THE juxtaposition of a couple of news items in yesterday’s business pages was hard to miss: While the National Economic and Development Authority (NEDA) offered an optimistic outlook for foreign investment in 2016, a little farther down the page were two items that suggested the government, intentionally or not, is doing its best to discourage investment.
Based mostly on last year’s healthy increase of a little more than 31 percent over the previous year, NEDA expressed confidence that foreign investment pledges—which, as has been pointed out countless times, are not quite the same thing as actual hard currency, but are a step in the right direction—would continue to expand this year, albeit more moderately due to understandable caution about the upcoming election.
The independent variable in all that, NEDA suggested, is whether or not investors could rely on continuity from one Administration to the next, or as the agency, in a sly insertion of political partisanship, specifically put it, “whether programs pushed by the Aquino government would continue.”
If we disregard the irrelevant who in that statement, NEDA does have a point; one of the first things President BS Aquino 3rd did when he took office six years ago was to break a lot of things that were working or would have worked just fine if he’d left well enough alone: A badly-needed rehabilitation project for Laguna Lake, an excellent and equally critically-needed port construction program, and a mining policy that, to everyone but the guy who just so happened to be in charge, and whose understanding of mining doesn’t involve anything more complicated than picking his nose, was considered a solid model. While it is the reasonable prerogative of the new President to review work in progress begun during his predecessor’s term, it is not too much to ask that it be done rationally.
With its cautiously upbeat outlook on investments, NEDA seems to be suggesting it thinks there will be reasonable continuity between the old and new governments and is trying to send the message that potential investors should not consider the transition a high risk.
While one part of the government is doing its best to be upbeat and keep the country on global investors’ radar, other agencies are doing their best to make their colleagues look foolish. This week’s bureaucratic nightmare is the Securities and Exchange Commission (SEC).
In her column for Deloitte yesterday (“Transparency of beneficial ownership”), Kamei Nogoy explained the details of the SEC rule requiring securities brokers and dealers to disclose the beneficial owners of shares, which complements a couple of related directives of the BIR; if you’re a stock or securities investor or thinking of becoming one, you should read it.
While neither agency involved has unreasonable goals in pushing for the rule, which is supposedly suspended by a Supreme Court TRO, the consensus is that this rule is not at all the best way to achieve them. The mountain of paperwork it will generate is almost off-putting enough on its own, but the fatal flaw in the SEC position is that complying with this directive obliges one to break the law protecting client-broker confidentiality. That discrepancy has not been resolved to anyone’s satisfaction yet; the SEC approach, which is to subtly imply anyone questioning the rule may have nefarious purposes (and to let the BIR do most of the talking), has certainly not accomplished anything.
Of a more immediate concern is the SEC’s confusing delay of the PSE takeover of the Philippine Dealing Exchange, over questions about how PSE would run the merged enterprise, according to a very frustrated-sounding PSE president Hans Sicat. If SEC’s approval isn’t forthcoming in the very near future, perhaps in the next few weeks, there may be no point in moving ahead with the merger, at least for the next couple of years.
That is not really a valid option; the Philippines will be the last country in Asean to merge its stock and bond markets, and its finally doing so is a critical step for integrating regional financial markets. There is no good reason for the SEC to be dragging its feet, and by doing so it is potentially putting the country in a very unfavorable position.
Very few investors are going to find the prospect of the details of their brokerage account being public information appealing, no matter how reassuring NEDA is about the local environment. And there will be some investors who will be hesitant to get involved as long as the market reorganization is delayed.
The SEC can’t be faulted for trying to carry out its mandate, but it is working against the national interest—in this case, the interest is “not scaring away money”—and needs to change its approach.
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With your kind indulgence, a couple of personal notes: Happy birthday to my mother Loraine, who this year is celebrating in her new home in Costa Rica, where I hope and pray she will enjoy many more.
Congratulations are also in order for our ace editorial assistant and occasional reporter Raadee Sausa for convincing a lovely young lady to become Mrs. Sausa over the weekend. May you both be blessed with many happy years of wedded bliss. Now get back to work.