SECURITIES and Exchange Commission chairman Francis E. Lim on Thursday said he made a mistake when he said the corruption issue have wiped out about P1.7 trillion in market value of publicly listed companies.
Lim said the information was ‘based on what I believed at the time to be a credible industry report. I have since learned that the report was fictitious. I deeply regret any confusion or concern that my statement may have caused.’
‘My sole intent was to underscore the vital importance of integrity in our markets and the devastating impact corruption can have on investor confidence,’ Lim said.
The P1.7-trillion market loss figure was denied by Frederick D. Go, Special Assistant to the President for Investment and Economic Affairs.
Data from the Philippine Stock Exchange showed market capitalization fell to P19.12 trillion at the end of third quarter in September, down by 1.4 percent, from August’s P19.4 trillion.
Go said Lim’s statement was based on a ‘confirmed fake news socmed [social media] post designed to catch attention and falsely sensationalize.’
Go said he was able to personally talk to Lim on the matter, who also said that the statement was indeed based on misinformation.
The spurious information was wrongfully attributed to S and P Global Market Intelligence, which disowned it.
‘So, unfortunately, it happened, but it was confirmed by multiple sources that it was fake news, including the attributed source of the Socmed post. So, hopefully, let’s not be fooled by fake news,’ he said in a press briefing in Malacañang on Thursday.
Go did not comment when asked about the possible consequence Lim may face for the mistake.
The economic aide, however, admitted that the country will face a ‘short-term challenge’ from the government’s ongoing crackdown on anomalous flood control projects and other public works, which is currently being led by the Independent Commission for Infrastructure (ICI).
While there was no steep 12-percent drop in the Philippine Stock Exchange Index as stated in the false report, Go said there was a minimal decline in the index in August, when President Ferdinand Marcos initiated reforms in the Department of Public Works and Highways (DPWH).
‘For the period mentioned, which is August 11 to 29, the named PSE drop was only 1.6 percent, as a matter of fact, it was 1.58 percent. And the All Shares Index in our Philippine stock market of 282 companies, the drop was only 1.5 percent. And in terms of the market cap which is the click bait number of that fake socmed post, the drop po is only 1.4 percent,’ Go said.
In the long-run he said the anti-corruption of the President including creating the ICI and naming Jesus Crispin ‘Boying’ C. Remulla as the new Ombudsman will help boost the business confidence in the Philippines as a reliable investment destination.
He said it will address the two main concerns of local and foreign business chambers when conducting transactions in the country-corruption and red tape-by ensuring government funds are not spent on substandard or non-existent public works.
‘I believe the negativity is overblown. This investigation will be good for the country long-term because it will address and correct the wrong practices,’ Go said.
‘Better deployment of the budget will result in projects with greater multiplier effect, bringing about better effects on the economy and jobs created. So while this may be a short-term issue, it definitely will have long-term benefits,’ he added.
Strong interests
Go said the anti-corruption probe on public works has not made a significant dent on the business pledges received by the country, as the government was able to put in place pro-investor measures such as the Republic Act (RA) No. 12066 or the CREATE MORE Act, RA No. 11966 or the Public-Private Partnership Code, and the green lane for strategic investments under Executive Order No. 18.
‘We’re quite confident that when this is all resolved, they will all come back. So, they have not pulled out. They will continue rather, that they will continue with their project,’ he said.
‘By enhancing the effectiveness of public spending, we are turning a short-term challenge into an opportunity to reallocate funds to projects with a far greater growth and employment multiplier effect. This is the clearest signal that the Philippines is building a future-ready economy, anchored on trust and sustainable growth,’ he added.
In fact, he said they will soon be transmitting to the Office of the President their approval of the first beneficiary of the CREATE MORE Act.
The beneficiary is a Korean semiconductor and electronics company, which will make an over US$1-billion dollars investment in the country.
‘The FIRB (Foreign Investment Review Board) will be transmitting this to the Office of the President this week. So, I don’t think we have lost any investment pledges because of this ongoing issue,’ Go said.
‘Let me assure the public that the SEC remains firmly committed to promoting transparency, good governance, and investor protection. Corruption is indeed a weapon of mass wealth destruction,’ Lim said.
Weak integrity, not weak fundamentals
Lim told the Financial Executives Institute of the Philippines on Tuesday that investors in the Philippines are not fleeing because of weak fundamentals of the country, but because of weak integrity of its leaders.
‘When trust breaks down, capital dries up, and everyone-the government, business and the public-pays the price,’ Lim said.
‘Let’s face the hard truth. Our stock market is a laggard. Sadly, this reflects something deeper-a crisis of confidence,’ Lim said.
‘Too many firms still hesitate to go public, while others who have chosen to go public are leaving the stock market. This is not just a market issue. It’s a trust issue. And rebuilding that trust is one of the SEC’s most urgent missions,’ he said.
At the moment, there is only one initial public offering-Top Line Business Development Corp.- and possibly another one by Maynilad Water Services Inc. by next month.
The benchmark Philippine Stock Exchange index fell on Thursday by 41.34 points to close at 6,057.40 points.
Lim said the agency sees compliance not as a bureaucratic hurdle, but as a leadership advantage, a way to strengthen the very foundation of markets and enterprise.
‘Because when markets are trusted, capital flows. And when capital flows, the economy grows,’ Lim said.
‘That’s why we’re moving boldly by strengthening the independent director system, making REITs (real estate investment trust) more inclusive, pushing PERA (Personal Equity and Retirement Account) reforms and championing financial literacy as a mandatory subject for our students. Because each reform we make is a promise that trust will again be our strongest currency, and that every Filipino, not just a few, will share in the nation’s growth,’ Lim said.