THE Development Bank of the Philippines is studying the possibility of establishing a venture capital fund to assist small businesses, according to DBP chair Patricia A. Sto. Tomas.
“Venture capitalism is something that we need to look into,” said Sto. Tomas after presiding over the development bank’s first out-of-town regular board meeting in Davao City last week. The bank also organized a Mindanao forum for members of the business sector at The Marco Polo Davao the following day.
Sto. Tomas said the establishment of a venture capital fund could take shorter than two years, depending on whether it will fit into the bank’s original mandate. Whether the Bangko Sentral ng Pilipinas (BSP) will approve it is another issue that is being considered, she said.
One way to address it is for the bank to create a subsidiary that will become the handler of the fund, she said, adding that the issue will be discussed in the program and policy development division of the bank, a division headed by Rey Magno Teves, its director from Mindanao.
The issue on venture capitalism was floated by Simeon P. Marfori II, president of the Davao City Chamber of Commerce, who urged the bank to consider the formation of the fund to grow small and medium enterprises.
“They (bank) need to do more,” said Marfori, pointing out that the bank, being mandated to fund development programs, must look into how it can help small businesses, particularly those in Mindanao which have difficulty in accessing funds from financing institutions.
Marfori even challenged the bank to drop the collateral-based framework and adopt the “character and credit-worthiness mechanisms” in extending loans to smaller businesses. He said by doing so, the bank will have a better opportunity to help those who are in need of financial help.
Although agreeing that official development assistance funds have specific targets, Marfori said the bank can discuss with donor agencies on how these funds could be diverted to developing smaller businesses.
By doing so, he said, smaller businesses will be able to eventually grow and become engines of growth in Mindanao .
Marfori said he would write the bank about his proposals.
Sto. Tomas, however, said the bank has to become conscious in taking the steps suggested by the business sector considering that, like other banks, it is regulated by the BSP.
“The problem is that we have to conform with regulations,” she said, although agreeing that there is a need to look into the proposal.
Reynaldo G. David, bank president, also challenged the Mindanao business sector to come up with worthy projects because the bank is ready to fund them. “You bring us the projects,” he said.
David said that he was “happy with the activity” because the bank was able to level off with the business community. “We think Mindanao is a ready growth area,” he added, pointing out that the bank will push for funds for key projects in the regions of the island. [AD]
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