CIRCLE OF EQUALS 3RD INDUCTION OF OFFICERS (2004)
by Gary B. Teves
President and CEO
Land Bank of the Philippines
Circle of Equals 3 rd Induction of Officers and Trustees
Turf Room, Manila Polo Club
August 30, 2004
Small Business Corporation chairperson Mel Alonzo; officers, trustees and members of the Circle of Equals; my fellow Landbankers led by EVP Boy Cruz and other distinguished guests, good evening. It's an honor and a pleasure for me to be in the company of esteemed past presidents of the various Rotary Clubs of the Philippines.
I was asked this evening to talk about the banking sector's role in promoting entrepreneurship. Let me start by giving you some examples of what people can achieve when the banking sector nurtures their entrepreneurial spirit:
Ms. Lourdes Ragas, proprietor of Asia Embroidery, Inc., started out in her teens as a salesperson in her uncle's Divisoria fabric shop. Armed with creativity, a passion for beautiful fabric and the fierce desire to succeed in the world of fashion, she persevered, gaining exposure by joining international textile fairs in New York, Paris and Frankfurt. Ms. Ragas availed of a P5 million loan from LANDBANK in 1999. She has since established a name for herself and her company in the international fashion industry, producing beautiful and world-class corded, beaded and embroidered lace fabrics.
Mr. Alfonso Namujhe, Jr. dreamed of introducing citrus farming to Malabing Valley, Nueva Vizcaya. To many, the concept didn't seem feasible, but LANDBANK was the first bank to extend assistance to the Namujhes with a P250,000 loan in 1991. As his neighbors witnessed the continuing growth and prosperity of Mr. Namujhe's small business, many adopted the farming technology for propagating citrus. At present, the Satsuma oranges and pomelos produced by Namujhe Farms are selling briskly in various local shops, fruit stands and supermarkets. With the help of Mr. Namujhe, most of the 600 families in the community of Malabing Valley are also now engaged in citrus farming.
Mr. Roberto Sason Jr.'s family was in the fish farming business. He, however, wanted to experiment with other flavors of daing na bangus, apart from the traditional vinegar and garlic. With a P1.6 million credit line from LANDBANK in 2003, he began producing ready-to-cook, deboned and vacuum-packed daing na bangus or milkfish in honey, lemon grass, barbecue, calamansi and smoked flavors. Currently, Aklan Boneless Bangus has gained wide market acceptance, not only in Aklan but also in Metro Manila's leading grocery stores.
These entrepreneurs share many common traits - they are all hard-working, innovative and enterprising. But while these traits are essential, financing is necessary if these admirable qualities are to be translated into successful enterprises.
Making Business Work for the Poor
Making business work for the poor is crucial to poverty alleviation. In our country, where small and medium enterprises comprise 99 percent of business establishments, the need to create an environment where enterprises thrive cannot be overemphasized.
President Gloria Macapagal-Arroyo has in fact included this in her 10-point priority agenda. To meet her goal of creating six to ten million jobs, the president specifically directed the banking sector to triple loans to small business owners from the 2003 level of P214.8 billion.
LBP support to SMEs and microenterprises
LANDBANK is the largest contributor to the SME Unified Lending Opportunities for National Growth or SULONG, the government's flagship program for SMEs.
Of the P26.7 billion total loans provided by participating government financial institutions under the program, LANDBANK released 47 percent or P12.7 billion in 2003. This helped entrepreneurs to create or support approximately 713,000 jobs nationwide last year.
For the first half of this year, we have released loans totaling P5.5 billion under SULONG benefiting more than 5,000 small and medium enterprises nationwide.
LANDBANK also offers other regular lending programs for SMEs that do not qualify under SULONG. For start-ups and projects requiring more than P5 million, we have the Easy Pondong Pang-Asenso or EPPA, with collateral and documentation requirements similar to SULONG. For the next six years, we plan to release a minimum of P60 billion to the SME sector .
To reinforce our commitment to entrepreneurship, LANDBANK has developed a recognition program for Bank-assisted SMEs. This September, we will confer the first-ever Gawad Entrepreneur awards to recognize our outstanding SME clients in two categories: sole proprietorships and corporations with a special award for an outstanding youth entrepreneur. In fact, the three entrepreneurs I mentioned earlier are three of our national finalists in this year's competition.
In addition, LANDBANK is actively involved in institutional linkaging and capability-building activities. Under these programs, we link our SME clients with relevant agencies such as CITEM, the Bureau of Products and Standards and TESDA, allowing them to take advantage of external opportunities such as market information, training and other support services provided by these organizations.
LANDBANK also addresses the financing requirements of micro-entrepreneurs through our attached agency, the People's Credit and Finance Corporation. As of May 2004, PCFC has extended P5.9 billion in cumulative loans for the microfinance sector, benefiting some 1.5 million poor borrowers, 98 percent of them women.
Creating an environment conducive for business
In essence, creating an entrepreneur-friendly environment is a task expected of, but should not be limited to financial institutions. Other government agencies, private organizations, training institutions and even groups such as the Rotary Club have much to contribute to this effort.
First, we need to continuously work to eliminate barriers for starting and currently operating businesses.
Second, we need to give small business owners greater access to formal financial markets at reasonable terms.
Third, the government and other regulating agencies should give entrepreneurs a level playing field with consistently and fairly enforced rules.
And lastly, we need to equip our entrepreneurs with better skills, knowledge and infrastructure support, allowing them to improve their products and their competitive chances.
You may be asking yourselves at this point, "What can we do?"
As individuals, you can take advantage of our products and services in order to establish, sustain or grow your own entrepreneurial endeavors.
As an institution, you can collaborate with us to provide business management, skills and ethics training for the SME sector.
We can also work together to begin implementing our joint initiative, the Rotary Community Corps. As some of you may recall, this initiative was developed in May 2003 with an initial credit fund of P500 million for livelihood projects of cooperative members. In addition, we also assist in cooperative formation -- providing training, marketing and other technical support.
Scientist and author Loren Eiseley tells a story about seeing a young boy at the beach where the tide had washed in thousands of starfish. The boy was picking up starfish one at a time and throwing them back into the sea. Eiseley told the boy he was wasting his time because there were so many dying starfish that his actions couldn't possibly make a difference. The boy bent down, picked up yet another starfish and threw it into the sea, saying, "Well, I just made a difference for that starfish!"
We look forward to our interaction with you tonight to discuss how we can tie up to launch much-needed capability-building programs for our SMEs. Let's collaborate on initiatives that will strengthen the creditworthiness of individual enterprises and disadvantaged groups, such as our farmers and fi