Due to the expense required, foreign investors tend to overlook the Philippine Stock Exchange (PSE) and its somehow languid equities market. We recently talked about the strengths of the PSEi, and it is still despite the quality of the company stocks traded in the market.
In this article, we will talk about this bill that is meant to create a strong, liquid, and competitive domestic capital market.
Useful sidebar about the bill
- Rep. Joey Salceda, the House committee chairman, proposed the sponsorship bill, House Bill 8958, with the aim of rectifying the belief that stock market investing is solely for the wealthy.
- The Philippine stock transaction percentage (0.6) is comparatively higher than some ASEAN countries (0.1) Vietnam and Indonesia. This bill will reverse the effect of the existing situation, attracting investors in both domestic and foreign markets.
- The bill proposes to drastically reduce the stock transaction tax from 0.6 percent to just 0.1 percent, thereby eliminating the differentiation between the tax on trading domestic shares in the local and foreign stock exchanges.
- The bill aims to reduce the dividend tax rate of 25 percent, the highest in the area, to 10 percent to encourage investments from abroad and to attract more non-resident investors. Greater involvement has the potential to enhance the liquidity, depth, and efficacy of the capital market.
Sentiments from Salceda
Rep. Joey Salceda from Albay noted that there is no doubt that the lack of growth in the PSEi is not due to the competence of our companies. He pointed out that the cost of investing in Philippine stocks is a possible cause.
The Maharlika Investment Fund and the proposed listing of Landbank of the Philippines’ shares will be positively impacted by this bill proposal. He further noted that once these GFIs are offered to the public, it will lead to the formation of additional resources for national development.
Furthermore, Philippine stocks should not be considered unappealing due to the higher dividends they offer in comparison to those of the S&P 500. He found that the bottom quarter of listed companies in the Philippines pay a rate of 1.88 percent, which is higher than the 1.54 percent paid by firms in the S&P 500.
“The stocks we have are not fully appreciated.” When looking at the United States, the market capitalization is 153.4 percent of the GDP. In comparison, the Philippines is only at 75.2 percent. Singapore stands at 129 percent, Thailand at 119 percent, and Malaysia comes in at 91.6 percent.
The cause of the slow progression in the PSEi is not due to the quality of our companies, but rather the cost of trading Philippine stocks.
The utilization of technology has immensely changed the way people work and interact in the present day. Nowadays, it is not uncommon to see people being able to do their jobs through digital means, while also connecting with others via the internet. This radical transition has enabled individuals to be more productive and efficient in their tasks, as well as being able to collaborate and communicate with others in a much more convenient way. Earlier, the Albay representative has also called out on online banking transaction fees which solidifies his stand on the subject.
Make do with what you have. However, keep in mind that simply because you have gotten used to the tides, doesn’t mean you cannot wish for a smoother and easier ride for everyone else.
