Article by:
Filane Mikee Cervantes
MANILA – A lawmaker on Friday called on Congress to look into the Commission on Audit's (COA) discovery that PHP4.99 billion, or over half of the funds allocated for loan distribution to micro, small, and medium enterprises (MSMEs) under the Bayanihan to Recover as One Act (Bayanihan 2), was never used by the intended beneficiaries.
Camarines Sur Rep. Luis Raymund Villafuerte said Congress should get to the bottom of the COA report that more than half of the funds intended to rescue MSMEs, particularly those in the tourism sector, remained idle until Bayanihan 2's extended effectivity lapsed in June last year.
According to the COA report dated March 2, the Small Business Corp. (SBC), as of June 30, 2021, released just PHP4.09 billion of the PHP9.08 billion earmarked for the Department of Trade and Industry’s Covid-19 Assistance to Restart Enterprises (CARES) Program, for distribution as collateral-free, zero-interest loans to MSMEs.
Villafuerte, citing the report, said this was mainly because of the SBC's supposedly inadequate staff to process loan applications and the hesitancy of potential beneficiaries to secure loans to revive their businesses.
“It was obviously a case of wrong or misguided priorities as tourism and other concerned authorities had lobbied for the funneling of the entire multibillion-peso rescue package for loans to tourism-related MSMEs, rather than devote the amount or a part of it to building tourism service infrastructure—in preparation for the eventual reopening of the domestic economy in general and the tourism industry in particular,” he said.
He said a House-passed version of Bayanihan 2 had a PHP10-billion budget for tourism infrastructure but was later scrapped for a PHP10-billion outlay allotted to the "DTI-attached SBC for loans to tourism-related MSMEs.”
“Such tourism infrastructure would have been up by now—and ready for the reopening of our economy and tourism industry—as such facilities could be built in six months to a year at the most,” he said.
He cited the COA report stating that “these unutilized funds could have been used to fund other emergency measures to address the effects of the pandemic.”
He said the almost PHP5 billion in unused SBC funds had reverted to the National Treasury as provided by law, and could no longer be used for either MSME loans or tourism infrastructure.
He, however, noted that the government still "switch to catch-up mode" by augmenting the infrastructure funds of Tourism Infrastructure and Enterprise Zone Authority (TIEZA) in the 2022 national budget and in the proposed 2023 General Appropriations Act (GAA) to improve and increase tourism services infrastructure as a way to "sharpen the country’s competitive edge as a tourism haven.”
He pointed out that infrastructure investments via TIEZA would have provided a big boost to the industry that early in creating a lot of jobs for displaced industry workers.
“Moreover, infrastructure investments have a high multiplier effect of 3.5—meaning, it will generate PHP3.50 for the economy for every PHP1 investment—so such funding for TIEZA projects would have generated badly needed economic activity in the tourism sites,” he added.
State auditors had cited two reasons why more than half the outlay was unused by the time the effectivity of Bayanihan 2 ended in June 2021—the “insufficiency” in SB Corp.’s human resources and the “hesitancy of potential clients” to avail of the financial aid.
They said the almost PHP10 billion given to SBC under CARES was “beyond its normal capacity” to process as it used to handle only PHP1.5 billion under this DTI-CARES program.
These auditors added that the hesitancy among intended borrowers could be gleaned from the fact that of SBC’s potential clients of 995,745, only 48,010 or a measly 4.82 percent had applied for loans.
Of these applicants, 4,378 or 9 percent subsequently canceled their applications because of various reasons, including the “long processing time” and lack of updates on their loan papers.
“The bulk of the budget is allocated for the tourism industry. Many tourism-based companies are hesitant to restart their business due to the multiple impositions of enhanced community quarantine in the country,” the COA said.
The COA report said that as a result, only 28,222 MSMEs had availed of loans totaling PHP4.99 billion as of end-June 2021.
Enterprises with 10 workers or below up to those with a maximum of 199 workers and with a capital of PHP3 million to PHP100 million were entitled under CARES to zero-interest and collateral-free loans ranging from PHP10,000 to PHP5 million each. (PNA)
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