"Without the growth of the investment banking industry, of capital markets, and the symbiotic linkages amongst large scale corporates such as PLDT for example, and downstream businesses that service major industries, the task of getting on the proper development path is more difficult," Pangilinan said.
During the recent induction of officers for the Investment House Association of the Philippines, Pangilinan offered a plan of action which stakeholders throughout the Philippine financial services sector should undertake.
First, he noted that the future of the capital market and investment banking industry will be influenced by the direction of government’s regulatory and monetary policies. Normal conditions must be obtained so that the maturity patterns of interest rates can induce savings to move across a broad spectrum – from short to long term. This, Pangilinan said, is what Thailand has done to stimulate a local bond market.
Secondly, he emphasized the need for structural reforms, such as the need to strengthen the complex and vague tax regime, the passage of the bill providing for elimination of the documentary stamp tax on secondary trading, and the Securitization Act which would help foster the growth of an asset-backed securities market.
Pangilinan, who is also the chief executive of Hong Kong-based First Pacific Co. Ltd., encouraged the development of a Philippine venture capital industry, not modeled on first world standards, but tailored to meet the needs of growing specific businesses: Information and technology, components manufacturing, animation and value-added agriculture.
He said a venture capital industry could be initiated by the creation of specific "capital pools" wherein seed funds are contributed by multilateral development agencies, the national government, and large corporate enterprises. "The funds would then be managed by investment bankers who would take proactive roles in the fostering of specific businesses with local entrepreneurs. That would ensure that local businesspersons would be able to grow their businesses effectively, with ready markets for their goods and services," Pangilinan explained.
During the same occasion, PLDT’s top executive also called on local investment bankers to continue to strengthen their role in national economic development.
"Today’s national economy is now dominated by two sectors, agriculture and services, of which telecoms, tourism and retailing are major subcomponents. The future of the Philippine capital market and the investment banking industry must then be to exploit the opportunities offered by these two fast growing sectors," Pangilinan noted
He also called on Philippine investment bankers to deploy greater creativity to address the needs of contemporary corporate debt issuers such as PLDT, who would like to raise more financing in the local markets.
He likewise said that greater reliance on investment banker’s analytical abilities, namely stronger fixed-income research, would assist in fostering greater investor interest and confidence. "A vital capital market and healthy investment banking industry cannot just be discrete goals. Developing unique and practical funding structures for both corporate and downstream industries, all working to advance a solid economic plan for the nation, must be at the heart and mission of the investment banking industry," he explained.