SEC says corporate investments dropping

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EMETERIO SD. PEREZ

EMETERIO SD. PEREZ

THE annual report that the Securities and Exchange Commission released under the leadership of the chairperson, Fe B. Barin, in 2009 contained the basic investment information. It included, on page 9, a list of corporations registered that year with the biggest paid-up capital.

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The 2009 list of the SEC showed 10 newly registered big corporations with combined paid-up capital of P5.44 billion.

Paid-up capital refers to the start-up or initial money invested by stockholders. It represents 25 percent of subscribed capital, which, in turn, is equivalent to 25 percent of authorized capital. For clarity’s sake, I am using authorized capital as denominated in peso to differentiate it from authorized capital stock or ACS, which is expressed in shares of stock. (ACS is the number of shares that a company may issue from time to time with the approval of the SEC.)

In 2009, there were two billion-peso new companies. Smartmatic TIM Corp. topped the SEC’s list with paid-up capital of P1.13 billion. Its “nature of business”, as the SEC’s 2009 annual report defined it, was “trading.” Sumisho Motor Finance Corp., which is engaged in financing, followed with P1 billion in paid-up capital.

As a result of company registrations, the SEC collected in 2009 P1.079 billion, which, however, was 19.5 percent less than P1.341 billion collected in 2008. In the five years from 2005 to 2009, SEC said it contributed P5.854 billion to the national government.

Now, let us consider SEC’s company registration reports from 1997 to 2001. In a five-year period, the SEC registered 64,934 companies with combined authorized capital of P668.45 billion. Of the total authorized, subscribed were P260.89 billion and paid-up were P172.35 billion.

The SEC’s investment report during the period showed Filipinos contributed P139.51 billion, or 80.94 percent, to the P172.35 billion paid-up capital against foreigners’ P32.85 billion, or 19.06 percent.

Under its chairperson Teresita Herbosa, the SEC reported collections of P2.778 billion in 2014 “of which P2.139 billion, or 77 percent, were registration fees; P295 million, or 10.6 percent fines and penalties; P299 million or 10.8 percent, represented other service income; P34 million, or 1.2 percent, licensing fees; P6 million or 0.2 percent, rent income; and P5 million, or 0.2 percent, seminar fees.

You can credit Herbosa for reporting in 2014 the composition of the country’s corporate sector as follows: of 870,235 firms, 65.26 percent are active. The SEC report did not provide the number of active firms, which when computed totaled 567,915. This should leave 302,320 inactive companies.

“Among the active firms, 54.58 percent are stock corporations; 28.88 percent are non-stock corporations; and the rest are partnerships,” the SEC said in its 2014 annual report in which it translated the percentages to 309,954 stock corporations, 164,000 non-stock corporations, and 93,965 partnerships.

“In 2014,” the SEC said, “the Commission registered 30,377 domestic corporations, recorded 3,508 articles of partnerships, and licensed 218 foreign corporations and 34 multinational companies.”

It is up to readers to interpret the numbers and guess the amounts of investments made by Filipinos in 30,377 domestic corporations and in 3,508 partnerships. It is also up to them to guesstimate the foreigners’ dollar infusion in 218 foreign corporations and 34 multinational companies.

At this point, it is up to the government to review the SEC’s annual investment reports and find out why the amounts of investments have been falling. Whatever happened to the investment climate in the Philippines that it could no longer attract similar investments by both Filipinos and foreigners as during 1997-2001?

The question would continue to be asked but to which there would be no answer yet. The next poser would be: Will the country’s investment climate improve to mobilize Filipino and foreign capital and, in the process, generate employment opportunities?

What the Philippines urgently needs are foreign investments in new capital ventures and not coursed thru the company shares listed on the Philippine Stock Exchange, which serves only as a secondary market for securities. More new capital means more jobs.

esdperez@gmail.com

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1 Comment

  1. Actually, one need not register with the SEC to engage in business. One can register a BVI company in ten minutes, borrow from a bank, use the proceeds from the loan to buy pldt or meralco shares, pledge those shares to the local bank and you have operating capital in philippine pesos. Why register with SEC which does not allow operational flexibilities when a single proprietorship does not need a board resolution to pursue a merger or a funding exercise? I guess, people have to change their mindset that it needs a big authorized capital to pursue large scale endeavors like funding a MM subway project. Brain power is already a trillion dollar asset and can be booked as Capital.