Villar proposes creation of stock exchange for SMEs

MANILA, Philippines - Las Piñas City Rep. Mark Villar is proposing the creation of a stock exchange for small and medium businesses to be known as the Small and Medium Enterprises Stock Exchange or SMEX.

His proposal is contained in Bill 4942. Villar said the stock exchange he envisions would allow small and medium entrepreneurs to raise capital by conducting initial public offering (IPO) of shares of stock just like what big companies are doing through the Philippine Stock Exchange (PSE).

He said 90 percent of the total number of businesses in the country and 97 percent of exporters are SMEs.

These businesses are therefore the engine of the country’s economic growth, as they provide essential products and services and employment to millions of people, he said.

“Yet, SMEs are hobbled by capital constraints. Unlike large companies, SMEs experience more difficulties in obtaining funds for capitalization and expansion,” he added.

He pointed out that his proposed SMEX could “provide SMEs with a steady poor of funds for their business requirements.”

Under Villar’s proposal, for the first five years after it is created, the stock exchange for SMEs would be run by a Malacañang-appointed board of governors composed of the Bangko Sentral ng Pilipinas governor, a representative of the Securities and Exchange Commission, a PSE representative, and five members from SMEs.

Funding for it would be included in the annual national budget. Disbursements would be subject to scrutiny by the Commission on Audit.

The SMEX board of governors would prescribe the rules for the exchange, its organizational structure and code of conduct for members.

The exchange would be privatized after five years.

Villar’s bill defines SMEs as businesses capitalized at between P2 million and P300 million.