Secured Transactions. Gay Santos, Operations Officer (Finance and Markets)

Transcription

1 Secured Transactions Gay Santos, Operations Officer (Finance and Markets)

2 Contents What do we mean by a Comprehensive Secured Transactions Reform? A Way Forward for APEC through the Cebu Action Plan Current Secured Transactions Regime The Project A Way Forward

3 Most MSMEs do not own real estate typically accepted by lenders as collateral in developing economies resulting to lack of access to finance among MSMEs In the past few years, some good progress made in secured transactions reforms (STR) in APEC economies in form of some major reforms (e.g., consolidated electronic registry and reforms in Australia, Vietnam, China and Mexico)... More needs to be done... Context

4 A True Comprehensive Secured Transactions Reform Entails the Following: It is more than the establishment of an electronic, consolidated and central registry This is just among the other elements that need to be in place Legal and institutional framework to facilitate the use of movable property as collateral for both business and consumer credit A shift in mind set among key stakeholders (government/legislators/judicial, financial institutions, MSMEs )

5 Operationalizing through the Cebu Action Plan (as recommended jointly with ABAC) APEC economies agree and commit to internationally accepted principles on Secured Transactions (e.g., UNCITRAL Legislative Guide on Secured Transactions) Leverage on each others knowledge and experience (e.g., APEC Financial Infrastructure Development Network to support APEC economies in developing enabling operational infrastructure for movable finance Secured Transactions Reform is now a critical part of Pillar 1-Financial Integration of the Cebu Action Plan

6 The Philippines: Secured Transactions The Philippines, as compared to other countries, i.e. China, Ghana, Vietnam and even Mexico, has already in place as early as the turn of the century (1906), a secured transaction legal environment, and a collateral registry. We have a diverse group of movable collateral accepted (of motor vehicles, and, standing crops, like rice, sugarcane, and other agriaqua commodities (quedan inventory financing) However, it is not maximized to the full potential and spirit of the law to increase trade and to increase access to finance to SMEs We need to keep up with the times and modernize laws governing movable collateral 6

7 DOF-LRA-IFC Project on Secured Transactions: Movable Collateral Reform IFC is working together in partnership with the Department of Finance and the Land Registration Authority on this reform In 2012, a Technical Working Group comprised of a diverse group of stakeholders (BAP, SEC, BSP, SME Groups etc.) was established and they came up with a framework document that provided recommendations on how to pursue a best practice secured transactions reform LRA adopted these recommendations as it enhanced its registry and move towards a web-based registry Today, we are reconvening the TWG to work together on drafting the law (what would work best in the context of the Philippines guided by the best practices) 7

8 What does this mean for you? We hope that you can be part of this effort For legislators/policy makers to champion this initiative For businesses and financial institutions to take proactive part in articulating what will work best to facilitate financing to SMEs taking into account balance of interest among debtors and creditors and striking a win-win situation for the overall economy For our relevant government agencies and also the financial institutions to help educate the public on responsible borrowing 8

9 Summary A reform will only have economic impact if three elements are present: - Modern legal and regulatory framework - Functioning registry. Modern technology is a must but not always possible. - Interest/willingness of banks and other lenders to use the system and to lend based on movable assets 9

10 Doing Business: Legal Rights Index

11 End Goal A True Reform should enable more credit flow to MSMEs, support growth of supply chains and help economies achieve inclusive and stable growth Bank Accounts Accounts Receivable Inventory and Raw Goods Intellectual Property Rights Industrial and Agricultural Equipment Durable Consumer Goods Agricultural Products (crops, livestock, fish) Vehicles

12 What Further Reforms are Required? Internationally Accepted Standards UNCITRAL Registry Guide and Legislative Guide on Secured Transactions World Bank Principles on Insolvency and Creditors Rights IFC Guide on Secured Transactions and Collateral Registries OAS Model Law 12

13 Thank You! The views and judgments of this presentation are those of the author. The conclusions and judgments contained herein should not be attributed to and do not necessarily reflect the views of IFC, or its management and Board of Directors, or the countries they represent. The author, by means of this document, is not rendering any professional advice or service, and shall not be responsible for any loss sustained by any person who relies on this presentation as a substitute for professional advice or service.

14 Annex

15 IFC to bring together all stakeholders via Workshop Commodities Goal: To improve commodity-collateralized financing in in Country X Warehouses MARD and MOIT To improve warehouse business licensing, competition and lien enforcement/dispute resolution Warehouse Receipts Assess and propose improvements in credit risk assessment and processes Techcombank and AMC Other Potential Banks Funding WHR Commodity Depositor IFC to assess agri warehousing sector - Extract lessons of experience across IFC &WB 15