A Conduit For Growth And Opportunities For The Mining Industry

Francis Ed. Lim

President And Chief Executive Officer
The Philippine Stock Exchange, Inc.
 

Abstract

The Philippine stock market experienced a dramatic turnaround story in recent months, emerging as the second best performer among select Asian bourses for 2004 and the best performer for January this year.

Year to date, our stock market has grown by about 15% from its level last year. The index appreciation was complemented by improved trading volume, with an average daily volume of P1.6 billion, or roughly double the P800 million mark last year.

Increased interest in our country among foreign investors reflects a welcome change in their outlook towards the Philippine economy. A confluence of factors has helped reinforce and sustain this bullishness such as the government’s implementation of the much-needed fiscal reform program to plug the budget deficit, the most notable of which is the recent imposition of expanded value added tax, impressive performance earnings of listed companies and the Supreme Court decision last December allowing 100% foreign ownership in mining companies.

This renewed opportunity for the mining industry has sparked great interest among investors. Proof of this is the whopping 80.3 percent upsurge of the mining index in the Philippine Stock Exchange (PSE) for the first 10 months of the year from its year-ago level while its value skyrocketed to 1,070.3 percent and that of its volume to 30.3 percent.

Indeed, the possession of significant natural resource reserves is a blessing and the Philippines is fortunate to have abundant mineral wealth, many of which have yet to be discovered.

This is why the PSE is doing its share in promoting the government’s policy to revitalize the mining industry. In August, the PSE has relaxed its listing rules to help more mining companies obtain capital through the stock market.

 It will now adopt a liberal interpretation of the requirements on track record and operating history for mining companies applying for listing. This is to allow more mining firms that are worth listing including those involved solely in exploration activities.

This, however, does not mean investor protection is sacrificed as the PSE will require the applicant company to submit certain documents such as geological report, proof of adequate working capital, copies of exploration permits and mineral agreements, quality of management report, among others.

In conclusion, the mining industry is very much back on its feet.

Let us therefore seize the day and make up for wasted opportunity. I can understand the reservations coming from some sectors given the realities of the past. This is a major challenge for us as a people but I think that with synergy among government, the private sector and civil society, we can meet this challenge and change this society’s perception from one of suspicion to one of hope.