Finex pushes measures to develop capital markets

The International Association of Financial Executives Institutes (IAFEI) and the Financial Executives Institute of the Philippines (Finex) is batting for the immediate passage of several pieces of legislation that would institutionalize the country’s capital markets.

"The development of the country’s capital markets will be hastened with the passage of five specific bills in Congress," Dr. Conchita L. Manabat, IAFEI chairperson and former Finex president said.

The bills, which are in varying stages of progress in both houses of Congress are revisions on the anti-money laundering law, the Private Equity Retirement Account or PERA, anti-solvency law, the fair credit reporting system (credit bureaus), and the Revised Investment Company Act (RICA).

Manabat said that the passage into law of the proposed pieces of legislation would hasten reforms in the country’s financial system and create an environment conducive to the convergence of the various financial products and services not to mention the entire system.

The PERA bill would promote savings and would allow individuals to choose investment instruments in preparation for retirement independent of the government-run pension funds such as the Social Security System (SSS) and the Government Services and Insurance System (GSIS).

When passed into law, the RICA bill would help develop the country’s domestic capital market which in turn will increase national savings, increase the options for fund sourcing for both government and the private sector, and protect the country from foriegn currency shocks.

A developed capital market would likewise place strong controls on debt servicing or reduce the country’s dependence on foreign funding sources for economic development.

Aside from the IAFEI and Finex, other business and industry associations as well as government entitities that joined the campaign to have the five pieces of legislation passed into law are the Philippine Stock Exchange (PSE), the Investment Companies Association of the Philippines (ICAP), the Investment Houses Association of the Philippines (IHAP), the Bankers Association of the Philippines (BAP), the Rural Bankers Association of the Philippines (RBAP), the Securities and Exchange Commission (SEC), and the Bangko Sentral ng Pilipinas (BSP).

Bankers in particular said that the Philippine economy will improve if its financial infrastructure is anchored not just on a healthy banking system but also on the presence of a deep and vibrant capital market.

The capital markets include debt and securities market, equities or stock market, and the bond and commercial paper markets.

"A developed capital market promotes savings, investments and economic growth especially in a market-driven economy. Domestics savings are then tapped to fund the requirements of business thus reducing the dependence on banks on non-banks financial institutions," Finex president Melito S. Salazar said during the formal launching of the 2005 World Congress of Financial Executives this December.

The Philippines will play host to hundreds of global business and financial leaders in both private and public sectors worldwide.