The government through the Department of Trade and Industry (DTI) has set up a P1 billion-peso fund to kill the “5-6” money lending system in the country.
The P1 billion fund is part of a planned P19 billion financing which the government wants to provide the country’s micro and small businesses in the coming years.
“We are trying to remove and kill the ‘5-6’ industry. We are replacing this with an alternative micro funding. So far we are able to set aside P1 billion new funds. It’s a project of President Duterte to really provide startup funds for the micro entrepreneurs,” DTI Secretary Ramon Lopez told Philippine Star.
President Duterte had earlier warned that loan sharks or those lending money under the 5-6 scheme would not be allowed to operate under his administration.
“As a replacement to 5-6, everything will be the same in this program except for the 5-6. In everything I mean accessibility, no collateral, ease of getting the funding, and of course we have to make sure collection will be undertaken so we will have to make use of existing, tried and tested micro financing institutions to partner with us and to implement this project with,” Lopez said.
The Trade chief stressed the program, which would be called “Pondo Para sa Pagbabago at Pag-asenso,” would also offer lower interest rates than the 20 percent under the current 5-6 scheme.
Lopez said about five or six established microfinance institutions are being eyed to be part of the program.
He said through the help of these established microfinance institutions, the government fund would be accessed even by the smallest of entrepreneurs across the country.
Lopez, however, said the P1 billion fund for next year is just a start, as the government is eyeing to allot P1 billion per region or a total P18 billion in the succeeding years.
