the P10 billion fund was “just a drop in the bucket” as compared to the P19.5 billion allocation for anti-insurgency activities which he considers as pork barrel.
He said the rescue of companies should be given priority since they are the generators of the economy. He said around 30,000 workers would be retrenched if the government would not assist these large employers.
“P10 billion is just a drop in the bucket if you look at the P1.5 trillion loss in the economy as a result of the pandemic,” said Drilon during the Committee on Banks, Financial Institutions and Currencies Subcommittee hearing on Government Financial Institutions Unified Incentives to Distressed Enterprises for Economic Recovery (GUIDE) bill.
“I hope the subcommittee will include in its report as to the inadequacy of the P10 billion and I question the priorities of this government in so far as allocating funds are concerned,” also said the Senate leader.
He also called a “joke” the plan to give P10 billion funds to Landbank at Development Bank of the Philippines (DBP) under GUIDE Act.
“P10 billion as a rescue package is a joke, especially if we look at it in the context of P19.5 billion anti-insurgency fund which is to me a pork barrel,” said Drilon.
“So Mr. Chairman, I am convinced that we need rescue package. Is 10 billion a serious package given the magnitude we are talking about? Drilon asked the committee chaired by Sen. Sherwin Gatchalian.
He insisted that the amount is too small to assist distressed micro, small, and medium enterprises (MSMEs).
.”Kung kukwentahin ang 9 1/2 percent na pagbaba ng GDP ay nasa 1.5 trillion pesos. Kaya ang 10 billion pesos na equity infusion ay masyado anyang maliit,” he told the Senate hearing.
Under the proposed measure, LandBsnk and DBP will widen their loan programs for qualified MSMEs affected by Covid-19 pandemic. They will funded through the National Treasury, Landbank and DBP will also be allowed to invest or enter into a joint venture with special holding company for the rehabilitation of Strategically Important Companies o SIC.
Meanwhile, Gatchalian underscored the need to simplify the procedures and reduce the transaction costs to encourage MSMEs to seek government loans to restart their businesses and help shore up the economy.
Gatchalian said the measure seeks to help companies severely impacted by the COVID-19 pandemic, including the MSMEs.
He said this would reduce taxes and transaction costs making it easier on the pockets to secure a loan.
This will make borrowings cheaper for small businesses through the Land Bank and DBP.,
“The documentary stamp tax, capital gains tax, creditable withholding income tax, value-added tax, gross receipts tax are usually shouldered by the borrowers,” he said.
If these will be lifted, Gatchalian said it will lower the overall cost of borrowings of MSMEs and entice them to seek financial assistance from government banks. I also hope that the bill will effectively streamline the process,” Gatchalian said.