The Market Monitor Minding the Nation's Business
Riza Lozada
Financial literacy will have to be inculcated in the minds of Filipinos to achieve a secured future, Sen. Sonny Angara said.
In his presentation before a recent Philippine Investment Funds Association (PIFA) forum, Angara said the unbanked population remained high and this posed a challenge for the education sector to drive financial literacy among people.
He said that financial literacy could be used to secure the economic future of the coming generation.
The Senator said that the country has been receiving good investment ratings but Filipinos still have to be educated on translating their savings to real wealth.
The stock market is also performing well, Angara noted, and this exemplified that public savings can be source of real wealth.
He said that to capitalize on these opportunities coming from the investment and stock market recording outstanding performances, the Filipinos would have to be equipped with the basics of financial literacy.
He cited that based on the available survey of the Bangko Sentral Ng Pilipinas (BSP), eight out 10 households did not have bank accounts.
This showed that the country has a long way to go before reaching its desired objective to make every Filipino literate about money, savings and banking.
“Unfortunately not many Filipinos are financially literate,” remarked Angara.
Likewise, the BSP survey found out that 90 percent of transactions of Filipinos are cash-based.
Angara lamented that borrowing is still predominantly done through the underground system where high lending rates prevail.
He stressed the need to espouse financial literacy as component of basic education, as well as inculcating entrepreneurship among the youths to achieve greater productivity.
Angara said that he was hopeful that the future generation would be comfortable with stocks as they talked about these investment products.
The PIFA event was intended to raise awareness on the massive untapped markets for mutual funds that are potential sources of funds for various public and private funded projects.
The group offers numerous types of funds including bonds, stocks and other money market assets.
It is banking on the strength of mutual funds that offer higher returns compared to regular savings and time deposit accounts.
An online mutual funds system is being readied according to PIFA in an effort to increase its present assets under management worth P244 billion as of January this year.
PIFA president Philip Hagerdorn said that fund managers have established footprints in major cities including Metro Manila, Cebu and Davao that offers accessibility to its numerous funds, which for a minimum of P5,000 can be invested into stocks and bonds.
He also said that the Senate has made major stride this year when the law was passed granting higher tax exemption on 13th month pay. This will form part of money savings that can be invested into other funds.
Angara said that financial literacy can empower people such that their propensity for borrowing to loan sharks would be addressed as they learn to adopt banking and keeping savings for the future.
Angara noted the inequities in the taxing system of employees citing the call center salary of P25,000 monthly with tax at 25 percent and the employee with salary of 65,000 monthly with tax at 32 percent. He compared these taxes with Singapore at zero percent and with Malaysia at 2 percent. This tax inequity makes the Philippines not competitive, he said.