The Philippine government and the private sector are looking at ways to provide small and medium-size enterprises (SMEs) access to financing without enterprises having to put up collateral, according to an official of a group of trade service providers.
One of these initiatives is to create a “single window” for trade finance where SMEs may apply for loans with banks, and banks in turn can acquire through the same platform information on SMEs’ financial details, said Francis Norman Lopez, chairman of the Pan Asian e-Commerce Alliance (PAA) steering committee.
The PAA is a group of customs service providers on major trade lanes in Asia that runs the Pan Asia Exchange (PAE), a business-to-business marketplace for buyers and sellers to conduct trade transactions.
The proposed platform is seen to improve the low success rate for loan applications of SMEs while minimizing risks for banks that will approve financing without collateral, said Lopez during a recent business presentation in Makati City.
Although SMEs comprise the bulk of Philippine industry, Lopez noted most are unable to borrow from banks, largely due to the “low level of disclosure of financial data” and the lack of IT infrastructure to engage in international trading.
Banks, on the other hand, balk at dealing with small exporters because of difficulties in obtaining first-hand trading information, making transactions risky.
Lopez said the PAA has taken the initiative to approach the government, banking community, credit insurance and guarantee groups, and export sector to seek support for the single window.
Among services to be made available on the platform are the provision of trade documents and Customs release messages; verification of trade documents to improve authenticity of the transaction; provision of business intelligence reports on exporters’ performance; credit insurance to reduce default risk; and provision of buyer certificate after credit check to verify buyer’s payment capability.
The project is being eyed for implementation in the second quarter of 2016.
Lopez said exporters will realize many benefits from the online window, such as improved operational efficiency, reduced preparation time for trade documents, improved open account payment method, and increased financing opportunities. The platform also seeks to give them credit guarantee, minimize buyer default risks, and reduce data mistakes from duplicated encoding.
He said discussions are ongoing with government agencies such as the Department of Trade and Industry and Bangko Sentral ng Pilipinas; banks such as Landbank, Union Bank, and Metrobank; and some credit guarantee and credit insurance companies.– Philexport News and Features
Image courtesy of Stuart Miles at FreeDigitalPhotos.net
