Foreign investments in RP firms up 27%

Foreign investments are gradually returning to the country following a number of reforms initiated by the government to regain the confidence of both local and international investors, data from the Securities and Exchange Commission show.

Based on a report prepared by the SEC’s Economic and Research Department, foreign direct investments (FDIs) in new and existing domestic stock corporations and partnerships grew by 27.13 percent last year.

FDIs that were infused in new and existing domestic firms reached P5.2 billion as against P4.09 billion in 2001. The 2002 figure does not include the P25.7-billion investment made by Japan’s Kirin Brewery Ltd. in food and beverage giant San Miguel Corp., the SEC said.

Apart from this, there was a significant increase in additional equity investments in domestic corporations. In particular, the increase in additional paid-up capital stock jumped by 102.89 percent to P77.32 billion from P38.11 billion. Increases in authorized and subscribed capital stock likewise grew by 124.21 percent and 104.44 percent, respectively.

According to the SEC, the marked increase in subscribed and paid-up capital stock resulted from the significant equity infusion of Kirin in San Miguel.

The SEC said its efforts to implement regulations intended to protect and promote the interest of planholders and investors in pre-need and financing companies also pushed up the growth of capital expansions.

Pre-need firms were required to build up their authorized capital stock to P100 million to ensure their financial viability.

Meanwhile, new investments registered with the SEC declined by 4.5 percent to P67.81 billion compared with P71.01 billion in 2001. The number of domestic entities that applied for a corporate license with the SEC stood at 11,435.

The subscribed and paid-up capital stock of these new companies also declined. In 2001, new companies’ subscribed capital stock totaled P26.62 billion and their paid-up capital reached P17.59 billion. These were lower by 5.2 percent and .05 percent, respectively.

The SEC noted that the corporate failures in the past two or three years have been a result of corporate misdeeds and not of the economic recession that started in March 2001 nor the 911 terrorist attacks which further deepened investor distrust in the global financial system.

Nevertheless, the SEC is bent on pursuing the necessary reforms to revitalize the capital market. These reforms include new policies to strengthen the market and support for new legislation to install the suitable infrastructure.

Since 2001, the SEC has spearheaded the adoption of reforms to promote good corporate governance. It has issued a Code of Corporate Governance aimed at increasing management accountability and promoting shareholder acitivism.

The Code was made applicable to corporations whose securities are registered or listed, corporations which are grantees of permits/licenses and secondary franchise from the SEC.