President's Message
Atty. Benedicta Du-Baladad Message from the President:

Benedicta Du-Baladad

To FINEX members and friends,

November 2017 Issue

We are now on the final stretch of 2017. This year has been one of the busiest and exciting for both FINEX and the country.

Earlier this month, our country was once again placed in the limelight as we hosted this year’s ASEAN Summit. The summit provided us to showcase what our country can share to the world and the creativity of the Filipino people. Indeed, the recent hosting of the ASEAN summit placed our country

Read More
When government programs work
Print PDF

September 29, 2017

When government programs work

FINEX Folio is a rotating column of members of the Financial Executives Institute of the Philippines appearing every Friday in BusinessWorld, opinion section.

For this column, I want to share with readers the performance of a small fund, the Industrial Guarantee and Loan Fund (IGLF), which has quietly but consistently served the MSME sector over 65 years now. The story of IGLF shows that there are government programs that work, as long as it is managed professionally and kept free from as much political interference as possible.


A few years after World War II, during the trying period of rehabilitation, the Philippines signed an Economic and Technical Cooperation Agreement with the United States of America (US). The IGLF was established through a Counterpart Project Agreement entered by and between the Philippine Council for United States Aid and the Mutual Security Agreement. It was created for the purpose of providing assistance to local enterprises engaged in export-oriented activities like mining and manufacturing. Specifically, the purpose of the IGLF was: “To encourage and assist in the establishment, expansion and refinancing of small and medium-size industrial, mining and other enterprises, but with emphasis on small-scale industries.” Administration of IGLF was a function of the former Central Bank of the Philippines and was transferred to the Development Bank of the Philippines effective August 1990. The IGLF under the Development Bank of the Philippines encouraged MSME loan availments in the countryside, promoted industry dispersal and pushed for more value-adding enterprises. Moreover, it aligned with the MSME Development Plans of the country. It established the IGLF Grant for Research and Promotion to support the technical assistance, developmental, promotion and capacity building needs of MSMEs.

IGLF has also been a major fund contributor to the Credit Surety Fund, a credit enhancement scheme conceptualized by the Bangko Sentral ng Pilipinas which aims to improve the bankability and credit worthiness of capital-short micro, small and medium entrepreneurs. The goal is to open up lending opportunities to entrepreneurs deemed unbankable for lack of collateral. In fact, while BSP won a Governance Award for its credit surety fund initiatives, IGLF has been instrumental in making this happen not just in the funding side but also in its strategic formation and training needs.

Now, in its 65th year of existence, the IGLF has built a solid track record of helping Filipino entrepreneurs.


IGLF’s performance continues to indicate favorable management of resources. It has paid out all its foreign obligations to the World Bank and with only the Asian Development Bank having a remaining balance of P305 million. IGLF has grown the government’s initial investment of P803 million to P6.8 billion today. Average net income from 2013-2016 of P110.74 million translates to an average return on total assets of 1.7%.

Loan portfolio has also continued to grow. Outstanding balance in 2014 rose by 68%, from P1.97 billion to P3.31 billion and in 2015 it again increased by 36% or P1.17 billion. In 2016, loan portfolio expanded by 25%, registering significant growth to P5.59 billion from P4.49 billion in 2015.

This robust performance demonstrates IGLF’s drive to push even further its commitment to support micro, small and medium enterprises with their credit needs. As IGLF assists MSMEs in their ventures, they are able to help increase livelihood and economic opportunities, and make their lives better in their respective communities. The historical record of IGLF over the past six decades is an affirmation of its significant contribution to SME development.


An evidence-based impact evaluation of the IGLF program by the World Bank had encouraging findings. One, the small and medium industry (SMI) lending was an inexpensive way to support the creation of new jobs, albeit with little effect on directly reducing poverty. SMI lending should be considered as part of a social safety net in only the broadest terms. Second, the SMI lending through financial intermediaries supported banking sector soundness and almost certainly helped the economy sustain the shocks which its neighbors experienced. Third, the credit risk of the commercial banking sector was reduced as the repayment record of assisted SMIs was considerably better than that of larger firms. Fourth, SMIs already confront higher real borrowing cost because they have higher transaction costs and could use more flexible financial products.

The IGLF is one rare government program that has grown and stood the test of time. It is one success that the administration can build on as it confronts the more complex and uncertain challenges confronting the Philippines’ small and medium industries today.

The views expressed herein are his own and does not necessarily reflect the opinion of his office as well as FINEX. Benel D. Lagua is Executive Vice-President at the Development Bank of the Philippines. He is an active FINEX member and a long time advocate of risk-based lending for SMEs.

Forecast and prediction

Manila Times(FINEX FILES)
January 05, 2018

Forecast and prediction

'Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.'Warren Buffett

People often ask me – “What’s going to be the price of bitcoin at the end on 2018”. Without any statistical basis, my unremitting retort is – “I don’t know”.

Golden FINEX rising
J. Albert GamboaBy J. Albert Gamboa

January 5, 2018

Golden FINEX rising

1968 was the year that changed the world, according to Time magazine. Civil rights leader Martin Luther King, Jr. and US presidential candidate Robert Kennedy were assassinated. A youth rebellion paralyzed France and students took over Columbia University in New York. Czechoslovakia tasted freedom for a brief moment in the Prague Spring; Mexico City hosted the Olympics; and the Tet Offensive became the turning point of the Vietnam War.

The Philippine Basketball Association will not die
Zoilo By: Zoilo "Bingo" P. Dejaresco III

January 3, 2018

The Philippine Basketball Association will not die

There were fears politics would put an end to the highly popular Philippine Basketball Association (PBA) tournaments a few weeks ago over a controversial trade involving franchise player Christian Standhardinger.

What to expect in 2018
Mr. George S. ChuaBy Mr. George S. Chua

MANILA BULLETIN (Business Option)
January 2, 2018

What to expect in 2018

My crystal ball tells me that the letter T will loom large in 2018, actually 4 of them, Taxes, Trans portation, Telecommunications, and Tourism. With the recent signing into law of the first phase of the tax reform package, we can see a mixed bag of results that will benefit certain sectors and be disadvantageous to others. Low income earners with an annual income of not more than R250,000 will no longer have to pay any taxes. That is certainly good news for them,

Ethics in media
By Mercedes B. SuleikBy Mercedes B. Suleik

MANILA BULETTIN (Business Option)
December 26, 2017

Ethics in media

The use that people make of the media of social communications can bring about great good or great evil. Today we move in an “information age” wherein all sorts of images, messages, perceptions, and ideas assault our senses every day. Not only is media able to influence society, but they can actually propose ideas and models of behavior that impinge on the whole world.

A Christmas Message
By Dr. Conchita L. ManabatBy Dr. Conchita L. Manabat

December 22, 2017

A Christmas Message

Christmas is one day in a year where most Filipinos take the time and effort to prepare. To some, the preparation commences once the “ber” months start. And of course, there is the usual last minute rush to gear up for it.