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The Philippines implements fintech to support MSMEs

The Philippines implements fintech to support MSMEs

Financial technology (fintech) tools are
being implemented by the Philippine government to enable the micro, small and
medium enterprises (MSMEs) to tap the e-commerce market and to widen their
business opportunities.

Department of Finance (DOF) Secretary Carlos Dominguez III said that aside from
increasing the use of digital technologies in order to empower them, the
government, through the state banks, have also implemented programs meant to
promote the sustainability and competitiveness of small businesses all over the
country.

According to the announcement
made by the DOF, MSMEs are among the key beneficiaries of the Tax Reform for
Acceleration and Inclusion Act (TRAIN). They have benefited from tax breaks
worth billions of pesos in the first six months of this law’s implementation in
the form of a higher value-added tax (VAT) threshold that exempts them from
paying this tax.

During the 26th Metro Manila
Business Conference, Sec Dominguez urged the MSMEs to be innovative and to
explore opportunities opened by the new ways of doing business. He said MSMEs
should be bold in opening new ventures.

He assured MSMEs that the government is
supporting small businesses in every way possible for they recognise the
crucial role that the MSMEs play in forging a better future for the Filipinos.
MSMEs comprise 99.6% of all business enterprises in the country and they are
significant in building a dynamic and inclusive economy for the people.

Sec Dominguez explained that the MSMEs
employ a bulk of the labour force. They serve as a link between big
manufacturers and their consumer base. MSMEs compose the supply chain that,
when enabled, will support the industrialisation of the country’s economy.

Among the fintech tools being developed by
the government to assist MSMEs include peer-to-peer lending, equity
crowdfunding, merchant and e-commerce finance and invoice finance. The
financial world, he said, is being revolutionised by new technologies and the
government is responding promptly to make fintech accessible to the
enterprises.

Furthermore, the Ease of
Doing Business Act of 2018
was signed into law by President Duterte
aiming to reduce red tape significantly and make government more responsive to
the needs of the entrepreneurs.

This new law, Sec Dominguez added, will be
complemented by several programs encouraging the use of digital technology in
all government procedures, including the Bureau of Internal Revenue (BIR),
which is streamlining processes for the documentary requirements on renewing
business permits.

A TradeNet system has also been
established. It automates licensing, permit, clearance and certification
procedures for all regulatory agencies. It will enable the full interconnection
of 76 trade regulatory government agencies across 18 government departments.
The Bureau of Customs
will be the first to go live. This system will also serve as the Philippines’
link to the ASEAN Single
Window
(ASW).

He added that the government is also ready
to run PHPAY,
which is a digital payment gateway that will enable taxpayers and other state
clients to remit fees and other charges electronically. This will transactions
costs across the board and cut corruption associated with primitive payments
systems.

Also, the Philippine Business
Data Bank
(PBDB) will soon be on the testing stage to ensure that it
serves its purpose efficiently of being the single repository of business
registration information in the country.

As for funding support, the Land Bank of the Philippines
extended US$ 1.69 billion (PHP 89.8 billion) in loans to small businesses in
2017.

The Development Bank of the Philippines
(DBP) has lent US$ 245 million (PHP 13 billion) as of June 2018 and also offers
financial advisory services to MSMEs for free. Moreover, it will open
additional Lending Centres in order to be closer to its clients, partnering
with microfinance institutions and cooperatives to support small businesses.

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