BSP to banks: Lend more

LEGAZPI CITY, ALBAY - The Bangko Sentral ng Pilipinas is starting to get upset as the banks continue to just place their excess funds with the central bank's special deposit accounts (SDAs) instead of bolstering their lending activities. "If we have more investment [activities], then there will be more demand for loans or credit [and less compulsion to invest in SDAs]," an impatient Amando Tetangco Jr. told reporters in Legazpi, Albay. He said the unhealthy preference by banks to invest more or less P900 billion worth of funds in special deposits instead of taking the risk by lending to businesses and households should weaken as investment activities pick. "What we need is more investments, particularly in the real sector, to increase the absorptive capacity of the economy," he said, pointing out that the Philippines ranks among the lowest in the Asia Pacific in terms of investments. According to the Finance Department, the Philippines falls "below 15 percent of local output" or the gross domestic product (GDP). Meanwhile, other countries in the region enjoy investment rates of 45 percent of GDP or even higher. Tetangco said he appreciates Albay governor Joey Salceda's efforts in optimizing the potential of his province by engaging in infrastructure and capacity-buildup programs that not only empower Bicolanos but power the rest of the country. Bicol's economy, he said, strengthened by 8.2 percent in 2009 after the province invested in its own people and pursued an infrastructure buildup program. "In 2009, when traditional growth areas generally slowed down and the national GDP was a modest 1.1 percent, Bicol's GDP increased by an impressive 8.2 percent," he said. - JE/OMG, GMANews.TV