Business groups want the Trade department and a public-private competitiveness body to review regulatory policies perceived as detrimental to companies, particularly small and medium enterprises (SMEs).
In a joint position paper, the Philippine Exporters Confederation (PhilExport), Philippine Chamber of Commerce and Industry (PCCI) and the Employers Confederation of the Philippines (ECOP) identified four regulations that “adversely affect business competitiveness” in the country.
The position paper, signed by PhilExport President Sergio Ortiz-Luis Jr., PCCI President George Barcelon, and ECOP President Edgardo Lacson, was submitted to the Department of Trade and Industry and the National Competitiveness Council.
Specifically, the three business groups questioned the Securities and Exchange Commission’s (SEC) Memorandum Circular (MC) 6-2014, which requires the disclosure of the complete addresses of corporations and partnerships. They claimed that requiring this of SMEs was costly as these firms tend to rent and then relocate to take advantage of lower office space prices.
“Considering the traffic, we also face the difficult task of coming up with a quorum in stockholders’ meetings with only this agenda of amending the address,” the position states.
“This policy will neither be useful in tracking delinquent companies as this may only affect those that are already compliant,” it adds.
Also an issue is MC 20-2013, which directs all board directors and key officers of publicly listed firms to attend, at least once a year, corporate governance training seminars conducted by SEC-accredited providers.
The business groups cited traffic and cost concerns, noting that with a fee of P7,000 per board member, this means companies will have to shell out at least P100,000.
“Corporate governance as a subject of a seminar will be quite standard anyway. We see no major changes in the modules and if any, these can easily be transmitted or published electronically . . . There should at least be 10 members of any board and the P100,000 expense for something that may not add real value is counterproductive,” the groups claimed.
They suggested that the SEC “give board members freedom to participate” and “allow the use of relevant on-line training facilities.”
Another concern is the SEC’s MC 10-2014, which implements the Bureau of Internal Revenue’s (BIR) Revenue Regulation (RR) 1-2014 mandating the submission of an alphabetical list of employees, their income and the taxes paid.
This rule should be suspended, the business groups said, “as it poses a grave threat to our ability to attract local and foreign investments,” citing among others abuse of discretion without regard to the right to privacy and possible violations bank secrecy laws.
The last concern involves a Board of Accountacy (BOA) rule, requiring companies earning above P10 million a year to engage certified public accountants for the preparation of financial statements and to include disclosure notes in said statements.
“This is a clear case of vested interest compromising the competitiveness of corporations especially SMEs that will be prejudiced by this imposition,” the groups said, claiming that the BOA rule is “unnecessary and redundant” and that SMEs’ chief accountants or finance managers do the duty.
If the concern is to ensure the integrity of a company’s financial statements, the groups pointed to existing BOA and SEC rules regarding accounting ethics and standards.
“We bring up this concern with the SEC, noting that the BOA requested the SEC to assist in monitoring the compliance of those submitting the annual statutory financial statement,” it added.