The Philippines’ local currency (LCY) bond market has grown significantly, with the ability to issue these bonds reflecting investor confidence in the country, the Department of Finance (DOF) said over the weekend.
The DOF said in its latest economic bulletin that the outstanding LCY corporate bonds in the Philippines amounted to more than P1.5 trillion as of the second quarter of 2021.
“This is 8.2 percent of gross domestic product, double the ratio in 2010. Practically miniscule 20 years ago, the Philippine LCY bond market has grown sizably,” the DOF said.
“The fiscal sector, once the Achilles’ heel of the economy, has become a strong pillar for sustainable development and an enabler of capital markets development,” it added.
The DOF said the Tax Reform for Acceleration and Inclusion Act helped usher the democratization of investing in real estate, even if indirectly.
To date, the DOF pointed out that three real estate investment trusts have debuted in the stock market and another one is already accepting subscriptions for its initial public offering.
According to the DOF, the passage of the proposed Capital Markets Development Act of 2021 is expected to increase demand for financial securities.
“The greater issuance of these securities, however, will depend on the sustainability of economic growth and efficiencies in the financial markets,” the DOF said.
“Sustainable economic growth can be enhanced by the participation of foreign capital which could be catalyzed by the proposed amendments to the Foreign Investment Act, Public Service Act and Retail Trade Liberalization Act,” it added.
The DOF said package four of the Comprehensive Tax Reform Program — the Passive Income and Financial Intermediary Tax Reform Act — aims to make Philippine financial markets more efficient and competitive by, among others, rationalizing or even doing away with “nuisance” documentary stamp taxes on financial products that are the sources of friction costs in the financial markets.
