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SMALL & MEDIUM ENTERPRISE DEPT

SMALL & MEDIUM ENTERPRISE DEPT. Briefing Material For Madame Chair Hon. Patricia Sto. Tomas Office of the Chairman 14 August 2006. SMALL & MEDIUM ENTERPRISE DEPARTMENT. VISION STATEMENT

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SMALL & MEDIUM ENTERPRISE DEPT

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  1. SMALL & MEDIUM ENTERPRISE DEPT Briefing Material For Madame Chair Hon. Patricia Sto. Tomas Office of the Chairman 14 August 2006

  2. SMALL & MEDIUM ENTERPRISE DEPARTMENT VISION STATEMENT We are the lead unit in the Development Bank of the Philippines for the development of small and medium Enterprises (SMEs) into a dynamic and strategic sector in the Philippine Economy. MISSION STATEMENT To design and manage banking and related services that address the financing needs of small and medium enterprises in agri-business, industry and services. The SME Department provides a catalytic influence in mobilizing resources, expertise and institutional involvement to support the development of the nation’s SME sector.

  3. SMED: GOALS • Development of the Country’s SME Sector for SME industries to become major national and international players. • Effectiveness in SME Financing through program development and management. • Public Perception that DBP is also an SME Bank, and fulfills its mandate as the country’s premiere development bank.

  4. SMED: CORE FUNCTIONS • Development and management of SME Financing Programs (Except those under other priority development programs as Infra & Logistics, Environment and Social Services). • Capability building initiatives for specific SME industry groups. • Influencing the funding of “Supply Chains” for the delivery of the financing programs to specific SME industry groups.

  5. SMED: CORE FUNCTIONS • Catalyzing other SME stakeholders into effective and consistent support for SME development. • Management of the IGLF facility and provision of support structures under SMED. • Assistance in other DBP (long term) initiatives related to the further development of the SME sector.

  6. SMED: FUNCTIONAL CHART • SMED HEAD • SMED Mgt • IGLF Admin IGLF ADMIN ASST Secretariat & other supports INDUSTRY & AREA PROGRAM DEV’T PROJ EVALUATION STUDIES & MANAGEMENT & MONITORING • Industry, area and • supply chain studies • Coordination w/ • partners in TWGs • Technical references • & external data reqts • Outsourcing of special • expertise & data links • Incubation facility for • new ideas/tech • Development of SME • Financing Programs • Evaluation of SME • program proposals for • DBP financing • Implementation of • industry & delivery • system interventions • Management of the • network of BACs • Admin/tech assist- • ance for IGLF • Risk mgt and controls • Coordination with all • Bank support units • Coordination with fund • sources & Treasury • Preparation of SMED • budget, performance • reports & MIS req’ts

  7. SMALL AND MEDIUM ENTERPRISEProposed Organizational Chart NOTES: 1/ Function performed by M. Pagaragan, Jr. SL 16, item with OP & CEO 2/ To be converted to PDO II once vacated New, Filled Existing, Flled New, Vacant Existing, Vacant Existing plantilla positions are those transferred from PD II

  8. SMALL AND MEDIUM ENTERPRISEProposed Working Set-up To be Filled up NOTES: 1/ Function performed by M. Pagaragan, Jr. SL 16, item with OP & CEO 2/ To be converted to PDO II once vacated New, Filled Existing, Filled New, Vacant Existing, Vacant Existing plantilla positions are those transferred from PD II

  9. SMED: SUMMARY OF PROPOSED ORGANIZATIONAL SET-UP

  10. DBP SME PORTFOLIO ENTERPRISES IN THE PHILIPPINES (2001) MICRO SMALL MEDIUM LARGE TOTAL Number743,949 61,762 2,923 2,958 811,592 % Dist91.7 7.6 0.3 0.4 100.0

  11. CONCERNS IN SME CREDIT • Below Economic Loan Size > Course credit through PFIs > Lending to/thru Industry Associations > Loan initiation & processing by BACs • Lack of Reliable Financial Statements/ Other Info > FS recasting by BACs > Accounting services > Info Feedback from Industry Association • Lack of Collateral > Guarantee scheme > Transactional/Cash flow based financing > Track record sourced from Industry Association

  12. SMED: LINE-UP OF PROSPECTIVE SME FINANCING PROGRAMS

  13. SME SUPPLIERS & SUBCONTRACTORS FINANCING PROGRAM SME DEPT FACTORING DEPT • PRODUCTION • PRE-SHIPMENT • EXPANSION • MODERNIZATION INSTANT WORKING CAPITAL BB ENTERPRISE SME SUPPLIER SUPPLIES RECVBLES

  14. SME EXPORT FINANCING PROGRAM • Books/administers • availments/pay- • ments from • Credit Facility DBP MKG UNITS SME DEPT. • Develops and • monitors financing • program for • industry group. • Manages Credit • Facility and serves • as conduit to its • member firms PFI/ INDUSTRY ASSN BAC/ SPEED • Provides technical • assistance to both • the PFI/IA and its • members • Borrows from IA’s • Credit Facility for • purposes qualified • under the Program. SME/ MEMBER NOTE: Guarantee Cover by PhilEXIM being arranged.

  15. SMED: DISTRIBUTION CHANNELS • Participating Financial Institutions: Through FI’s accredited PFIs. • Industry Associations: To serve as conduit for the target SME industry group. • Marketing – Branches Sector: Through the RBC host branch. • SPEED-BACs: BACs to supplement branches and PFIs in the delivery of SME financing.

  16. BACKGROUND ON BACs SPEED: Sustainable Partnership for Energizing Entrepreneurship Development • To encourage, promote and assist the growth of countryside mSMEs. • Establishes Business Assistance Centers in key areas to serve like one-stop-shops. • Partners include private/state universities/ colleges, DTI, DOST & NGOs. • BACs offer e-services for the marketing of mSME products, business counseling, project development and financial advisory.

  17. KEY RESULT AREAS OF BACs Number of mSMEs Assisted: • Access to Markets > registered mSMEs in DBP websites > business matching/subcontracting > e-stores established & maintained • Access to Credits > projects referred to MFIs/PFIs > amount of financing requested & approved • Access to Technical Assistance > projects referred to DOST, DTI, NGO, etc. > other types of assistance (specify)

  18. ADDITIONAL FUNCTIONS OF BACs • Assistance in the preparation of industry group and area studies for SME program development. • Building up of prospective list and marketing list for SME financing programs. • Building up of information for credit folders of SME loan applicants in DBP/PFIs. • Assistance in the processing of SME loan applications in DBP branches. • Assistance in monitoring of SME loan accounts endorsed by BACs to DBP for approval.

  19. LOCATION & PRIORITIZATIONCRITERIA FOR NEW BACs • Number of mSMEs:candidate locations should have at least 5,000 mSMEs. • Regional dispersal: to form nationwide network (at least 1 per regional group). • “Developmental” BACs:those in regional city centers that do not have minimum number of mSMEs. • Host university:should have undergraduate and, preferably masteral, business courses.

  20. EXISTING BACs

  21. PROPOSED BACs, 2006

  22. “DEVELOPMENTAL” BACs, 2007

  23. GEOGRAPHIC SPREAD OF BACs LEGEND EXISTING NEW, 2006 DEVELOPMENTAL (2007)

  24. SMALL & MEDIUM ENTERPRISE THANK YOU

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