BSP vows to continue financial system reforms

The Bangko Sentral ng Pilipinas (BSP) has vowed to continue implementing financial system reforms to complement and accelerate the development of the capital market.

In a speech before the members of the Investment House Association of the Philippines (IHAP), BSP Governor Amando Tetangco said one of these reforms is the laying out of the groundwork through asset clean-up of banks to restore the credit supply to the economy for the first semester of 2005.

He noted that the non-performing loans (NPL) ratio of universal and commercial banks was back to a single-digit level at 9.2 percent. This is a reversal from a peak of 18.8 percent in October 2001 due to asset dispositions under the Special Purpose Vehicle (SPV) Law.

He said this effort could lead to restoring asset quality to pre-crisis levels once the extension of the SPV law is accomplished.

Tetangco also assured the capital market proponents that the BSP would look into the various issues confronting the industry particularly the taxes. "We have to look at these tax matters," he said.

The BSP governor has recognized the need to push for more legislative reforms. "Although we have made some milestones with the passage of the securities law, the SPV Law and the elimination of documentary stamp tax (DST) in secondary trading, there are remaining measures in our legislative agenda that need to be pursued," he said.

These measures, he said, are the amendment of the BSP charter, Corporate Recovery Act, Personal Equity and Retirement Account (PERA) Bill, Revised Investment Company Act (RICA), Credit Information System Act, Revised Corporation Code of the Philippines, Insurance Code of the Philippines and Pre-need Code of the Philippines.

He urged the capital market stakeholders to help the BSP in pushing of these legislative measures as this will be crucial in developing further the capital market development.

"These pieces of legislation are central to capital market reform and IHAP‘s support can strengthen out stand against the grueling legislative mill," he said.