THE head of the European Union-Asean Business Council (ABC) on Wednesday said the Philippines should open up its bond market for long-term investment vehicles so that money would be available for the government to use for many very important infrastructures.
“The basic problem throughout the region is lack of finance, lack of long-term vehicles for bonds and insurance companies to invest their money to support the infrastructure,” said Chris Humprey, ABC executive director, at the sidelines of the Asean EU Business Summit Conference in Makati City.
“This is where Asean collectively should be doing more in terms of integration: Promoting capital and bond markets because that will create the funding needed to support infrastructure development.”
“Airports, railways, roads and bridges, hotels and schools are expensive and all of these things will need to be built throughout the region, particularly here in the Philippines,” he said. Asked how insurers and banks could be convinced to allow their capital to be used for long-term financing, Humprey said: “You need to change laws across the region concerning the investment vehicles that can be used and concerning the longevity of those investments. Extending the life span of a bond to make it longer term.”
“Changing the approach to how financing is done across the region is actually the key that will help unlock money to build the infrastructure,” he said.
Asked if the local banks and insurance companies’ lending practices are not enough, Humprey said: “The money is not being used sufficiently.”
“The government can’t afford it by themselves, so you need to involve the private sector, insurance companies in particular, to invest in long-term vehicle, which will help fund things, including airports and railways,” he said.
“For long-term government bonds, you can invest in what you want because that is a safe bet and it gives the money for the government to use to a very long time,” he said.