THE PHILIPPINE central bank has pushed for amendments to the Warehouse Receipts Law of 1912, in which warehouse receipts financing would help provide loans for Filipino farmers and agriculture-based micro, small, and medium enterprises (MSMEs).
“Now, more than ever, we need to take a whole-of-society approach toward putting in place necessary and responsive elements that make lending to the agriculture sector viable,” Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla was quoted as saying during a forum last month.
The BSP on Nov. 8 held an online forum intended to gather support for the passage of legislation aimed at modernizing the Philippine warehouse receipts system.
The proposed changes to the Warehouse Receipts Law of 1912 aim to address the development needs of MSMEs and the agriculture sectors by allowing them greater access to loans, professionalizing warehousing activity through the accreditation of warehouses and their operators, and establishing an electronic warehouse receipts registry.
“International experience suggests that a well-functioning warehouse receipts system can support collateralization of post-harvest produce owned by farmers, traders, and processors, and held in licensed warehouses,” the BSP said in a statement on Monday.
“Countries that have implemented such a program have seen reduced post-harvest losses, improved stability of market prices, increased food security, and a heightened level of formalization of businesses within the sector,” it added.
Over 200 participants from several financial institutions attended the virtual forum, expressing their support for the reforms that would benefit the MSMEs and agriculture sectors.
It featured presentations from the International Finance Corp. and trade consulting firm TradeAdvisors on the elements of a dynamic warehouse receipts financing market and features of the proposed warehouse bill, respectively.
CARD Bank, Land Bank of the Philippines, and Rizal Commercial Banking Corp. representatives also provided their insights on the discussions.
“But while we fully recognize that enabling laws are necessary, they are not sufficient to develop a thriving warehouse receipts financing market that ultimately benefits MSMEs and the agriculture sector,” Mr. Medalla said.
“The concerted effort of all stakeholders is needed to make warehouse receipts finance work,” he added.
The MSMEs and agriculture remain among the most vulnerable sectors of the country’s population, despite accounting for a large portion of employment in the Philippines, the BSP said.
The central bank added that households headed by fisherfolk and farmers are among the poorest and the least banked in the country, with three out of 10 owning formal financial accounts.
Modernizing the Warehouse Receipts Law of 1912 could promote wider acceptance of warehouse receipts as credible collateral for bank loans, the BSP said.
The Financial Inclusion Steering Committee, chaired by the BSP, recommended the passage of the bill in the last Congress. — Keisha B. Ta-asan