The Organization for Economic Cooperation and Development (OECD) has called for stricter enforcement of corporate governance policies in the Philippines, highlighting their importance in building investor confidence and strengthening the country’s capital market framework.
The recommendation is a key focus of the OECD’s Capital Market Review of the Philippines, released on Wednesday.
“I am optimistic that there is a clear momentum in the Philippine economy, that many important reforms already in the works will also support capital markets, and that there is a genuine will to address perceived areas for improvement,” said Carmine Di Noia, OECD director for Financial and Enterprise Affairs, during the report presentation.
The OECD recommended streamlining the public listing process to encourage more private enterprises to go public. Simplifying the approval process for initial public offerings (IPOs) and setting predictable regulatory timelines, it noted, could make the stock exchange more appealing.
The review also identified growth opportunities in the bond market, suggesting measures such as improving transparency from local credit rating agencies and easing restrictions on institutional investors to broaden the investor base.
Additionally, the OECD emphasized the importance of regularly publishing corporate governance reports to enhance transparency and accountability.
It said this would foster market trust and attract more investments.
Conducted at the request of the Securities and Exchange Commission (SEC) in late 2023, the review provides an independent, globally informed analysis of the Philippine financial system.
“The country needs to close the large infrastructure investment gap and raise the capital per worker to the level of peer countries. To achieve this, the Philippines requires a well-functioning capital market to mobilize and allocate resources efficiently in the economy,” the report read.
Changes under way
The SEC has already implemented initiatives aimed at improving market conditions. These include streamlining public offering requirements, shortening the IPO processing period to 45 days, and reducing the equity trade settlement cycle to two days.
The regulator has also removed minimum broker commissions, issued guidelines for IPO cornerstone investors, and simplified securities registration for industries such as power generation and real estate.
To support small and medium enterprises (SMEs), the SEC has promoted crowdfunding as an alternative funding mechanism through roadshows spearheaded by its Office for the Advancement of Strategic Investments in SMEs.
“The SEC is doing everything in its power to continue these reforms and follow through with our vision of a more robust and dynamic financial sector,” SEC chairperson Emilio B. Aquino said.
