The Bangko Sentral ng Pilipinas  is looking to form a group that will make opportunities for capital acquisition of corporations more accessible through tax adjustments.

BSP Governor Eli Remolona Jr. said this measure is part of the central bank's goal to provide domestic firms a wider range of investment options, such as emerging markets fund indices offered by fund managers BlackRock, Vanguard, and State Street.

"They are selling stock indices, emerging markets fund or EMF indices. We're not in those indices. How come? I'm told that for those investments they are tax exempt," Remolona said.

"We're still subject to withholding taxes. There are many issues, but we're trying to form a working group along with the Securities and Exchange Commission and the Insurance Commission to try to resolve this issue," the BSP chief  added.

The EMF aims to gain long-term capital appreciation by investing in securities, principally equity securities, of issuers in countries with smaller capital markets.

BlackRock, for one, taps EMF by investing at least 80 percent of its net assets plus any borrowings for investment purposes in equity securities of issuers located in such countries.

Small capital markets

Remolona said, indeed, the Philippines continues to have small capital markets as most corporations and investors are limited to highly rated securities.

"Our corporate bond market is small in which to be able to issue, you have to be triple A or double A. That's not a corporate bond market," he said.

Remolona recommended access to single A and even triple B securities. "In Thailand, the median rate is single A," he shared.

Individual consumers should also be empowered to invest through non-bank financial firms, resulting in deeper capital markets, the BSP chief said.

"Deeper capital markets essentially mean it is cheaper for businesses and investments to finance themselves. You will have a financing source that will compete with the banks," Remolona said.

E-wallet providers

Some e-wallet providers which are linked to fund management firms have started offering investing with a minimum capital of less than P100, while a few banks have reduced that requirement to P1,000.

Remolona said the creation of affordable investing options and widespread awareness of these financial tools are critical in building wealth in the long term.

"In the investing world, active investment is out. You leave that to the very good guys to choose the investment instrument. What most of the world is doing now is passive investment," he said.