The local currency bond market in the Philippines grew significantly over the past decade on investors’ strong and sustained confidence on the domestic economy, the Department of Finance said over the weekend.
The outstanding local currency corporate bonds exceeded P1.5 trillion as of end-June, representing 8.2 percent of the gross domestic product and double the ratio in 2010.
“Practically minuscule 20 years ago, the Philippine LCY bond market has grown sizably. In many ways, the ability to issue LCY bonds is a reflection of investor confidence in the economy,” the agency said in an economic bulletin t
“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 said.
It said the passage into law of the Tax Reform for Acceleration and Inclusion helped usher the democratization of investing in real estate, even if indirectly.
The TRAIN Law, the initial package of the Comprehensive Tax Reform Program, was signed into law by President Rodrigo Duterte on Dec. 19, 2017.
Data showed three real estate investment trusts debuted in the stock market and another was already accepting subscriptions for its initial public offering.
The DOF said the passage of the proposed Capital Markets Development Act of 2021 would further 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,” it said.
It said sustainable economic growth could 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.
Package 4 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 doing away with “nuisance” documentary stamp taxes on financial products that are the sources of friction costs in the financial markets.