The capital market is made up of financial intermediaries that mobilize funds from those with excess money to those in need, or from savers to investors.
Through an efficient capital market, government or private corporations may raise funds to meet their long-term funding requirements. In turn, the public may put their money (or savings) into "instruments" or securities hoping to earn from these investments.
To improve and encourage the development of the Philippine capital market, a review of the taxation system on securities must be undertaken, Deutsche Bank said.
"Our taxation of securities is such that it penalizes, not encourages, the secondary trading, which is what develops the market," said Jose Isidro N. Camacho, chief country officer and managing director (Philippines) of Deutsche Bank. An efficient capital market is one where an investor can buy and sell with the least amount of intermediation or tax cost, he added.
According to a study conducted by the Washington Sycip Policy Center, a think tank attached to the prestigious Asian Institute of Management (AIM), the Philippines "has one of the highest dealing costs in the region such as commission fees and multiple taxation requirements."
Brokerage commission in the Philippines is 1.5 percent of the transaction costs. In Thailand, it is 0.5 percent for local investors and 0.3 percent for fund managers. In Malaysia, it is a maximum of one percent to a minimum of 0.5 percent.
Other fees slapped are: documentary stamp tax, stock transaction tax, transfer fees, cancellation fees, Philippine Central Depository (PCD), and the Securities Clearing Corp., of the Philippines (SCCP) fees.
In spite of all this, the global investment bank remains bullish on RP. Deutsche Bank actually plans to increase its presence in the country in terms of various forms of financing including cash management, trust banking, custody, investment banking, and debt capital.
Deutsche Bank wants a stronger presence domestically especially in the capital markets as well as fund activities for government to cope with its budget deficit. It is one of our global players named as the leading custodian banks in the Philippines.
"We can talk with government or private corporations and offer, for example, a peso bond. We want to provide everyone more financing options," Camacho said.