PSE expects a vibrant capital market ahead

CEBU, Philippines - The Philippine Stock Exchange Inc. (PSE) sees a vibrant capital market ahead owing to the efforts made by the government in passing laws to bolster investments opportunities in the Philippines.

“We appreciate the efforts of the government in fast tracking the approval of laws that relate to developing the capital market in the Philippines,” said PSE Chief Operating Officer Val Antonio Suarez.

Among the laws Suarez cited that will pave the way to boost the country’s investment climate include the Personal Equity and Retirement Account (PERA) Law, the Real Estate Investment Trust (REIT) Act, and the Credit Information System Act (CISA).

The PERA Law aims to create a savings investment vehicle of at least five years especially for those who are not covered by the Social Security System (SSS) and the Government Service Insurance System (GSIS) as well as Filipinos working abroad.

The law is also geared at developing the domestic capital market by giving incentives to long-term investments and creating more institutional investors.

A contributor could establish an account with a maximum annual contribution of P100,000 while overseas Filipino workers (OFWs) could inject P200,000 per year who would be entitled to a tax credit of five percent.

“The law would encourage contributors to invest their extra savings into the fund,” Suarez said.

The REIT Law, on the other hand, will develop the capital markets in the Philippines and provide much needed investment opportunities for institutional and retail investors to increase the wealth of the population through a lower risk instrument.

“It will also boost the development of real estate in the country by releasing capital for reinvestment into land and buildings, leading to increased productivity and more jobs,” noted Suarez.

To encourage investments in REITs, the law provides certain tax incentives to the REIT.

However, in order to enjoy these incentives, the REIT must be listed with a stock exchange and maintain its status as a listed company and annually give out at least 90 percent of its distributable income to shareholders.

In addition, the CISA is seen to become a “critical component for banks to assure the credit worthiness of traders,” Suarez said.

“The laws that we have are promising for the capital market,” he added.

Suarez also bared that this year the Philippines will join countries like Singapore, Thailand, Indonesia and Malaysia in the “Asean [Association of Southeast Asian Nations] Trading Linkage” where discussions will center on how the region can attract more investments.

Suarez was in Cebu last week, together with investment bankers for a road-show in partnership with Cebu Chamber of Commerce and Industry (CCCI), urging Cebuano companies to enlist in the stock market as an alternative financing to expand their business.— Ehda M. Dagooc