GMA pushes for higher SSS exposure in stock market

GMA pushes for higher SSS exposure in stock market
By Zinnia B. Dela Peña
The Philippine Star 03/08/2006

President Arroyo is in favor of increased Social Security System (SSS) investments in the stock market to help boost trading liquidity and further spur the growth of the equities market.

Philippine Stock Exchange (PSE) president Francis Lim said this matter was brought up in his talks with Mrs. Arroyo, who visited the stock exchange in Makati last Monday.

Lim said the President will ask Finance Secretary Margarito Teves to discuss with SSS head Corazon Dela Paz a scheme on how the pension fund could raise its stock market investments, considering that its P5-to P6-billion limit for stock market investments remain untouched.

President Arroyo earlier made a pitch for government financial institutions to assume a bigger role in promoting investments in the stock market to attract more investors.

Mrs. Arroyo’s visit was taken positively by market players, saying this should augur well for the stock market.

Lim said he was assured by the Chief Executive that the government would do its best to promote more investments in the equities market, which still pales in comparison with Asian neighbors despite its improvement in recent years.

Lim noted that only less than one percent of the Philippine population actively invests in the stock market.

President Arroyo earlier called on the private sector to do its share in luring back foreign and local investors into the stock market.

She had also urged the PSE to broaden its educational campaign to further encourage investors to take up equity investments besides savings in banks or being lured by pyramiding scams.

The PSE, for its part, has been active in encouraging big companies to list on the exchange under the more liberal, revised listing rules.

Entities registered with the Board of Investments and those borrowing money from government financial institutions such as the Development Bank of the Philippines are also being pushed to offer their shares to the public.

To lure more investors, the PSE is seeking the passage of a law that would grant private companies intending to go public reduced corporate income tax.

"The plan is still at a very infant stage. But we would like to see a law which states that if you are a private company and listed within three years from the enactment of the law, you would enjoy reduced corporate income for five years," Lim said.

Currently, the corporate income tax is pegged at 35 percent.

Lim said he would discuss with the Department of Finance and Congress on how to go about the proposal.

Other sweeters being considered are lower listing fees and relaxed reportorial requirements.

An initial public offering is a means of raising funds for expansion and capital, employed by companies as a cheaper alternative to the more expensive debt instruments such as bonds and bank loans.

It is done by selling a portion of the company’s shares of stock at a price based on its book value or on its projected earnings for the year. These shares are then listed with the PSE so that stockholders and investors may trade the issue.

 

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