House OKs bill giving financial aid to MSMEs
MANILA, Philippines — The House of Representatives on Tuesday approved on third and final reading a bill that would equip government banks to grant more loans to micro, small, and medium enterprises (MSMEs) heavily affected by the coronavirus pandemic.
With 185 affirmative votes, 16 negative votes and two absentations, the lower chamber approved House Bill No. 7749 or the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act.
The bill seeks to expand the loan assistance programs, rediscounting and other credit accommodation facilities of the Land Bank of the Philippines (LBP), Development Bank of the Philippines (DBP), Small Business Corporation (SBC) and Agriculture Credit Policy Council.
The measure, which is expected to help speed up economic recovery, was meant to complement the passage of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).
Stipulated in the GUIDE bill are the targeted sectors and intended beneficiaries, which would include LBP, players in the agricultural supply chain, and for DBP, eligible MSMEs engaged in infrastructure, the service industry, and manufacturing businesses.
The bill also mandates the LBP and the DBP to create a special holding company that will reinvigorate strategically important companies experiencing liquidity issues due to the Covid-19 pandemic, such as agriculture and infrastructure, services, and manufacturing industries.
The SHC will be known as the Accelerate Recovery to Intensify Solidarity and Equity (ARISE).
The proposed law also seeks to grant incentives and exemption privileges to LBP and DBP and the SHC.
These incentives and privileges include the exemption from payment of documentary stamp tax, capital gains tax, creditable withholding income tax, value-added tax, gross receipts tax, and other taxes imposed under the National Internal Revenue Code of 1997 (RA 8424, as amended) and exemption from the Government Procurement Reform Act for mandate-related procurements for three years.
LBP, DBP and the SHC will likewise be exempted from the GOCC Governance Act of 2011 and Philippine Competition Act for a period of three (3) years for acquisitions of assets of an investee company.
The GUIDE bill would provide for P10 billion to DBP and LBP as additional paid-up capital so they could help MSMEs get back on their feet and create the SHC.
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