US pension fund asked to reconsider

The Arroyo administration is trying to woo back the US-based California Public Employees Retirement System (CalPERS) saying that the pension fund’s decision to pull out from the Philippines was based on inaccurate information.

Finance Secretary Jose Isidro Camacho met with senior CalPERS officials in the US to convince America’s largest pension fund to reconsider their decision.

According to Camacho, CalPERS’ decision was based on two considerations: the country factor and market factor. Although the country scored high on the fund’s country evaluation, it failed to meet three criteria under the market evaluation.

CalPERS has a $1-billion investment in emerging markets that included Southeast Asia, Latin America and Eastern Europe. After its evaluation, it announced that it was pulling out its investments in the Philippines, Indonesia, Malaysia and Thailand.

CalPERS had decided to shift its investments in Poland and Hungary.

In the Philippines, CalPERS has investments of up to $25 million, more than twice the total daily trade at the PSE. It is the largest holder of Philippine bonds and its pullout has had a dampening effect on the market.

CalPERS is the largest pension fund in the US with assets of over $150 billion.

Camacho said CalPERS evaluated the individual countries in the region based on overall market liquidity and volatility, settlement procedures and openness.

"It became apparent to me that their basis for the decision was inaccurate," Camacho said. "So I just discussed with them some information that they were not previously aware of."

According to Camacho, CalPERS had not even heard of the Philippine Central Depository (PCD) and its book entry system that allows scripless trading at the Philippine Stock Exchange.

"They thought our stock market was totally manual," Camacho said. "I also told them that we have an open market, there are no restrictions on repatriation and foreign investors can even buy indirectly into media concerns."

Camacho said the Department of Finance is preparing a formal letter and a complete briefing package for CalPERS to evaluate. "We feel that our rating should be upgraded," he said. – Des Ferriols