MOBILIZING INVESTMENT FOR LOW- MISSION …asialeds.org/sites/default/files/PPT Elaine_AGRI-AGRA...
Transcript of MOBILIZING INVESTMENT FOR LOW- MISSION …asialeds.org/sites/default/files/PPT Elaine_AGRI-AGRA...
MOBILIZING INVESTMENT FOR LOW-EMISSION DEVELOPMENT IN ASIA’S
AGRICULTURE SECTOR
Elaine B. Pagkanlungan
HO CHI MINH CITY, VIETNAMOctober 28, 2015
HISTORICAL PERSPECTIVE
Presidential Decree 717 or the Agri-Agra Law - signed by then President Ferdinand Marcos in May 29, 1975 to facilitate credit for agri-agra sector and spur productivity
Over the years, Congress and the Bangko Sentral ngPilipinas (BSP) have expanded the means of compliance with the law to include alternative modes
Congress proposed various measures to correct flaws. Department of Agriculture consulted various farmer groups in the course of amending PD 717.
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Republic Act No. 10000 – an Act providing for an Agriculture and Agrarian Reform Credit & Financing System through Banking Institutions approved on February 23, 2010.
Implementing Rules and Regulations (IRR) – signed on July 14, 2011
Circular No. 736 , on the IRR issued by Bangko Sentralng Pilipinas on July 20, 2011
Implementing Agencies: BSP, Department of Agriculture (DA), Department of Agrarian Reform (DAR)
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Policy of the State:
Promote equal access to opportunities under anenvironment of sustained growth and expandingproductivity as the key to raising the quality of life for all.
To achieve this:
The State shall promote rural development by enhancing access of the rural agricultural sector to financial services and programs that increase market efficiency and promote modernization in the rural agricultural sector.
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Agriculture and Agrarian Reform Credit – refer to loans granted for the following activities and purposes:
Agricultural production and processing
Promotion of agribusiness and exports
Acquisition of work animals, farm and fishery equipment and machinery
Acquisition of seeds, fertilizers, poultry, livestock, feeds and similar items
Acquisition of lands authorized under the Agrarian Reform Code of the Philippines
Construction, acquisition and repair of facilities for production, processing, storage, transportation and marketing and other facilities
Efficient and effective merchandising of agricultural and fishery commodities stored and/or processed by the facilities
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Other activities that include:
Procurement of agriculture and fisheries products for storage, trading, processing and distribution
Acquisition of water pumps and tube wells for irrigation
Working capital for fisheries and agriculture graduates and for long gestating projects
Agribusiness activities which support soil and water conservation and ecology-enhancing activities
Irrigation systems that are designed to protect the watershed
Credit guarantees on uncollateralized loans to farmers and fisherfolks
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Credit Quota – “All banking institutions, whether government or private, shall set aside at least twenty five percent (25%) of their total loanable funds for Agriculture and Fisheries credit in general, of which at least ten percent (10%) of the loanable funds shall be made available for agrarian reform beneficiaries.”
Credit quota is subject to review after 3 years by the implementing government agencies
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Direct Compliance for Agriculture
Actual extension of loans to qualified borrowers
Bond issues for on-lending to the agriculture and agrarian reform sector by DBP/LBP
Special Deposit Accounts maintained for on-lending to the agriculture and agrarian reform sector of BSP accredited rural financial institution
Wholesale lending of other banks for lending to the agriculture, fisheries and agrarian reform sector of BSP accredited rural financial institutions
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Allowable Alternative Compliance
1. Eligible securities
Investment in bonds issued by Development Bank of the Philippines and Land Bank of the Philippines
Investment in other debt securities
Paid subscription of shares of stock in accredited rural financial institutions (preferred shares), Quedan and Rural Credit Guarantee Corporation, or Philippine Crop Insurance Corp.
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Allowable Alternative Compliance
2. Loans and other credits
Investment in SDAs of BSP accredited rural financial institutions
Wholesale lending
Rediscounting facility granted by UBs/ KBs to other banks covering agriculture and agrarian reform credits
Actual extension of loans for the construction and upgrading of infrastructures including farm to market roads and post-harvest facilities; and other public infrastructure
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Allowable Alternative Compliance
2. Loans and other credits
Loans to NFA and NFA registered warehousemen/ millers/ wholesalers Actual extension of loans to borrowers
Purchase of eligible loans on a “without recourse” basis from other banks and financial institutions.
Loans to Barangay Micro Business Enterprises (BMBE) – computed at twice the amount of the outstanding balance of the loans
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Excess compliance in the ten percent (10%) agrarian reform credit may be used to offset a deficiency, if any, in the fifteen percent (15%) other agricultural credit, but not vice versa.
Administrative sanctions/ penalties on the lending institutions for noncompliance/ under compliance –computed at One-half of one percent (0.5%) on a quarterly basis.
Collected penalty – 90% allocated to AGFP and PCICequally and 10% to BSP to cover administrative expenses.
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Application in DBP
1. Prepared programs on Agribusiness, tree plantation, forestry and Fishery
2. Boost loan availments on agriculture projects to improve compliance through
Program presentations, meetings, briefings Coordination with the Department of Agriculture, Department of
Agrarian Reform, Department of Environment & Natural Resources(DENR), and other government units
Coordination with farmers’ groups, cooperatives, associations Networking activities such as joining forums, expo, conferences on
agriculture Use of media such as print media (brochure), newspaper, radio
interview
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Compliance with Agri-Agra Reform Credit Act as of March 2015
In Billion Pesos All BanksUniversal & Commercial Banks
Thrift Banks
Rural & Cooperative Banks
TOTAL LOANABLE FUNDS GENERATED
2,331 2,158 117 55
MINIMUM ALLOCATION
1. 10% Agra2. 15% Agri
233349
215323
1117
58
COMPLIANCE WITH AGRA 28 (1.24%) 17 (.79%) 2 (1.99%) 9 (17%)
COMPLIANCE WITH AGRI 364 (15.65%) 334 (15.51%) 11 (9.44%) 18 (34.15%)
TOTAL COMPLIANCE
1. Direct Compliance2. Alternative Compliance
3. Total
177216393
138213351
11213
27.4328
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
DBP Compliance as of June 2015
Net Loanable Funds Generated 14.36 B
Agrarian Reform Loan (10%) 1.43 B
Utilization/ Compliance 52.2 M (36.38%)
Deficiency – 1.38B 1.38 B
Other Agricultural Credit Loans (15%) 2.15 B
Utilization/ Compliance 3.14 B
Excess 991 M
Deficiency 393.3 M
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Computation of Penalty
Amount of Deficiency - 1.384M
x Rate per quarter 0.125%
Amount of Penalty per Quarter - 1.73M
DBP Compliance as of As of September 2015 - 30.89B
Amount of Penalty - 5.4M
PHILIPPINES AGRI-AGRA REFORM CREDIT ACT OF 2009
Actions Being Undertaken
Intensified promotion of credit financing programs for the agriculture and fishery sectors by DBP
Implementing agencies coordinate with banks regarding concerns in implementing the Agri-Agra law.
The government provides financial support to 2 government agencies the AGFP and PCIC for the provision of guarantee/ insurance to farmer borrowers in obtaining bank loan.