CMDC pushes for priority measures to spur capital development in RP

The Capital Market Development Council (CMDC), a private-government sector advocacy group, is pushing for seven priority legislative measures to spur capital development in the country.

The seven measures are the Personal Equity Retirement Account bill, the Credit Information System Act, the Collective Investments Schemes Law, the Financial Sector Taxation Reform measure, the Corporate Recovery and Insolvency Act, the Real Estate Investment Trust measure and the Land Administration Reform Act.

The passage of the measures would result in a temporary reduction in taxes but in the long-run, would result to strong economic growth, CMDC’s newly appointed chairman David Balangue told reporters Thursday night following the council’s first board meeting for the year.

“On the short term, there will be losses but in the long-term, the economy will grow and everyone will benefit,” he said.

Balangue noted that these measures are likely to encounter difficulties in both chambers of Congress but expressed optimism that the PERA and the CISA measures would hurdle Congressional deliberations this year.

The PERA measure promotes voluntary long-term savings thru investments in products designed to be locked for at least five years until the retirement age of the investor.

The long-term savings are seen to be important incremental source for domestic capital market growth.

“The measure will significantly contribute to a stable retirement income architecture while addressing the pension needs of our overseas workers; strengthening capital market development and lowering the cost of government borrowings via increasing demand for government securities,” CMDC said in a paper.

The CISA measure, meanwhile, is aimed at establishing a comprehensive credit information system, allowing financial institutions ready access to accurate and up-to-date credit information through the proposed credit information bureau.

“This is intended to improve the overall availability of credit, particularly to small borrowers, for which credit information are currently not readily available,” CMDC said.

The Collective Investment Schemes Law seeks to institute reforms in the domestic investment company industry, including mutual funds.

The proposed financial tax measures features legislative and policy reforms anchored on the results of a study commissioned by CMDC toward a more tax-neutral financial system.

“This is meant to rationalize taxation to level the playing field as regards applicable tax on similar financial instruments offered by different financial institutions,” CMDC said.

CRIA, meanwhile, focuses on the adoption of an effective rehabilitation and insolvency system for ailing companies.

REIT seeks to provide a legal and regulatory framework and create a favorable market environment for real estate investment companies.

“It will develop financial resources and develop a market for medium and long-term investment funds to finance the capital requirements of the real estate industry,” CMDC said.

Finally, the last of the seven proposed measures, is the LARA which CMDC said would enable the consolidation of several land administration agencies into a single agency to address inefficiencies and bottlenecks in the land administration process.

“This will result in lower cost of doing business involving real estate and enhanced confidence in the land administration process. Rationalized and clear valuation standards and titling process will reduce confusion, delays, minimize occurrence of spurious titles and cut red tape. All these will boost investments in real estate,” CMDC said.