Attracting investments

Asean economies are rebounding well from the global financial crisis. According to JPMorgan Chase & Co., investor interest in the stock markets of Thailand, Indonesia, the Philippines and Malaysia could increase because of the resilience they showed during the credit crunch, and the economic growth in the region. They predict that Thailand’s economy will expand by 8.5 percent this year, followed by Malaysia (7.2 percent), the Philippines (6.8 percent) and Indonesia (6 percent).

Foreign direct investments are also expected to do well. According to analysts, the region is becoming more attractive to investors because of the Asean free-trade agreement that took effect in January, and the growing domestic markets of Indonesia and Vietnam. The rising labor costs in China is also driving investors to consider other investment destinations in Asia.

This favorable regional outlook is advantageous to our economy, and can help boost the investment rate in the country. At 14 percent, the investment rate in the Philippines is sluggish compared with our neighbors Indonesia, which has an investment rate of 25 percent; Thailand, 28 percent; Singapore, 22 percent; and Vietnam, 38 percent. Our government intends to bolster this to 18 percent by 2011, through more public- private partnerships in infrastructure.

During the past Congress, we enacted laws that strengthen our financial system and create an environment more conducive to business. These include the Personal Equity Retirement Act (Pera) and the Real-Estate Investment Trust (REIT), laws that introduce new investment vehicles to deepen our capital markets.

Pera is a pension scheme that supplements existing government pension plans and aims to encourage Filipinos to save more by providing tax incentives to its contributors. Pera then channels these domestic savings into financial instruments. The REIT, on the other hand, is a stock corporation that invests in income-producing real-estate assets like apartments, office buildings, warehouses and the like. It allows the direct returns of real estate in a securitized form by providing a structure for real-estate investments similar to how mutual funds manage stock investments.

We have also passed the Preneed Code, the Credit Information System Act and the Business Rehabilitation and Insolvency Act (BRIA). The  Preneed Code and BRIA revamped and modernized the regulatory framework on preneed firms, and the rehabilitation and declaration of insolvency of businesses, respectively. The Credit Information System Act, on the other hand, gathers credit information from financial institutions such as banks, credit-card companies and government lending institutions, and makes it available to lenders. Armed with reliable credit information, lenders can now manage credit risks better, which, in turn, can lower the cost of credit and reduce the reliance on physical collateral.

We intend to pursue the financial-reform agenda during this 15th Congress.

This includes amendments to the charter of the Bangko Sentral ng Pilipinas to allow it to adopt various international best practices in banking supervision and other measures that will strengthen its regulatory and supervisory powers over banks and other financial institutions.

I have also refilled the Collective Investment Schemes Law, which will provide a comprehensive regulatory framework based on international best practices for all forms of collective investment schemes.

Fine-tuning the financial system will certainly improve the fiscal position, which, in turn, will make the investment climate more attractive. This is the virtuous cycle we wish to trigger. –Sen. Edgardo J. Angara, Businessmirror

E-mail: edgardo_angara@hotmail.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Web site: www.edangara.com.