BSP Explores Plans for Supply Chain Financing for MSMEs in the Philippines
The Bangko Sentral ng Pilipinas (BSP) is planning to provide financing for micro, small, and medium-sized enterprises (MSMEs) that belong to the supply chains of larger businesses in the Philippines.
The supply chain financing (SCF) scheme aims to ease the collateral requirements of MSMEs by leveraging their major customers’ superior credit profiles. It will include an overhaul of regulations while establishing electronic platforms that are available to multiple lenders.
BSP stated in an email, “Along with an enabling regulatory environment around electronic invoicing, electronic signatures, and secured transactions, the strategic intervention may include the development and operation of a multi-lender electronic SCF platform which may be run by the BSP or other government agencies as has been successfully done in Mexico, China, and Chile.”
Additionally, the SCF scheme allows suppliers easy access to credit as verified suppliers of large firms.
In a study conducted by Asia-Pacific Economic Cooperation (APEC), small businesses in the Philippines, Vietnam, Chile, Mexico, and Peru must present around 212% to 346% of their proposed loan.
According to the Department of Trade and Industry (DTI), around 99% of roughly one million business registrations in the Philippines are MSMEs.
BSP expressed that “SCF supports not only the smaller firms but also their large corporate buyers in terms of improved working capital management and reduced supply chain disruptions, as well as the bank itself in terms of better credit risk management and additional revenue streams.”
BSP is exploring collaborations with experts in the SCF market, including the International Finance Corporation (IFC) who assisted the People’s Bank of China in setting up its SCF platform in 2013.
The SCF platform of China’s Central Bank provided approximately $1.7 billion in credit to 200,000 registered businesses over the past seven years.