Lawmaker Asks the Administration to Make Investing Affordable and Easier for Filipinos
An economist-lawmaker stated that the government should make investing more accessible and affordable for Filipinos upon passing the proposed Collective Investment Schemes Act.
House Committee on Ways and Means Chairman Joey Sarte Salceda noted that the government should make investments affordable for Filipinos after heading the technical working group on collective investment schemes (CIS) under his House Bill (HB) 642.
Salceda discussed, “Countries, including the United Kingdom, Japan, Australia, Korea, and Singapore, have adopted a single law to regulate all types of CIS. Presently, the Philippines has various laws governing investment companies [mutual funds], unit investment trust funds, and separate account funds or variable unit linked insurance products.”
A CIS is described as an “arrangement where funds are pooled for the purpose of investing in securities and other investments.” Salceda cited that investors must shell out significant amounts of cash to invest in “clunky” assets such as real estate or businesses.
Salceda explained, “Only around 27% of households have any savings at all, and many of them are excluded from investing. If you are an OFW and you never had a TIN, you won’t be able to get one while abroad because you can only get a TIN onsite. That is potentially $58 billion that is not being fully tapped in the formal markets – and that is why OFWs are susceptible to scams. We are trying to solve that with the Ease of Paying Taxes Act.”
Salceda added, “But the other problem is that our assets tend to be “clunky,” In finance, we call this asset divisibility. The idea is that assets can be divided into infinitesimally small units so that the smallest retail investor can participate in investing an asset. Because we do not have a legislated CIS framework, most of our assets cannot be divided among smaller investors.”
In addition to making investments more accessible and affordable, Salceda stated that the Philippines needs a better and broader market for collective investment schemes. Furthermore, Salceda also wants to add tax perks for such schemes, such as tax incentives.