By: John Carlo Tria
THE recent State of the Nation Address allowed us to take a look at new laws that the previous congress passed which I believe will change the game in business by allowing new forms of collateral for loans and spur new technology innovation.
Republic Act 11057 (Personal Property Security Act) simplifies and harmonized the Chattel Mortgage law of 1906 and other fragmented and outdated financing regulations in the country by enabling borrowers to secure financing using non-traditional collateral such as account receivables, inventory, warehouse receipts, crops, livestock, machinery and equipment.
The PPSA’s goal is to open access to credit for MSMEs, farmers and fisherfolks to use other collaterals than the usual real estate or vehicles, which not all people have as property.
This law is expected to help boost economic expansion because access to financing is critical to higher productivity of MSMEs and the agriculture and fisheries sector.
RA 11057 is expected to strengthen the country’s position in the “Getting Credit Indicator” of the Ease of Doing Business Survey of the World Bank, where the Philippines was ranked 142 among 190 countries in 2017.
This will help pave the way for entrepreneurs to expand their business or obtain better technology options. At the moment, the Department of Finance is conducting consultations to fine tune the implementing rules and regulations.
In this light, Republic Act 11293 or the Innovation Act has now allowed government to embark on innovation projects along with the private sector to harness and develop innovative technologies, with a billion peso budget to push such things.
These two laws will change the game. Their first test is to develop new products and approaches to improving our agricultural productivity, by allowing small farmers access to credit, and innovative approaches or technology to improve yields or process agricultural raw materials.
This can help them deal with the challenges posed by climate change, or produce more competitively given the demand for our fruits abroad, and for larger and cheaper sources of food for the bigger appetites of our growing and developing population.
This can also help our budding software industry compete with counterparts in Asia.