Inclusive economies
As the name of the forum implies, economic concerns are at the forefront of the discussions during the Asia- Pacific Economic Cooperation summit. Building inclusive economies is a theme of the APEC meetings in Manila.
Along this line, one promising development is the launch the other day of the Financial Infrastructure Development Network. In establishing the FIDN, the Philippines is collaborating with the World Bank Group, the Organization for Economic Co- operation and Development and the business sector to make financial services more accessible particularly to low-income households and micro, small and medium enterprises or MSMEs.
Philippine officials estimate that MSMEs account for over 40 percent of GDP in the APEC economies, 15 percent of exports and 60 percent of employment, but about 40 percent of MSME financing requirements are not served. FIDN is preparing measures, including proposed laws and regulations, to encourage bank lending to MSMEs.
This laudable project must be complemented by measures to make it easier for MSMEs to do business. Red tape and numerous and often unnecessary and redundant fees are problems that beset all types of businesses in this country regardless of size. From barangay offices to city hall to national government agencies, the red tape can be daunting. In certain communities, homeowners’ associations add to the layers of red tape and fees that entrepreneurs must hurdle before they can do business.
Big companies have people to deal with the hassle and can afford the mountain of fees. But the red tape and fees are a heavy burden on MSMEs, even if the amounts involved are much smaller. By the time all the fees are paid, the bank loan facilitated through FIDN would have been depleted. It’s not unusual for prospective micro or small entrepreneurs to just give up and look for a job overseas.
Access to credit is welcome news for any entrepreneur. The financing initiative can be accompanied by measures to clear the many roadblocks that deter inclusive economic growth.