When Asian Terminals Inc. rang the closing bell for the final time on 3 April, it marked more than another corporate exit from the Philippine Stock Exchange (PSE). It reflected a deeper structural problem in the country’s capital market, one that should concern policymakers, investors and the broader public.

The numbers are stark. As of 2025, the PSE had only 282 listed companies. Malaysia had nearly four times as many, Indonesia three times more, and Vietnam, whose exchange opened only in 2000, listed over 700 firms. The OECD, in its 2026 Economic Survey of the Philippines, describes the market as “relatively shallow,” with capitalization at around 50 percent of GDP and IPO activity far below regional peers.

More alarming than the stagnation is the pace of exits. ATI’s P6.39-billion tender offer, conducted with the Maharlika Investment Corporation, resulted in the acquisition of over 99 percent of its shares, paving the way for its delisting. The rationale cited — greater flexibility and operational agility — signaled a growing sentiment that public listing was no longer attractive and offered no sufficient value.

Close behind was Robinsons Retail Holdings Inc., which approved its voluntary delisting after an P18.37 billion tender offer from JE Holdings Inc. These are not marginal firms. ATI operates critical ports, while RRHI runs major retail chains nationwide. Their exits followed Keppel Philippines Holdings which left in 2025 after decades on the exchange.

Why are profitable, established firms leaving the PSE? The OECD points to structural weaknesses: poor corporate governance, concentrated ownership, weak board independence, and inadequate oversight of related-party transactions. Combined with burdensome listing requirements and modest shareholder returns, the incentives to remain public or listed in the PSE are weak.

The IPO pipeline offers limited comfort. The PSE is targeting P170 to P175 billion in capital raising, relying heavily on a perceived potential GCash listing. Yet last year’s outcome — only two IPOs versus a six-deal target — highlighted an alarming persistent execution risk.

This matters because capital markets are essential to economic growth. They channel savings into long-term investments and allow ordinary Filipinos to participate in wealth creation. Without a vibrant stock market, companies depend more on borrowings or bank financing, which is typically shorter-term and less suited for large-scale expansion.

Reform is therefore urgent. The Capital Markets Efficiency Promotion Act, which reduces transaction taxes, is a step forward but is insufficient. Broader reforms are needed: strengthening corporate governance, simplifying listing rules, and expanding the institutional investor base.

One additional reform deserves renewed attention: the passage of the proposed Stock Market Competitiveness Act, a measure introduced in 2009 by Senator Angara. The bill envisions fiscal incentives for companies that list on the exchange and proposes that listed firms be accorded last priority in government tax audits. Such measures directly address a key deterrent to listing by reducing both regulatory burden and perceived enforcement risk.

Another promising avenue is the listing of state-owned enterprises or government-owned and controlled corporations (GOCC). Unlike its regional peers, the Philippines has no GOCCs listed.

Partial listings of institutions like Land Bank of the Philippines, the Development Bank of the Philippines, Philippine Gaming Corporation, and Philippine Charity Sweepstakes Office would significantly deepen the market. However, these must be paired with strict governance standards, including independent boards and robust safeguards against related-party transactions. These institutions must include independent directors in their boards.

Ultimately, the decline of the Philippine stock market may not be inevitable. But reversing it will require coordinated action and political will. The choice is clear: allow the market to drift into irrelevance or rebuild it into a dynamic platform for growth and shared prosperity. The SEC must lead this initiative.