Daraine Luton, Senior Staff Reporter
IF YOU are a farmer seeking agricultural loans but have been faced with the burden of providing traditional collateral such as land or a house title to a financial institution, the passage of the Security Interest in Personal Property (SIPP) Bill in the House of Representatives yesterday could mark a new day for your enterprise.
The bill, which is a requirement under the four-year Extended Fund Facility with the International Monetary Fund (IMF), allows for crops to be used as collateral to secure loans.
It was passed with 84 amendments and will now go to the Senate for consideration. Parliament must pass the bill by year end to meet the IMF target.
In piloting the bill through the House yesterday, Industry and Commerce Minister Anthony Hylton said the SIPP would "work a transformation within the financial community and will have an impact, not only on commerce, but particularly on the business of the micro, small, and medium-size enterprises, as well as be a fillip to the farming sector of this country".
Expanding credit opportunity
"This will revolutionise the financing sector. It will allow, for the first time, intangibles, including, in this regard, the intellectual property and other forms of personal property to now become part of the collateral that can be pledged to secure financing for business and will expand greatly the opportunity for credit in this country," Hylton said.
Richard Parchment, member of parliament (MP) for South East St Elizabeth, said that if financial institutions were prepared to change their mindset from requiring hard collateral, it could mark a major stimulus to farming.
"We were referred to as the Breadbasket, but with this piece of legislation, the Breadbasket is going to overflow," Parchment said in relation to his parish.
Opposition backbencher Delroy Chuck also welcomed the legislation, saying it provides an opportunity for Jamaicans to start and expand business.
"If you have institutions which are prepared to open themselves to that sort of access to credit, it could be a major building block for economic activity in this country," Chuck said.
West Rural St Andrew MP Paul Buchanan said: "The legislation is most welcome in reversing the trend in social decay in areas where the mass of the population lives. Hopefully, the banks will now come on-board because that is the real test of the paradox of thrift, where savings is supposed to be positive, but in the context of our inner city and rural areas, it is negative," Buchanan argued.