now loading...
Wealth Asia Connect Middle East Treasury & Capital Markets Europe ESG Forum TechTalk
The country eyes inclusive growth to bolster economy
A look into how the government is encouraging financial inclusion
Darryl Yu 22 Feb 2017
It may be one of Southeast Asia’s most robust economies, but the Philippines still struggles with financial inclusion. The new administration, under President Rodrigo Duterte aims to change that.
 
Dominguez - PhilForum
“We have come to understand and officially define financial inclusion as a state where there is effective access to a broad range of financial services for all,” says Pia Bernadette Roman Tayag, director of the inclusive finance advocacy of the Bangko Sentral Ng Pilipinas (BSP) at a recent forum held by The Asset. 
 
According to the BSP, the country’s central bank, 36% of the country’s 1,634 cities and municipalities do not have a single banking presence.
 
Moreover, nearly 70% of the country’s deposit accounts are found in the National Capital Region (NCR) as compared to the Autonomous Region in Muslim Mindanao (ARMM) with a marginal share of 0.2%. Only 8% of ARMM’s 118 municipalities have banking presence. “The general distribution of banking services is biased towards higher-income areas, leaving much of the low-income areas significantly underserved,” says Tayag.
 
For the BSP the lack of financial inclusion represents a threat to the country’s future growth and development. Market frictions such as lack of infrastructure and information asymmetry are just some of the barriers facing the Filipino unbanked community. The development of microfinance in country is one of the major initiatives BSP has been quite active in. By liberalizing schemes and putting in place incentives, the BSP was able to get 169 banks to provide microfinancing services to more than 1.6 million entrepreneurs, resulting in total outstanding loans of 11.7 billion pesos (US$236 million).      
 
The move towards business inclusive policies is a point also echoed by the country’s Department of Finance (DoF). Speaking at the forum, Carlos Dominguez III, secretary of finance says that he would set up a task force to look into ways the government could simplify procedures to better serve taxpayers, importers and exporters. “I asked the Bureau of Internal Revenue to simplify tax forms and to make their offices more pleasant and more client-driven,” he adds. For Dominguez, having a simplified system can be a business enabler for any potential Filipino entrepreneur. 
 
The push for the government to be responsive to consumers stems from the very top of the new Philippine administration, which came into power in June last year. For Dominguez, technology offers solutions to achieving efficiency in governance. The application of information and communication technology in government services, also known as e-governance, is a priority of the new administration. “The DoF and the newly formed Department of Information and Communications Technology have now partnered to develop the government’s automated business and citizen data bank portal. This portal is the beginning of e-governance for our country. It will serve as the primary tool for cutting red tape and reducing processing time for government frontline services,” says Dominguez.
 
“Cutting red tape will enhance inclusive growth in our economy. I suspect that the weak culture of entrepreneurship we often complain about is, at least in part, due to the difficulty in setting up a business. Government agencies behaved as gatekeepers instead of enablers.”
 
For the Philippine Stock Exchange (PSE) financial inclusion in the form of company listings by small and medium-sized enterprises (SMEs) and getting more investor participation will be key objectives for the exchange. The PSE main board holds 265 companies. In contrast, the SME board has only four.
 
“What is really hampering the flock of SME companies to the capital markets is their heavy reliance on the traditional financing models, which involves going to your friends and your immediate sphere of networks,” says PSE chief operating officer Roel Refran. “After that, you go to the banks, then probably after that they realize that it’s really a tough task to go to a public venue and share your story with the market.” 
 
Like Dominguez, Refran believes technology offers solutions to financial inclusion. “We are reinforcing the fact that we are doing a lot on social media (and) a lot of webinars on the investor side,” says Refran.
 
“We already have our hand-holding team in place. It’s always best if you engage with us because we will show you the IPO (initial public offering) roadmap at no cost. We do this to encourage people to open up their minds and hopefully do a public offering.”
Conversation
Jane Huang
Jane Huang
head of issuer services department
Taiwan Depository & Clearing Corporation
- JOINED THE EVENT -
7th Taiwan Investment Summit - Webinar Series 2021
Transitioning to a green future
View Highlights
Conversation
Nneka Chike-Obi
Nneka Chike-Obi
head of APAC ESG ratings and research
Sustainable Fitch
- JOINED THE EVENT -
6th ESG Summit
Beyond the hype
View Highlights