Check Rediscounting Facility

Here's part of a speech I wrote for my boss. This will give you an idea of the new Check Rediscounting Facility of the Cebu-GTH.

How does government assist exporters, particularly those based in Cebu, to face up to the challenge from the domestic and international fronts?

I believe one of the essential steps we need to take is to help their suppliers and subcontractors who contribute 85% of the production process.

The Philippine Export-Import Credit Agency (PhilEXIM) recently provided the Cebu-GTH Foundation Twenty-Five Million Pesos (P25M) to open a Check Rediscounting Facility for the benefit of subcontractors of members, paving the way for easier access to funding in order to purchase raw materials for production.

In Cebu, we all know that exporters rely heavily on subcontractors for their production. It is a sad reality that subcontractors are often confronted by lack of capital which compels them to regularly borrow money from usurers, who charge interest rates between 10-20%.

That is why I am happy to know that the Cebu-GTH Foundation has agreed to provide assistance to its members by way of this Check Rediscounting Facility.

This is a first in the country where an industry foundation tries to professionalize a common practice among subcontractors. Documents such as promissory note, request for availment, job order and post-dated check will have to presented to the creditor in order for a loan to be released.

PhilEXIM, which provided financial assistance to the Cebu-GTH, is a government financial institution attached to the Finance department that is mandated by the government to assure the export sector's speedy and unobstructed access to trade finance.

This is just one way for government to assist exporters who are currently affected by the strong peso.

Government is acknowledging the huge contribution of exporters to the Philippine economy and is doing everything it can to ease their burden.

In any economy, exports provide an opportunity for rapid growth since the other components of National Gross Domestic Product (GDP), such as government spending, consumer spending, and investments may be impacted by other dynamics central to the country itself, and may not grow as fast as the export sector, as has been shown in recent years.

Growth in exports leads to greater employment opportunities and fosters greater productivity which, in turn, allows specialization to occur. In time, as higher rates of economic growth are sustained, a leveling in skewed income distribution takes place.

Exports, in other words, constitute a viable and effective tool against poverty.

Checking on our statistical data, the Philippines’ export landscape has drastically changed in the last 25 years. From being largely agricultural and resource based, exports today consist mainly of manufactured items. Resource-based products have gradually shrunk to a little above 5% of total trade. This means that the export industry is hiring a lot more subcontractors to produce items than they did years ago.

It goes without saying that the DTI will always be supportive to the Philippine export sector.

However, let us bear in mind as we face the global challenge that what happens to us is entirely in our own hands. That is why initiatives such as this Check Rediscounting Facility to ease fund availability for subcontractors is significant.

With this, I would like to encourage those concerned to avail of the new service facility of the Cebu GTH foundation for their liquidity needs.

Let us all support this project.