Think tank pushes entry of more foreign capital into RP economy

State economists said the government can address its financial sector problems through creative ways by increasing the participation of foreign businesses in the economy without the need to amend restrictive ownership provisions in the Constitution. Encouraging the entry of more foreign capital is needed to improve the country’s financial sector, a recent study presented by the Philippine Institute for Development Studies (PIDS) said. The study entitled "Enhancing Access to Financial Services Through a More Competitive Financial System” said that while members of the Association of Southeast Asian Nations apply different degrees of restrictiveness on foreign financial players, the Philippines, however, has the most restrictive rules on foreign investments. The Philippines requires the majority of board members of both companies and investment houses in the country to be nationals, and restricts the maximum equity share of foreigners to 51 to 66 percent. Also, the country does not allow foreign ownership of land. On other hand, Singapore and Malaysia allow foreign ownership of land and are the only Asean member states that apply this rule. "It’s better to allow foreigners to buy land than stocks,” former PIDS president Mario Lamberte said in response to the query on removing some legal restrictions on land ownership. Lamberte, however, was mum on the issue’s relativeness to the recently ignored economic charter change (cha-cha) proposal in congress which seeks to remove the 60-40 equity limitation on foreign investments. "We should encourage foreign players to come here as subsidiaries,” Lamberte said, adding that such liberalization policy should be "combined with a strong merger and consolidation policy.” "There must be something wrong in our financial system because it doesn’t contribute much to our economy,” Lamberte said. According to the study, the Philippines trailed behind most Asean nations in banking development in 2012, with the country making only a third of the banking development of Malaysia and Singapore – and higher only than those of Indonesia and Myanmar.//