PSE urged to let SMEs join the capital market

CEBU, Philippines - With the important role of small and medium-sized enterprises  in the economy, the need to support and improve this sector must be given attention.

This according to Vice President Jejomar Binay as he urged the Philippine Stock Exchange to give opportunities to industry small players to participate in the capital market.

Binay was the keynote speaker during last Friday’s Philippine Capital Markets Investment Conference where corporates, investors and bankers gathered to know the status of the country’s growing market.

Even if he recognized the big contribution of the PSE to the economy, he still asked the national stock exchange to make listing easy for SME players so they will have better access to finances and capacity building.

The vice president noted SMEs will have to overcome possible barriers which hinder them from tapping the market saying that better financial access allows small players to pump more funds for their enterprises.

The need of SMEs to raise capital is becoming increasingly critical, he further added.

"The stark reality is that today," he stressed, "while there are 30 companies listed in the PSE’s main board, only two firms are available in the SME board."

In totality, only three companies are part of the SME group out of the 257 listed with the PSE.

This means that the capital market industry seems to prioritize only the large and established companies and the rich people, he told forum participants.

"The problem is that while investment inflows are diversifying," Binay emphasize, "the breadth of investment products remain basically the same — shares from large, publicly listed companies and other traditional products."

While SME players are not able to join into the capital markets pool, he said, adding that funding such sector has been one of the most critical challenges.

A capital market is a market where government and companies can raise money or capital to fund their operations and long term investment. Selling bonds and stocks are two means to make capital; the two are considered capital markets.

"We need to move several directions," he urged. "We need to create opportunities for the SME to grow and flourish."

True inclusive growth can only be achieved as the SME sector is being made part of the gains of economic growth, he also said.

He added small enterprisers should be educated on other ways as to where they can get capital funds and that the PSE should give help to those interested to be listed and pass the requirements.

"This is the final dimension of true inclusion --- sustainable inclusion," Binay said in his speech, "when economic growth not only brings jobs, but also creates opportunities for small and medium scale firms to grow and flourish."

The government official stressed that sustainable inclusion allows all Filipinos consumers, employees, investors and enterprisers to "become part of the growth story" and share in the gains of economic development.

"And it is at this point that we can say that we have succeeded in truly moving our nation forward, in building a Philippines where the fruits of progress are shared by all."

‘Not exclusive’

The vice president also recognized the regions in the Philippines for contributing to the country’s development, saying, "Our progress has always been driven by the growth in the regions outside the capital."

He added, "The center of the business is no longer exclusive to Metro Manila. Cebu is the excellent example."

However, even if the Philippines is growing consistently, reducing poverty remains a big challenge for the government to address, Binay claimed.