ELEVEN business groups opposed the proposed increases in regulatory fees and charges by the Securities and Exchange Commission (SEC), describing it as money-making schemes in the guise of regulatory enhancements.
The groups, including the Philippine Chamber of Commerce and Industry, Philippine Exporters Confederation Inc., Employers Confederation of the Philippines, Management Association of the Philippines and Philippine Retailers Association, asked SEC chairperson and chief executive Emilio Aquino to submit the planned increases in regulatory fees to the Anti-Red Tape Authority (ARTA) for a regulatory impact assessment (RIA).
Other signatories in the letter to the SEC are the Federation of Filipino Chinese Chambers of Commerce and Industry Inc., Chamber of Thrift Banks, Franchise Association of the Philippines, Philippine Association of Legitimate Service Contractors, Stratbase ADR Institute for Strategic and International Studies and the Philippine Food Processors and Exporters Organization Inc.
“Consistent with the ease of doing business law, we then strongly recommend that SEC submit this proposed policy to check against harmful impacts to business and the economy. We likewise raise the need for exhaustive stakeholder consultation prior to the RIA as part of the regulatory process and due diligence on the part of SEC,” the groups said in the letter dated Oct. 2, 2023.
The SEC proposed to charge corporate issuers 1⁄4 of 1 percent of the total indebtedness. The group said that based on 2022 numbers, the new SEC fees would amount to P1.27 billion on the total bond issuances of P508 billion for that year.
The SEC also proposed to impose a fee on the total transactions cleared and settled in the previous year by Securities Clearing Corporation of the Philippines (SCCP) and Philippine Depository Trust Corporation (PDTC) in the amount of 0.1 basis point and 0.05 basis point, respectively. Based on 2022 transactions, this would amount to P14.51 million and P7.25 million of additional friction cost for stock market investors.
The groups said the basic principle espoused in Administrative Order No. 31, s. 2012 and DOF-DBM-NEDA Joint Circular No. 1-2013 in fixing regulatory fees is that national government agencies should seek to strike a balance between cost recovery and the socio-economic impact of the impositions.
“Any increase in fees must be just and reasonable and minimize, if not avoid, unintended impact on established national priorities and the general public. If the purpose is regulatory – and not revenue generation – then the test of reasonableness vis-à-vis costs to regulate should be met in order to increase the processing fees of SEC. Clearly, this standard has not been met by the SEC in coming up with the proposed fee increases under the guise of regulation,” they said.
The groups said that “while the President and his economic team are actively wooing new investors and struggling to maintain existing ones, it is unfortunate that SEC is doing exactly the opposite by proposing unnecessary and unconscionable increases in fees. We cannot help but feel that SEC is operating on its own and is not aligned with this thrust of the current administration.”
The groups said the increased cost of doing business would also hurt SMEs covered by SEC and/or due to the ripple effects of the fee increases.
They said the fee collections of SEC already far exceed the cost of its operations, citing the purchase of its own building in Makati CBD that cost P2.5 billion, with 90 commercial parking slots estimated at about P1 million per slot.
Apart from possible increases in regulatory fees, the groups also noted the sudden increase in download fees for pertinent documents that rose form P0.50 per page to anywhere from P1,000 to P2,000, depending on the document being downloaded.
“Given this exorbitant amount of increase, it is clear that instead of charging for cost recovery in delivering this basic service to its stakeholders, the SEC wants to make the e0Search Facility a flourishing money-making activity,” they said.