(TAGAYTAY CITY, Cavite) The private sector has identified 12 initiatives that could be included in the Cebu Action Plan (CAP) to help small businesses, a private sector representative to the Asia-Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC) has said.
In a press conference at the Summit Ridge Hotel here on Thursday, Dr. Caesar Parrenas said that these initiatives include the creation of a credit information system, the use of movable collaterals, and fixing trade and supply chain financing.
Parrenas, who is a member of ABAC, said one of the problems of small and medium enterprises (SMEs) in the Asia-Pacific region, especially the medium enterprises, is that many of them do not have real state collaterals.
In many cases, if an enterprise does not have any real state collateral, it cannot get loans from banks, he said.
The ABAC, he noted, is collating experiences from countries that have successfully initiated legal reforms that allow the use of movables as collaterals, which are very important to SMEs.
But doing this is not simple, he said, adding that when policymakers make laws, they need to create a whole operational infrastructure that would allow the use of movables as collaterals.
A searchable collateral registry must also be set up, as what Australia did for its small and medium businesses, he said.
Parrenas explained that under this set up, borrowers could register their collaterals in the Internet and lenders could check them online.
The system must be consistent, he said, adding that even in advanced economies like Japan, they have a system called “perfection system” to address issues when a company goes bankrupt.
“We are looking at the best practices that are already there and share these experiences with Asians, especially with the developing Asian economies which have expressed their interest in initiating reforms,” he said.
Citing an example, he said Vietnam is carrying out reforms in this area and the ABAC is providing advice. Aside from the private sector, experts from multilateral institutions such as the International Finance Corp., have been working on these issues for many years.
Another issue that is important to SMEs is trade and supply chain financing, Parrenas explained, pointing out that there are two sets of issues in this area: regulatory issues that raise the cost and limit the availability of trade financing for SMEs, and innovations coming into the market.
These market innovations are being done by some banks, suppliers and buyers but there is very little awareness on these issues, hence the need to raise awareness, he said.
Another important thing for small businesses is an e-commerce platform, Parrenas said, noting that the issue on e-commerce platform is how to develop the regulatory structure that would make it safe and function efficiently.
The APEC Finance and Central Bank Deputies’ Meeting opened on Thursday to address the concerns of businesses in the region, as well as spur economic growth. PND