MANILA, 16 July — Talk to the major players in the Philippine capital and financial markets these days and you would never suspect that the markets have been in the doldrums for quite a while. Actually, one could not remember the last time seeing these people in such joyous mood. And that’s because of the long absence of good news to perk them up. In an instant, however, all of them are acting like winners. We mean, big winners!
Members of seven big associations representing the country’s financial and capital markets have all the reason to rejoice after a recent meeting with President Gloria Macapagal Arroyo. No less than the president has assured them that the government would do everything it could to bring back investors’ confidence in the country.
At the same forum, the Association of Securities Analysts of the Philippines, Fund Managers Association of the Philippines, Financial Markets Association (ACI Philippines), Investment Companies Association of the Philippines, Investment Houses Association of the Philippines, Money Market Association of the Philippines, and the Trust Officers Association of the Philippines presented their collective proposal to the president for the creation of a multi-sectoral financial and capital markets advisory council to work toward reforms that could reinvigorate the badly battered markets.
The president welcomed the proposal to create an advisory council, and she named Finance Secretary Jose Isidro Camacho as the government’s representative to the multi-sectoral advisory body. Assuring the seven business groups of her support, she said the government would be taking bold steps in rationalizing and harmonizing the reforms proposed by the private sector. However, Arroyo reiterated that restoring investors’ confidence should be the primary objective of the industry and her administration because without this all the gains that the proposed reforms could bring would be useless.
The local markets suffered a beating when portfolio investments left the country, particularly at the height of the political turmoil that led to the ouster of former president Joseph Estrada. The high-profile hostage taking in Mindanao worsened the situation. Nevertheless, significant portfolio inflows were noted after the president signed into law last month the power reform bill, which would pave the way for the restructuring of the power industry and the privatization of the state-owned National Power Corp.
Official figures showed that net portfolio inflows reached $27.8 million from January to June 22, reversing a net outflow position a year earlier. Analysts attributed this to the positive response of some foreign fund managers to the government’s passage of the power reform law. Analysts, however, said the perception of political instability among foreign investors limited the entry of more foreign funds.
‘The lack of clear direction, coordination and concerted action has derailed structural reforms in our country,’ an investment house manager said, adding that market players have been urging the government to support their initiatives that are geared toward fueling the growth of the country’s primary and secondary financial and capital markets.
Based on the proposal they submitted to the president, market players would want the 12th Congress to pass laws ‘that would overhaul decades-old regulations and practices in the investment arena.’ Their list of laws that need updating include the Personal Equity Retirement Act, Revised Investment Company Act, among others. The group is also pushing for a law that eliminates documentary stamp tax on secondary securities, and the completion of the proposed Securitization Act.
The business groups is also asking the Securities and Exchange Commission, the agency that regulates market activities, to adopt and strictly implement a uniform disclosure standards, particularly in relation to accounting practices, reportorial format and ownership. Meanwhile, the group applauded the president’s declaration of support for initiatives to review and amend the Securities Regulation Code.
