Angara calls for 'financial literacy' for Filipinos

While Filipinos are obsessed with political news and are keen followers of most political developments, they are sadly stuck in a depressing state of "financial illiteracy" which has dragged down economic growth, Senator Edgardo J. Angara has lamented.

Angara, chairman of the senate committee on banks, said that the "financial illiteracy" that afflicts most Filipinos has dampened investments, failed to develop new financial instruments and constricted the growth of the stock exchange.

"We are so financially illiterate that we can not even get people to invest in the capital market. And it often takes a long, long while before new financial instruments are offered to would-be-investors," Angara said during a recent financial forum that introduced the REIT, a special real estate investment vehicle.

The banking system holds a staggering amount of US$80 billion, money which should not have sitting in banks had there been a wide menu of investment and opportunities instruments available", according to Angara.

"We cannot even unlock the investment power of money locked in the banks and this is a sad thing," said Angara.

Even the financial pyramiding scams are proof that people have money to invest and are on the lookout on where to place their money.

"The financial pyramids have been built by people who want to generate income from their money. There is really money lying around waiting to be tapped and the architects of the pyramiding scam tapped into this kind of money," he added.

Angara said the stock exchange is constrained by the limited number of companies listed in it and there is very little financial sophistication to push people into investing into the stock market.

The efforts to expand the market and lure in the investors are hamstrung by the lack of interest in financial journalism and business news, said Angara.

"Unlike in other countries where people read the developments in the stock market and other financial markets with real interest, there is no similar enthusiasm here for financial and business news and this has not helped increase the financial sophistication of Filipinos who want to invest", added Angara.

The pre-need firms, he said, are generally regarded as steady anchors of the capital market in developed economies but this is not the case in the Philippines.

"There is an urgent need to put in place sweeping reforms in the pre-need industry to transform the industry into a powerful component of the capital market", said Angara.

Angara said that people with money also invest in land but since these buyers have no solid grounding in the real estate market, "liquidity often turns out into illiquidity."