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Philippines
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LOAN: PHI 36419-01
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SME Development Support
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Location
Nationwide.
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Sector
Industry & Trade /Small & Medium Scale Enterprises
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Initial Listing
5 July 2002
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Most Recent Update
15 August 2007
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Executing Agency(ies)
Small Business Guarantee and Finance Corporation
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- Missions
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| TA Fact-Finding |
Loan Fact-Finding |
Pre-Appraisal |
Appraisal |
| 14-18 Oct 2002 |
11-29 Aug 2003 |
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16 Feb-18 Apr 2005 |
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Loan Approval Date
29 September 2005
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Estimated Completion Date
February 2009
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- Cost and Financing Plan (in US$ million)
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| Source |
Foreign Cost |
Local Cost |
Total |
| Bank |
25.00 |
0.00 |
25.00 |
| Cofinancing |
0.00 |
0.00 |
0.00 |
| Borrower |
0.00 |
0.00 |
0.00 |
| Beneficiaries |
0.00 |
13.30 |
13.30 |
| Others |
0.00 |
0.00 |
0.00 |
| Project/Program Cost |
25.00 |
13.30 |
38.30 |
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OCR |
ADF |
Total |
| Loan Amount |
25.00 |
0.00 |
25.00 |
- Description
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The Project will be an integral part of coordinated support of development partners to help the Government implement its SME Development Plan 2004-2010. The Project will specifically (i) support policy initiatives to strengthen the enabling environment by simplifying registration and licensing processes, establishing a Philippine business registry, and develop a blueprint for a movables collateral registry; (ii) help meet the funding gap for SMEs by providing a credit line to the Small Business Guarantee and Finance Corporation (SB Corporation) under government guarantee aimed at viable SMEs that currently do not have access to bank financing, and a Partial Credit Guarantee (PCG) Facility without Government counter-guarantee to encourage selected private sector financial institutions to expand their SME portfolio particularly to qualified medium sized enterprises outside the target client group of SB Corporation ; (iii) strengthen SB Corporation's credit underwriting and risk management; and (iv) assist in the establishment of a comprehensive and credible credit information system through an equity investment in the planned Credit Information Bureau (CIB).
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- Thematic Classification
- Economic Growth / Private Sector Development
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- Target Classification
- General Intervention
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- Rationale
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In 2002, SMEs in the Philippines contributed 32% of value added, accounted for 8% of business establishments and 31% of employment. SME's direct contribution to total manufacturing exports was approximately 24%, but the indirect contribution as suppliers to large exporters is likely to be higher. SMEs are thus a vital subsector in the economy in terms of employment and value added. However, SMEs faces a a number of constraints to operate effectively. Policies directly affecting SMEs are not conducive in that registration and licensing processes are cumbersome and costly and the lack of both a national business registry and a collateral registry further hampers SME lending.
Access to and availability of finance is another key constraint which reflect (i) bank's reluctance to expand SME lending following the Asian financial crisis as SME lending is perceived to be costly and risky in relation to revenues generated compared to other investments, and (ii) SME's difficulties in preparing and presenting credible business plans, realistic cash flow estimates, and provide sufficient collateral for bank lending.
In July 2004, the Government announced SME Development Plan 2004-2010, which aims at improving the enabling environment for SMEs and thereby contribute to increase SMEs share in value added from 32% to 48% by 2010.
- Objectives and Scope
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The overall objective of the Project is to help the Government implement its SME Development Plan 2004-2010 in cooperation with other development partners, and by supporting SME development contribute to broad-based economic growth to generate employment opportunities. In President Arroyo's 10-point agenda, the concrete target is to create at least 6 million jobs in 6 years through, among other things, promoting SMEs by tripling financing available, and developing land for agricultural business. The Project will support this objective by improving the enabling environment for SMEs, stimulate SME development by facilitating access to finance and augment financial resources at SB Corporation that is dedicated to SMEs as well as expand private sector lending for medium-sized enterprises supported by a partial credit guarantee. This combination of a public sector loan and private sector partial credit guarantee allows for targeting of different segments of the SME market and catalyzing expanded SME finance through a demonstration effect. Through associated technical assistance, the capacity and performance of SB Corporation in supporting SME development will be further enhanced.
- Policy Dialogue
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- Environment Category:
FI
- Environment Impact and Mitigation
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- Social Aspects and Remedies
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- Benefits and Beneficiaries
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The Project is expected to contribute to an improved enabling environment for SMEs, a stronger SB Corporation better equipped at expanding its portfolio at wholesale and retail level, expanded SME lending by SB Corporation and commercial banks, and job creation by SMEs. SMEs are expected to benefit from better business environment, improved access to finance and augmented availability of finance.
- Public Consultation
- Arranged by
- Date for Consultation :
- Groups Consulted :
- Beneficiary Participation in Formulation
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- Beneficiary Participation in Implementation
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- Consulting Services
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Not applicable.
- Procurement
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ADB's Guidelines for Procurement applicable to development finance institution will be followed by sub-borrowers with the assistance of the EAs and PFIs. These guidelines may require sub-borrowers to (i) demonstrate that the procurement procedures adopted are appropriate in the circumstances; (ii) ensure that the goods and services to be financed by subloans are purchased at a reasonable price, given time of delivery, quality, and efficiency; and (iii) ensure that all goods and services to be financed by subloans are procured from ADB member countries. Sub-borrowers will be encouraged to procure goods through international competitive bidding and/or international shopping when such procedures are needed in the interest of economy and efficiency.
Procurement will be conducted transparently and in conformity with the ADB anticorruption policy.
- Contacts
- Bank
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Asa Malmstrom Rognes
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Senior Financial Economist
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SEGF
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Tel. No.:
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E-mail:
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- Executing Agency
- Small Business Guarantee and Finance Corporation
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Contact Person
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Zorayda Amelia C. Alonzo, Chairman and CEO
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Tel. No.
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(632) 810-5791 or 95
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Fax. No.
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(632) 813-5726
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E-mail
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zalonzo@sbgfc.org.ph
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Contact Person
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Tel. No.
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Fax. No.
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E-mail
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