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FIST: A much-needed economic punch

Big banks are like big rivers … but we need ponds, creeks, and small channels in the system. Without these in an ecosystem, floods and droughts will always happen here and there, — Chinese billionaire Jack Ma

The power to promote and ensure financial stability is expected to rest firmly, safely, securely in the regulatory hands of the State.

The Senate on November 10 passed on final reading the bill which would provide a lifeline to businesses and save over 3.5 million jobs amid the economic slowdown brought about by the Covid-19 pandemic.

With 18 affirmative votes, no negative vote, and no abstention, Senate Bill 849 or the Financial Institutions Strategic Transfer Act was finally approved minutes after its Second Reading approval. The bill, which was certified urgent by the President, allows all banks to sell their non-performing assets while availing of fiscal incentives.

Sen. Grace Poe, principal author and sponsor of the bill, described the measure as a pro-active response to the Covid-19 pandemic which, according to the estimates from the National Economic and Development Authority, can possibly free up P1.19 trillion worth of loans from the sale of non-performing assets to management companies called FIST corporations.

NPAs eligible for sale or transfer to FIST companies would include those that have become nonperforming before Dec. 31, 2022 to allow FIs to harness the full benefits of the law as some loans could still turn sour in the coming months because the country is still in a recession.

“This, in turn, could help serve around 600,000 micro, small, and medium enterprises, and save over 3.5 million related jobs,” said Poe, chairperson of the Committee on Banks, Financial Institutions and Currencies.

Under the bill, the institutions covered by the Special Purpose Vehicle law would be expanded to include lending companies and other institutions licensed by the Bangko Sentral to grant credit.

The bill also offers longer applicability period for up to 36 months for assets that have become non-performing as of Dec, 31, 2022 which would give sufficient time to FIs to assess the need to offload assets.

As a safeguard against abuse of the system, the bill states that one-person corporations are prohibited to set up their own FIST corporations.

Further, to ensure that limited government resources would not be used for risky endeavors, government financial institutions will not be allowed to set up their own FIST corporations.

To address possible violations of the anti-dummy law, foreign participation in foreclosure sales of lands is removed.

The Securities and Exchange Commission and the Department of Justice are given the power and responsibility to investigate violations.

The lady lawmaker thanked her colleagues for accommodating and passing this priority measure which, she said, is “important for our economy and for the businesses and for our banks to maintain a healthy financial situation in our country”.

With the passage of FIST, Poe is hopeful that banks would be encouraged to lend to businesses and consumers to fuel the economy and pull it out of a recession.

“This is a proactive response to the pandemic that should free up P1.19 trillion worth of loans and allow banks to lend to some 600,000 MSMEs and save over 3.5 million jobs,” she pointed out.

The Covid-19 pandemic dealt an unprecedented blow to the nation, with millions losing their livelihood and businesses closing shop.

The economy shrank at a slower pace – 11.5 percent — in the third quarter still due to the impact of the coronavirus disease 2019 but indicating a recovery in the coming quarters.

The slide in the country’s gross domestic product eased in the July to September period from a contraction of 16.9 percent in the second quarter.

“(This) indicates that the economy is on the mend. The path is clearer to a strong bounce-back in 2021,” acting Socioeconomic Planning Sec. Karl Kendrick Chua said. “The economic team is optimistic that the worst is over for the country.”

The GDP growth rate averaged -10 percent in the first three quarters of of the year.

Echoing Chua’s bullish sentiments, Poe expects the economy to turn the corner by next year – nudged along by FIST.

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Skewed infra budget allocation

Quite concededly, no two or more congressional districts are completely alike in terms of geographic size, terrain, demographics, and natural endowments, etc.

Can those which have less in these things have parity with other geopolitical units — if not more in law or at least in resources provided by law?

If equal access is impractical or untenable, is compensatory budgetary allocation acceptable?

The idea is to enable communities within a given district to make up for the lack of resources on which to build a socio-economic base and set them on the road to progress.

Ped Xing believes this is a fair fighting chance for resource-challenged congressional districts.

Can’t really fault a very discerning Sen. Panfilo Lacson for citing the “disparity” or the unfair split of allocation of infrastructure budget of congressmen, citing billions pesos being poured into selected districts while others have to make do with virtual loose change.

In the Senate review of the proposed P.4.5-trillion national budget, Lacson said the glaring difference in the size of budgets among certain districts was clear as daylight.

He cited an urban District in Davao that has an infrastructure budget of around P15.351billion; Albay P7.5 billion; Benguet, P7.9 billion; and Abra, P3.75 billion.

Lacson did not name the congressmen representing the district cited, but one of the currently seated representatives of Davao is presidential son and Davao 1st. District Rep. Paolo Duterte, the others being 2nd District Rep Vincent Garcia, and 3rd District rep. Isidro Ungab.

In the 2nd of District of Albay the current representative is Joey Salceda. In Abra it is Lone District Rep. Joseph Bernos while the current congressional caretaker of Benguet is ACT CIS Partylist Rep. Eric Yap.

“This is just to point out the disparity in the distribution of the budget. Yun ang honor roll. Horror roll… I just want to point that out, bakit ganun ang disparity? What’s in those districts that would merit those appropriations?” the senator posed.

Lacson admitted being skeptical about the billion-peso infrastructure projects actually pushing through.

“The absorptive capacity. Kasi kung sa isang district ‘yan babagsak, I cannot see how that particular engineering district could implement P15.351 billion of infrastructure projects,” he explained.

Even Senate President Tito Sotto was alarmed by Lacson’s observations.

“Usually kasi sa pinagdaanan kong mga budgets, yung mga districts, ‘di masyadong nagkakalayo ang amounts ng funding nila, especially sa DPWH. Bago sa akin ito na mayroong ilang districts na saksakan ng lalaki ang amount,” Sotto explained.

It maybe recalled that during the House Speakership row recently, this was raised as an issue against former House speaker and Taguig Rep Alan Peter Cayetano by the allies of Marinduque Rep and now current House Speaker Lord Allan Velasco — Negros Oriental Rep. Arnulfo Teves, 1 Pacman Partylist Rep. Mikee Romero and Oriental Mindoro Rep Doy Leachon. The lawmakers accused Cayetano of favoring certain lawmakers.

Velasco was sought for comment on the “horrol roll” appropriations of Lacson, but the House Leader zipped his lips.

Under his leadership, the House passed on final reading the proposed ₱4.5-trillion national budget for 2021. With 267 affirmative and six negative votes, the General Appropriations Bill was finally approved on October 16.

Behold God’s glory and seek His mercy.

Pause and pray, people

Publication Source :    People's Journal