Instead of focusing on amending economic provisions of the Constitution, a business group urged the government to pick the “low-hanging fruits” to improve business activities, including enacting the bill aimed at tempering the surge of nonperforming assets (NPAs).
“We respectfully request the President to sign into law the Financial Institutions Strategic Transfer Bill [FIST], which was ratified by Congress before its Christmas break,” Financial Executives Institute of the Philippines (Finex) President Francisco ED. Lim said in a statement on Monday.
The FIST bill allows financial institutions to get rid of their NPAs by selling them to asset management firms or FIST companies. That way, they can attain better management of their debt levels during this pandemic.
NPAs refer to nonperforming loans (NPL) and real and other properties acquired in settlement of loans.
According to the latest data from Bangko Sentral ng Pilipinas, gross NPL ratio stood at 3.81 percent as of end-November 2020, which is higher than 2.19 percent for the same period in 2019.
The FIST bill is just one of the legislative measures highlighted by Finex.
“There are low-hanging fruits which Congress can focus on to help the country successfully emerge from the pandemic and make it more attractive to investors,” Lim said, pointing to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill and the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) bill.
He said “there are also efforts to put in place a new stimulus package to revive and restore our economy to normalcy.”
CREATE will cut the corporate income tax (CIT) immediately to 25 percent from 30 percent upon effectivity, bringing it closer to the average of 21.65 percent in the Association of Southeast Asian Nation (Asean) region. The CIT will then be reduced further by 1 percentage point every year from 2023 to 2027 until it reaches 20 percent.
GUIDE, meanwhile, proposes a P55-billion budget for Philippine Guarantee Corp., Development Bank of the Philippines and Land Bank of the Philippines, allowing them to extend more financing to small and medium enterprises.
These are the matters that the government should focus on for now, Finex said, instead of Charter change.
The financial executives agree that revising economic provisions in the Constitution will make the country a more attractive investment destination, but they have some reservations.
“Having said that, we are strongly opposed to any initiative at this time to amend the Constitution,” the group said. “It is akin to undertaking house renovation while the family struggles to pay for the food, basic education, hospitalization expenses and other basic necessities badly needed by the family.”
“We call on Congress to tackle the legislative initiatives on the economy at the earliest possible time, rather than devote its time and the country’s meager resources to a highly controversial and divisive issue at this time,” Lim concluded.
Source: https://businessmirror.com.ph/2021/01/19/finex-sign-fist-bill-into-law-instead-of-cha-cha/