鈥楥rowdfunding鈥� tapped to aid Cordillera MSMEs
BUSINESS OF TOURISM Baguio, the country’s summer capital, is the leading economic center of the Cordillera. The city’s main growth driver has always been tourism, which has spawned businesses that benefited even small entrepreneurs. The government has committed to help tap capital to fund micro, small and medium enterprises for the rest of the region. —NEIL CLARK ONGCHANGCO
BAGUIO CITY—Using social media-inspired “crowdfunding” techniques, the Securities and Exchange Commission (SEC) is helping match investors with micro, small and medium enterprises (MSMEs) and business startups in the Cordillera, an official said on Friday.
During a capital market roadshow here, Vicente Graciano Felizmenio Jr., SEC director for markets and security regulations, said his agency was negotiating to include state insurers like the Government Services Insurance System and the Maharlika Investment Corp., administrator of the country’s first sovereign wealth fund, among possible sources of capital for MSMEs in the country.
The government is tapping this “alternative mechanism” to address an MSME fund gap of $220 billion, based on a March to April 2020 survey conducted by the Asian Development Bank, he said. MSME businessmen, he said, make up 98 to 99 percent of the country’s business landscape.
As of 2021, the Cordillera has 22,493 MSMEs, of which 1,270 are classified as small enterprises and 28 are medium-scale businesses, according to the Philippine Statistics Authority. Many more microentrepreneurs and startup businesses may not have been included in that list.
About 140 small businesses from the Cordillera and Ilocos regions, which joined the roadshow, were introduced to stock brokerage firms and professional fund managers who function as authorized and regulated “crowdfunding intermediaries” for the SEC’s “crowdfunding portal.”
Article continues after this advertisementCrowdfunding started out as an online practice of different groups of people and organizations who finance projects like a movie or who donate money for ailing children and individuals. The same principle applies to government crowdfunding, which allows capitalists to connect with and scrutinize the projects being developed by small businesses.
Article continues after this advertisementHowever, these transactions are overseen by heavily regulated “crowdfunding intermediaries” to protect the interests of both entrepreneurs and investors, Felizmenio said.
High-value farming
SEC has also invited local investment managers to join the portal because of potential investments that are distinct to the provinces, he said at a news conference held on the sidelines of the roadshow.
For example, the bulk of registered small businesses in the Cordillera provinces are engaged in high-value farming and other agricultural ventures, Regina Cajucom-De Guzman, SEC Cordillera director, told reporters.
Benguet province, and border towns in Ifugao and Mountain Province, generate 80 percent of the salad vegetable supplies in Metro Manila like cabbage, lettuce, cauliflower, broccoli, carrots and beans.
DISTINCT TRADE Many of the small businesses in vegetable- growing provinces in the Cordillera are engaged in high-value farming and other agricultural ventures. —VINCENT CABREZA
So a likely small and medium business project that could draw as much as P500 million in capital is a cold storage chain for vegetables here and for fish in the Ilocos coastlines, Felizmenio said.
Policies are now being reviewed to improve business opportunities and reduce investment risks in food production, he said, among them a proposal from the Bangko Sentral ng Pilipinas (BSP) to amend Republic Act No. 10000 (the Agri-Agra Reform Credit Act of 2009).
The law requires all financial institutions like rural banks to reserve 25 percent of their loan facilities for agriculture and agrarian reform beneficiaries.
Felizmenio said the BSP wanted rural bank investments in capital markets to qualify as their contributions to the agri-agra requirements.
The Cordillera is also venturing into renewable energy, so small and medium entrepreneurs could crowdfund investments for power generation and transmission using the portal, Felizmenio said.
When asked, Felizmenio said his department might draw up “master plans” for key investment priorities in each region to help sell regional, provincial and municipal .
The government’s “crowdfunding” system was among the nonconventional mechanisms that became available when all businesses were shuttered and online business transactions became the norm at the height of the COVID-19 pandemic, he said. INQ
