The MSME magna carta needs a major update

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The Magna Carta for micro, small and medium-sized enterprises (MSMEs) needs to be changed to make it fit for the times, a lawmaker has said.

“I wouldn’t say there’s anything ‘wrong’ with the Magna Carta for MSMEs, as long as we need to update it,” said Jose Ma, Albay’s second district representative. Clemente,” Joey Salceda told the Manila Times.

“It had its day when it was enacted almost 15 years ago. Today, MSMEs have radically changed in character and we have new laws which replace those referred to. [in the magna carta],” he said.

One of these laws is the Business Recovery and Business Tax Incentives (Creation) Law.

The MSME magna carta “always makes reference to the Omnibus Investment Code, particularly in relation to simplifying the use of tax incentives under this Code,” Salceda explained.

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“Of course, that’s been superseded by the Create Act, which of course is size-neutral except for investments above $1 billion, which it seeks to attract. We can change the magna carta so that it refers to and is compatible with Create,” he said. said.

Enacted in 1991 as Republic Act 6977, the magna carta was amended by Republic Act (RA) 8289 in 1997 and amended by RA 9501 in 2008.

Several bills have been introduced in the House of Representatives to amend the Magna Carta for MSMEs.

One of the provisions subject to change is Article 15. Until 2018, Article 15 required that “all credit institutions as defined by the rules of Bangko Sentral ng Pilipinas” reserve at least 8% of their total loan portfolio to micro and small enterprises and at least 2% for medium enterprises “based on their balance sheet at the end of the previous quarter”.

Five House bills as well as one in the Senate seek to ensure that magna carta requires lending institutions to set aside at least 10% of their total loan portfolios for MSMEs, provided that a maximum of 1 % is intended for medium-sized companies.

Additionally, among the proposed amendments is one that requires automatic provisional approval of MSME permit and license applications from local government units. The changes are incorporated into Bill 9178, which passed third and final reading in 2021.

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