The Fourteenth Congress made much headway in enacting the CMDCs priority legislative initiatives -- two of them in 2008, namely the Personal Equity Retirement Account (PERA) and the Credit Information Systems Act (CISA), and another one in 2009, the Real Estate Investment Trust (REIT). By the end of 2009, the proposed Corporate Recovery and Insolvency Act (CRIA) has reached the later stages of legislation in both chambers of Congress.

The Personal Equity Retirement Account

The long-awaited PERA (RA 9505) was not implemented in 2009. The Council Secretariat facilitated discussions on the draft IRR initiated by Financial Executives Institute of the Phil (FINEX). Said draft was considered by the regulators in the crafting of the Implementing Revenue Regulations (IRR), which is still being finalized. Thus, the impact of PERA in generating the much needed long-term savings to finance investment growth will be further delayed. The PERA is expected to promote private retirement savings with tax-free income on PERA savings per individual up to P100,000 per year. This tax-free savings ceiling is doubled for OFWs. The PERA will also provide an effective avenue for the grant of corporate retirement benefits.

The Credit Information System Act

The CISA (RA No. 9510) is expected to significantly improve access to and lower cost of credit. With mandated sharing of credit information among lenders, the financial system will benefit from minimized loan losses and enhanced borrowers’ financial discipline. The SEC completed the covering IRR, which as of yearend was being circulated for signature of the House and Senate Committee members.

The Real Estate Investment Trust Act

The REIT (RA No. 9856) lapsed into law on Dec. 17, 2009. This provides a legal and regulatory framework for real estate investment companies thru securitization of income-generating real estate assets. This is expected to broaden ownership base of major real estate investments, allowing access to small investors, with special incentives granted to OFWs. The liquidity feature of the investments, as shares are to be traded in the stock market, will strongly promote both local and foreign investments in Philippine real estate.

Other Legislative Priorities for the 14th Congress

The CMDC sustained its advocacy efforts toward the enactment of the following legislative measures:

a. Corporate Recovery and Insolvency Act (CRIA)

As of yearend 2009, the CRIA bills have been thoroughly deliberated upon in both Senate and House committees, and enactment by early 2010 was expected. The bill has been expanded to cover not just insolvent companies but also insolvent individuals; thus, it was renamed Financial Rehabilitation and Insolvency Act (FRIA). It seeks to adopt an effective rehabilitation and insolvency system for bankrupt debtors in order to minimize their losses and help protect the interests of their creditors.

b. Collective Investments Schemes Law (CISL)

The bill, which was formerly referred to as the Revised Investment Company Act (RICA), seeks to establish a comprehensive regulatory framework for investment companies, including mutual funds, as key players in the capital market. CISL focuses on the application of fiduciary principles to enhance investor protection. A bill has gone through Committee deliberations at the Senate, but none has yet been filed at the House.

c. Land Administration Reform Act (LARA)

In order to significantly cut red tape and facilitate land titling, as well as encourage capital formation using real estate properties as collateral, LARA has been included among the Council’s priority legislative measures. The LARA seeks to mandate the consolidation of several agencies into a single agency to address inefficiencies and delays in the land administration process. It seeks to lower the cost of doing business involving real estate and to enhance confidence in the process. There have been many bills filed on LARA, but the administrative issue on how to reallocate the functions of land titling has remained to be a major hurdle. The House has completed its substitute bill.

d. Financial Sector Taxation Reform (Fin Tax)

Despite the dissemination of the Study commissioned by the Council on this reform, no bill has yet been filed in either chamber. The Fin Tax seeks to adopt tax administration reforms toward administrative simplicity, fairness and equity. This is intended to level the playing field and achieve neutrality and efficiency in taxes imposed throughout the financial sector. This is expected to allow investors to decide on which financial product to invest on based on risks and returns and not based on the manner by which a product is taxed.

e. Amendment to the BSP Charter

The need to strengthen the powers of the BSP became more pronounced with the failure of a group of rural and thrift banks in Dec. 2008. Thus, the private Sector members of the Council issued a statement that advocates for financial regulators that are well equipped and manned by the best and the brightest, given immunity from suits, except in cases of grave abuse of discretion, for prompt and full dispensation of their duties. The BSP charter must allow for perpetrators of fraudulent schemes to be prosecuted swiftly with diligent application of the full force of the law. Thus, the Council decided to add the amendment to BSP charter to its priority legislative advocacies as a critical means of enhancing investor and depositor protection.

back to top