Philippines Among Best Microfinance Environments

February 20, 2013, 7:21pm

The Philippines is a global leader in microfinance, having one of the best business environments for microenterprises. It ranked 4th out of 55 countries in the annual global survey “Global Microscope on the Microfinance Business Environment 2012,” released in 2012 by the London-based think-tank Economist Intelligence Unit (EIU). The Philippines posted a two-notch improvement from its 6th ranking in 2011. The report highlighted the country’s stable market and reforms initiated by public and private institutions to develop an enabling microfinance environment.

The EIU said the rankings recognized key efforts of the Bangko Sentral ng Pilipinas (BSP) such as raising the ceiling for “microfinance plus” that microenterprises and small businesses can avail of to fund their operations. Microfinance originally financed microenterprises or small livelihood activities but BSP expanded loan products to include microfinance housing, micro-agri loans, micro-insurance, and micro-deposits. There are 202 microfinance institutions operating in the Philippines.

In the 2nd quarter of 2012, the BSP, in Circular No. 748, eased its guidelines on microfinance lending to allow banks to disburse more funds in the countryside for agriculture and agrarian reform sectors. The BSP,  in Circular No. 782 on January 21, 2013, raised the threshold of microfinance clients to allow low-income clients access to credit such as housing microfinance. Low-income are those with income below P17,000 a month or P206,000 per year.

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Microfinance is a way of providing financial services to entrepreneurs and small businesses lacking access to conventional banking. In the Republic of the Philippines, microfinancing is an activity dominated by rural banks, non-government and people organizations, with support from international donors. Rural and cooperative banks provide financial services to over 85 percent of cities and towns, under the Micro-enterprise Access to Banking Services of the Rural Bankers Association of the Philippines, supported by the United States Agency for International Development.

We congratulate the Bangko Sentral ng Pilipinas, headed by Governor Amando M. Tetangco Jr., in its efforts to promote microfinance as one of the powerful programs of the Philippine economy. CONGRATULATIONS AND MABUHAY!

Look Before You Leap - A Guide to Choosing Mutual Funds

By Angela Stephan Heasley

Mutual funds are usually considered to be a risky venture. But that risk only comes when unwise decisions are made. The fault often lies in shoddy research, which leads to ignorance and assumptions. It isn't a simple matter, choosing where to put your money. You need to make sensible decisions - and for that you need to make sure that you have all of your facts straight. The best way to do that is to research. But what do you look for? The first thing to check is how the fund functions. Some mutual funds companies invest in small and medium-cap stocks while others prefer large-caps. Know which company invests where and you'll be closer to knowing how it performs. Another thing to look at is how well is has performed in the past, It might not show how well it will perform in the future, but at least you know that if there are very great ups and downs in their investment choices. You're better off choosing a steady fund, not a very volatile one. This is where you need to pay attention to who heads the fund. If there has been a recent change in who makes the decisions, then you might want to wait and watch their decision-making and its effects before you sign up.

Size also matters - if the fund is too large, it might have assets that are sitting idle. If the fund is too small, it might easily go belly up because there are too few investors. Choose a fund that is not too large but is still established long enough to be known about in the market. This neatly leads to the matter of fees. Whether or not you make a profit, you'll end up paying your fees. This is why you need to make sure that it doesn't eat into your pocket. If the firm's turnover rate is high, you'll find that it'll eat into your fees. The turnover rate is how frequently the firm trades - that is, how many times it buys and sells stocks. Trading incurs taxes, which you'll end up paying for. Keep that in mind.

You need to look at how the mutual fund works and more important, whether the working suits your needs. Undoubtedly, every firm offers you the option of a systematic investment plan - look at how viable an option that is for you. After all, it might be better than investing a lump sum and then seeing the firm close down. These are just a few things to look at before you agree to invest in a firm.

Mutual funds companies offer various types of investment plans, but systematic investment plan is good as compared to other plans.

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